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The Economic and Historical Foundation of the Common Agricultural Policy in Europe

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  • Zobbe, Henrik
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    The Common Agricultural Policy (CAP) was founded in the 1950s with price support as the main policy instrument. Despite massive criticism from both within and outside the EU, price support remains the backbone of the CAP. This paper argues that the choice of price support was logical viewed in both historical and economical perspectives, and gives three reasons for this. First, even though talks on agricultural integration began immediately after the war, the CAP was a result of general economic integration in Europe rather than the reason for it. Second, the structure of the CAP was determined by the agricultural policies of the six founding countries. The third and last reason is related to the economic characteristics of running a price support system. The six countries together were net importers of agricultural products and could thereby benefit from import levies. Price support is paid for by the consumers, and European consumers had been paying high prices for food for a long time. This, together with a high level of economic growth in Europe in the 1960s, made it easier for the governments to choose this policy rather than a policy based on direct payments financed by taxpayers that would have put pressure on the national fiscal budgets of the six countries.

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    Paper provided by European Association of Agricultural Economists in its series 2002 International Congress, August 28-31, 2002, Zaragoza, Spain with number 24867.

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    Date of creation: 2002
    Handle: RePEc:ags:eaae02:24867
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    1. O'Rourke, Kevin H., 1997. "The European Grain Invasion, 1870–1913," The Journal of Economic History, Cambridge University Press, vol. 57(04), pages 775-801, December.
    2. Tracy, Michael, 1994. "The Spirit of Stresa," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 21(3-4), pages 357-374.
    3. ROSEMARY FENNELLy, 1985. "A Reconsideration of the Objectives of the Common Agricultural Policy," Journal of Common Market Studies, Wiley Blackwell, vol. 23(3), pages 257-276, 03.
    4. Fennell, Rosemary, 1997. "The Common Agricultural Policy: Continuity and Change," OUP Catalogue, Oxford University Press, number 9780198288572.
    5. Gardner, Bruce L, 1992. "Changing Economic Perspectives on the Farm Problem," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 62-101, March.
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