- About ten years ago, European Common Agricultural Policy (CAP) underwent a
major change. In the past, CAP would set price floors on various agricultural products
in order to support farmers. In contrast, current policy directly subsidises farmers.
Subsidies may be a flat rate payment for maintaining land in cultivatable conditions
(currently around �250 per hectare in England), or may depend on the land�s crop in a
given past year, which is taken as reference point (as in Scotland). Discuss the
possible effects of that policy move. - Under the European Union Emissions Trading System all European factories, power
stations, and other installations with a net heat in excess of 20 Mega Watt must hold
special permits in order to emit CO2. What is the rationale for this policy? Originally,
permits were granted to the firms for free. However, permits can be traded. In April
2005, the price of a one-tonne CO2 permit was close to 30 Euro. In September 2007, it
was zero. What could explain this change in the price of pollution permits? Should
policymakers have reacted, and, if yes, how?
these two topic, to write two essay, maybe 962 each,no longer than 1000, each one has 10 reference. i
am the university of leicester student, i dont know which essay style is suitable
Effects of European Common Agricultural Policy (CAP) New Policy Move
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The Common Agricultural Policy (CAP) is in a constant revolution and multi-faceted. The face,
as well as their counterparts, consumers and industrial dependents of the agricultural products 1 .
Since the inception of European Common Agricultural Policy (CAP), it has evolved from a list
of programs specific to certain products to the improvement of food safety and security in the
European region, and then again to an industrial system assistance with manifold objectives. In
its most recent wave, the developments have been: partially decoupling the payments of direct
income from production to farmers; and the increase on the objectivity of utilizing assistance to
reach the environmental and rural development goals. As well, besides policy changes, the
European Union membership itself has dramatically changed with enlargements that have been
initiated progressively 2 . For instance, there has been an increment of the member states to 25
from 15 which increased the number of farmers to 11 million from the existing 7 million, which
consequently increased the area used for farming by 30% to 130 mil. Hectares. Specifically,
about a decade ago, European Common Agricultural Policy (CAP) would set price floors for
various agricultural products so as to support farmers 3 . In contrast the current policy directly
subsidizes farmers, whereby subsidies maybe a flat rate for maintaining land in cultivatable
conditions or may depend on the crop on that land in a given past year – for instance in the case
of Scotland. This paper discusses possible effects of that policy move.
1 Bouet, A., Decreux, Y., Fontagne, L., Sebastian, J. and Laborde, D., ‘Assessing applied
protection across the world’, Review of International Economics, vol. 16, issue 5, p. 858, 2008.
2 Narayanan, B.G., Some Discussions on EU Agricultural Export Subsidies in GTAP 7 Data
Base, 2009 www.gtap.agecon.purdue.edu/access_board/documents/ AgEX.pdf (accessed 15
July 2009), p. 98.
3 Brockmeier, M. and Pelikan, J., Agricultural Market Access: A moving target in the WTO
negotiations?, IIIS Discussion Paper No. 125, March, 2006, p. 88 .
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The European Common Agricultural Policy (CAP) subsidies to farmers are subject to various
effects. The financial support for agricultural productivity has notably greened after the changes
were initiated 4 . More funds have actually been availed for the sustainability of agricultural
production and the “green activities”, like the conservation of nature, while various other
subsidies to farmers have been reduced substantially. The consequences and the possible effects
of the reforms incorporated in European Common Agricultural Policy (CAP) can be viewed on
the lens of the income of farmers, the world market, prices of food, and the environment or
nature 5 .
This is the most substantial move as it began in 1992 intensifying a more than a decade later in
2003, when the link between subsidies and production was removed. This meant that farmers no
longer have to conduct farming in order to receive subsidies, in actuality, production of food for
a market that does not exist 6 . Instead, under the current policy implementations, they can produce
what the consumers and the market, search for new markets with profitability and exploits any
niches they did not venture into previously. A direct effect is that farmers now receive support in
terms of income, given that they preserve and maintain the good quality of their farmland and
establish a food-safety platform, animal and environmental welfare standards, are and if they fail
to do so, then their payments will be reduced respectively 7 .
4 Balkhausen, O., Banse, M. and Grethe, H., ‘Modelling CAP decoupling in the EU: A
comparison of selected simulation models and results’, Journal of Agricultural Economics, vol.
59, issue 1, pp. 59, 2007.
5 Huang, H., van Tongeren, F., Dewbre, J. and van Meijl, H., A new representation of
agricultural production technology in GTAP, paper presented at the 7th Annual Conference on
Global Economic Analysis, Washington DC, 17–19 June, 2014, p. 56.
6 Anciaux, J.P. (rapporteur), Réforme de la PAC et DPU, Livre Blanc, Mission tripartite, May,
Paris, 2005. P. 54
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These new European Common Agricultural Policy (CAP) policy provisions are viewed to be
friendlier to trading activities because 90 per cent of the organizations direct payments are
classified by the non-trade-distorting and the WTO. The new policy provisions are actually
providing consumers with a broad choice for high quality of the produced food. It can be viewed
as a positive move that ultimately is streamlining, modernizing and simplifying European
Common Agricultural Policy (CAP) in a progressive manner. With the provision that payments
meant to farmers will not be linked to their production capacity, as in the Scotland case, the is an
implication that financial security is a guarantee and now farmers will not be constrained in their
response to signals in the market. The market instruments of European Common Agricultural
Policy (CAP), for instance public intervention, have been incorporated to act as a safety
container without standing on the way of the normal market signals. The policy on rural
development especially assists farmers in the farm restructuring and the care of nature and the
environment, hence enabling the rural farming practices to thrive.
