The March 1999 and June 2003 CAP reforms: Main provisions

The CAP reforms of March 1999 (2000 Agenda reform) and June 2003 (Luxemburg compromise) are part of a process started a few years earlier with the 1992 Mac Sharry reform. Although it did not come close to suppressing intervention and wholly liberalizing markets, the 1992 reform did represent a turning point. It suggested the reduction of price support and the compensation of induced income losses through direct aids, founded on the land (cereals and oleo-proteaginous) and livestock (beef) factors of production. The 1999 reform was a further step in the same direction, with new falls ininstitutional prices and partial compensation for income losses through direct aid, still founded on primary production factors. The 2003 reform goes farther by suppressing the link between direct aid and product choices. In other words, the 2003 reform goes even farther by “decoupling” the direct support aids from agricultural incomes. This paper presents the main provisions of both 1999 and 2003 reforms.