Academic journal article Global Economic Observer

Common Agricultural Policy - the Main Driver of Sustainable Rural Development in European Union

Academic journal article Global Economic Observer

Common Agricultural Policy - the Main Driver of Sustainable Rural Development in European Union

Article excerpt

Introduction

Is the Common Agricultural Policy still necessary in the current EU financing context?

It must be specified that the term "common policy" reflects one of defining features of the CAP, namely that for around 90% of the agricultural production, the decision no longer belongs to the Member States, but to the European Union. There are two reasons that led to the emergence of this policy. The first was the need to "streamline" European agricultural product trade and, especially, the desire of exporting countries to secure the placement of their products. The second reason is a certain fear of a situation in which the workforce released from agriculture as a result of mechanisation could not be simultaneously absorbed by the other sectors of the economy, in which case agricultural income would decrease even further when compared to industrial incomes.

Being one of the most controversial and reformed European policies, the Common Agricultural Policy (CAP) has changed significantly since the 1950s (the year when the foundations of its functioning were laid) up to the present, becoming from a policy that was based on the subsidizing of production and the protection of domestic markets against non-European producers, a policy where subsidies are no longer aimed at stimulating production, favouring instead rural development and environmental protection (see Figure 1).

1. The CAP reform - objectives and ways of implementation

Some critics of the CAP3 argue that it is a "costly luxury" for the European Union, considering that the support given to the Community agricultural production represents interventionism that stands in the way of achieving the true competitiveness of this sector.

Under these circumstances, having regard to the difficult economic period faced by the European Union at present, several analysts raised the question: is the CAP actually necessary and, moreover, can it guarantee a sustainable development of the rural areas in the EU (as this policy proposes as its declared objective in its most recent reform)?

In order to answer this question, it must be specified that the initial objectives of the CAP also included the modernisation of the villages and the increase of the living standard of the rural population. However, the focus on the subsidies and on production reduced the rural environment - with all its social, cultural and economic aspects - to its agricultural-economic dimension. In other words, the CAP placed too much focus on subsidising agriculture and too little focus on stimulating rural development. This is in fact the reason why the 2011 reform attempted to shift the focus towards rural development.

A short assessment of the CAP in facts and figures shows that, although its objectives have not always been attained to a satisfactory degree, there is an ongoing and undoubted progress in terms of the CAP contribution to the increase of the Community agricultural production (see Figure 2).

As regards rural development (with the application of the 2nd Pillar - modernisation of villages and of agriculture, the development of economic branches alternative to agriculture, the protection of the environment and of the rural landscape, since 1999), it was found that a perfectly unitary European policy was no longer possible. The granting of equal subsidies for agriculture was a simple process, but the modernisation of villages and the development of alternative branches needed different measures, adapted to the specific situation of each Member State. As such, Member States were given more freedom in adopting the programmes for the modernisation of the rural area.

On 12 October 2011, the European Commission adopted a proposal for the reform of the rural development policy with major implications for the future directions of evolution of the CAP4. Based on the European Commission's proposal, which provides for common regulations for all the funds operating under a single strategic framework, the 2nd Pillar of the CAP must collaborate in a coordinated and complementary manner with both the 1st Pillar and with other EU funds (especially the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund and the European Maritime and Fisheries Fund (EMFF)). …

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