Geoscience Reference
In-Depth Information
redistribution between members of the union. I present a brief overview of
these programs in turn.
In the early 1960s, the members of the European Economic Community
set out to implement the provisions of the Treaty of Rome, title II, article 33,
which read as follows:
“The objectives of the common agricultural policy shall be:
(a) to increase agricultural productivity by promoting technical progress and
by ensuring the rational development of agricultural production and the
optimum utilization of the factors of production, in particular labor;
(b) thus to ensure a fair standard of living for the agricultural community,
in particular by increasing the individual earnings of persons engaged in
agriculture;
(c) to stabilize markets;
(d) to assure the availability of supplies;
(e) to ensure that supplies reach consumers at reasonable prices.”
The pursuit of these goals was articulated around three basic measures
(Hix
2005
: 282):
protection against low internal prices
(by having the Euro-
pean Agricultural Guidance and Guarantee Fund (EAGGF) buy surplus goods
when prices fall below the guarantee price in the European market);
protection
against low import prices
(by imposing levies on imported agricultural goods
when world prices fall below an agreed price); and
subsidies to achieve a low
export price
(by paying out refunds to producers when the world price falls
below an agreed price).
This policy originated as a way of compensating French farmers for open-
ing the French economy to external competition, particularly German indus-
tries. Throughout the 1990s, the policy suffered a number of reforms, as a
result of which the balance between the different elements of the policy has
reversed. Until the early 1990s, price protection, to support the farmers, was
the primary strategy. A series of reforms (1992, 2000) turned the policy into
a direct income support program (about 45% of all agricultural expenditures
were direct payments to farmers in 2005), concentrated in particular areas of
the EU.
The last of these reforms took place in February 2006, when EU mem-
bers agreed to cut the guaranteed minimum sugar price by 36%, in exchange
for funds to encourage uncompetitive sugar producers to leave the industry.
Funded through either VAT collections (collected by national governments)
or direct contributions from member states (European Commission
2004
), the
EAGGF operates as a system of transfers targeted to agricultural producers
concentrated in specific areas of the Union: hence its importance as an interre-
gional transfer.
Figure 4.3
displays the percentage of agriculture expenditures received by
different European countries. Payments and benefits are unevenly distributed
by country, depending on the size of the agricultural sector and the structure of