The introduced reforms has sparked concerns and debates among the EU citizens 8 . Therefore, the
new changes have presented an opportunity to confront the environmental, economic and
terrestrial setbacks that are facing rural areas and farmers in general in the present day setting,
capitalizing on diversity and wealth of the various types of farming in the 27 European Union
7 El Mekki, A.A., de Frahan, B.H., Van Meijl, H., Salvatici, L., Van Tongeren, F. and Veenendaal,
P. 2010, ‘Assessment of the usefulness of GTAP for analyzing reforms of the Common
Agricultural Policy’, in Soren, F.E. and Staehr, M.H.J. (eds), Assessment of the GTAP modelling
framework for policy analysis from a European perspective, Danish Institute of Agriculture and
Fisheries Economics, Report no. 116, 2010, p. 167.
8 European Commission, Fact Sheet: New Perspectives for EU Rural Development, 2006, para.
8.
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countries, while at the same time making sure that fairness is maintained between regions,
farmers, and countries 9 . The society will thus in general merit from the security of food
production, and improved environmental surrounding, and a countryside that is ultimately
thriving, the rural area farmers will merit from a more balanced, efficient, stable and fair policy
that is rich with investment opportunities.
In the general analysis, the proposed European Common Agricultural Policy (CAP) reforms
regarding farmer subsidies are meant to have various effects on the dimensions of greening or
the nature, the income of farmers, adjustment of business operations, a progressive change of the
policy, improved food security and an impact on the rural policy. The CAP proposals are based
on the broad pillars of income and market policy. The rural policy that aims to maintain the
viability of the countryside in the broadest sense possible will not be impacted much in the
preceding years. The role of the European Commission (EC), the European Parliament (EP), and
the European Union (EU) towards CAP will change and they will now play an active political
role in the revision of the agricultural policies of CAP 10 . In summary though, farmers will benefit
from the new CAP policy reforms as direct effect is that farmers now receive support in terms of
income, given that they preserve and maintain the good quality of their farmland.
References
9 Bach, C.F., Frandsen, S.E. and Jensen, H.G., ‘Agricultural and Economy-wide effects of
European enlargement: Modelling the Common Agricultural policy’, Journal Of Agricultural
Economics, vol. 51, issue 2, pp. 168, 2010.
10 Alliance Environnement, Evaluation of the application of cross compliance as foreseen under
regulation 1782/2003, Part II, Deliverable prepared for DG, 2007
Agriculture, http://ec.europa.eu/agriculture/eval/reports/cross_compliance/
index_en.htm (accessed 24 July 2009), para. 5
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Alliance Environnement, Evaluation of the application of cross compliance as foreseen under
regulation 1782/2003, Part II, Deliverable prepared for DG, 2007 Agriculture,
http://ec.europa.eu/agriculture/eval/reports/cross_compliance/index_en.htm (accessed 24
July 2009).
Anciaux, J.P. (rapporteur), Réforme de la PAC et DPU, Livre Blanc, Mission tripartite, May,
Paris, 2005.
Bach, C.F., Frandsen, S.E. and Jensen, H.G., ‘Agricultural and Economy-wide effects of
European enlargement: Modelling the Common Agricultural policy’, Journal Of
Agricultural Economics, vol. 51, issue 2, pp. 162–80, 2010.
Balkhausen, O., Banse, M. and Grethe, H., ‘Modelling CAP decoupling in the EU: A comparison
of selected simulation models and results’, Journal of Agricultural Economics, vol. 59,
issue 1, pp. 57–71, 2007.
Bouet, A., Decreux, Y., Fontagne, L., Sebastian, J. and Laborde, D., ‘Assessing applied
protection across the world’, Review of International Economics, vol. 16, issue 5, pp.
850–63, 2008.
Brockmeier, M. and Pelikan, J., Agricultural Market Access: A moving target in the WTO
negotiations?, IIIS Discussion Paper No. 125, March, 2006 .
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El Mekki, A.A., de Frahan, B.H., Van Meijl, H., Salvatici, L., Van Tongeren, F. and Veenendaal,
P. 2010, ‘Assessment of the usefulness of GTAP for analyzing reforms of the Common
Agricultural Policy’, in Soren, F.E. and Staehr, M.H.J. (eds), Assessment of the GTAP
modelling framework for policy analysis from a European perspective, Danish Institute
of Agriculture and Fisheries Economics, Report no. 116, 2010.
European Commission, Fact Sheet: New Perspectives for EU Rural Development, 2006.
Huang, H., van Tongeren, F., Dewbre, J. and van Meijl, H., A new representation of agricultural
production technology in GTAP, paper presented at the 7th Annual Conference on Global
Economic Analysis, Washington DC, 17–19 June, 2014.
