Structure of EC Agriculture: Implications for CAP Reform and GATT, The

Statistics demonstrate the diversity of EC agriculture. Agriculture in southern Europe is characterized by many small farms, most of which emphasize crop production. In northern Europe, farms are larger and more likely to emphasize livestock production. More than 70 percent of all EC farms are in southern Europe, but northern Europe accounts for more than 60 percent of all agricultural production and public expenditures on agriculture. The proposed Common Agricultural Policy (CAP) reform would reduce agricultural support prices and impose additional supply control measures. Small-scale producers would be exempt from supply control provisions and would receive direct payments to compensate for reduced market returns. Large-scale producers would receive compensation payments on only a portion of their production. Given the distribution of land and livestock in the European Community, less than 10 percent of all farms are too large to receive full compensation, but these farms account for approximately 50 percent of all crop acreage and 40 percent of dairy and beef animals. These large farms are concentrated in northern Europe, which helps explain the opposition of several northern European agricultural ministers to the reform proposal.