EU Agricultural Policy: the Concept of Multifunctionality and Value Added Agriculture

Multifunctionality and value added agriculture are the European answers to WTO challenge to liberalize agricultural trade. The second chapter provides a framework for the European Common Agricultural Policy. It presents an historical perspective and its main limits and challenges, in particular the current Doha round of WTO negotiations. The resulting reforms will be discussed. The following chapters will deal with the answers elaborated by EU and implemented in its CAP reforms in order to make its agriculture to survive. The main pillar of EU agricultural strategy is the concept of multifunctionality analysed in the third chapter. It implies recognition of the services (public goods/positive externalities) provided by farmers to justify public domestic support. The main elements in terms of interpretation and implementation of multifunctionality are provided along with the debate on its disguised use as a new form of protectionism. The second EU answer to the challenges posed by agricultural liberalization is the maximization of the value of the output produced by farmers in order to increase their incomes. The instruments used to this purpose are denominations of origin (PDO/PGI) and labels for Organic Farming (fourth chapter); and rural tourism (the particular case of Italian ‘agriturismo’ will be presented) as a way to diversify farm activities and to create new sources of income and employment for farmers (fifth chapter).