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The disappearing budget constraint on EU agricultural policy

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  • Matthews, Alan

Abstract

Concern over budgetary costs has been the traditional driving force behind changes to the EU's Common Agricultural Policy. While the recent MacSharry reform of this policy was more related to external pressures arising from the need to reach an agreement on agriculture in the GATT Uruguay Round, many expect the budgetary constraint to re-emerge towards the end of this decade, particularly in the light of the impending accession of a number of Central and Eastern European countries (CEECs). This paper argues that it is unlikely that there will be any budgetary need to further reform Europe's agricultural policy to accommodate the CEECs. Using a simple forecasting model of the FEOGA Guarantee budget, the paper demonstrates that, under a range of plausible assumptions for the key variables affecting the resources available for agricultural expenditure and the amount of that expenditure, a significant positive margin will emerge between the agricultural guideline and the cost of EU agricultural policy by the beginning of the next decade. While the budget constraint may disappear, however, both external and internal factors such as concern about agriculture's impact on the environment will remain as pressures for further CAP reform.
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Suggested Citation

  • Matthews, Alan, 1996. "The disappearing budget constraint on EU agricultural policy," Food Policy, Elsevier, vol. 21(6), pages 497-508, December.
  • Handle: RePEc:eee:jfpoli:v:21:y:1996:i:6:p:497-508
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    1. Michael D. Helmar & William H. Meyers & Dermot J. Hayes, 1993. "GATT and CAP Reform: Different, Similar, or Redundant?," Center for Agricultural and Rural Development (CARD) Publications 93-gatt4, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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    Cited by:

    1. Cathal O'Donoghue & Thia Hennessy, 2015. "Policy and Economic Change in the Agri-Food Sector in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 46(2), pages 315-337.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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