The EU’s Common Agricultural Policy Explained

By Maria Callewier

The EU’s Common Agricultural Policy (CAP), which launched in 1962, sets out to ensure food security and support farmers throughout the European Union. This makes it one of the longest-prevailing policies within the framework of the EU.  With an annual budget of around 58 billion euros, this policy gets by far the biggest slice (38%) of the European budgetary cake out of all subsidy schemes. 

How does it work in practice?

The policy is built on two pillars; the first one establishes a direct payment supplement to farmers, while the second supports rural development projects to make an area more innovative, competitive or sustainable.  

Shielding farmers’ revenue from the volatile market and ensuring a steady supply of produce at a reasonable price for the consumer may sound like the perfect policy on paper, yet it has many shortcomings.

First of all, there was a link between the size of the farm and the amount of subsidies that are given out. According to statistics from the European Commission, 80% of the subsidies go to the 20% largest farmers. Moreover, CAP failed to mention any standard of labor rights for people working on these farms. A recent investigation uncovered that these workers were underpaid, subject to abuse and often were denied basic amenities such as water. Lastly, it was often not in line with one of the new core projects of the EU: The Green Deal. If you are looking for a more in-depth analysis of the compatibility of Europe’s green goals with the CAP, we recommend you take a look at the Euractiv Special Report.

What is being reformed?

The lack of greener agricultural practices was heavily scrutinized and found itself in the spotlight of most of the debates concerning the new CAP budget. After two years of failed and postponed talks around the reforms, a compromise was reached on June 25th 2021. The package represents a balancing act between the interests of farmers and those of the proponents of a greener European Union.

This deal has three major components: on the one hand, 25% of the budget needs to go towards eco-schemes in the first pillar. On the other hand, there would be a 35% ring-fence for development projects in the second pillar. However, there exists a loophole in the form of a rebate mechanism that would let countries slack on the amount of eco-schemes they allocate money towards if they reach a threshold of extra spending in the second pillar.  Lastly, the compromise also strived to protect workers rights by the linkage of direct payments to achieving a set standard of worker’s rights.
Although some member-states have mixed feelings over the final agreement, one thing is sure, Europe’s green ambitions will play a huge role in future policy decisions.

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