Academic journal article Global Economic Observer

The Future of Common Agricultural Policy and the Challenges of Europe 2020 Strategy

Academic journal article Global Economic Observer

The Future of Common Agricultural Policy and the Challenges of Europe 2020 Strategy

Article excerpt

Introduction

Launched in 1962, the Common Agricultural Policy (CAP) represents a link between agriculture and society, between European Union and its farmers. Its main aims are to improve agricultural productivity and to increase the supply in order to provide stable and affordable food resources for consumers and to ensure a fair standard of living for farmers. Since its creation as the main regulatory framework for agriculture and rural development in the EU, the Common Agricultural Policy has always been adapted to better respond the challenges of its time. Currently, the Common Agricultural Policy is built around two pillars. First, the agriculture pillar that includes measures with a view to regulating the agricultural products markets integration. Second, the rural development pillar that comprises structural measures aiming at promoting a unifonn development of rural areas, considering the social, economic and environmental issues. At present, the Common Agricultural Policy is facing a complex series of both particular (like the development gap between rural areas across EU) and unforeseen challenges (for example, the negative impact of international economic crisis).

As some analysts have shown (Ackrill, 2000), although it is well known that the CAP is the most expensive EU policy, it has a significant impact not only on European agriculture, but also on the EU's environment and the food industry. The negative effects of the financial and economic crisis on the European economy highlighted the need for reassessing the EU objectives and regulations on rural development and agriculture. Furthermore, the Common Agricultural Policy is now facing the challenges brought on by its harmonization with the goals of the Europe 2020 Strategy. As a result, EU has launched a comprehensive reform, in order to modernize this policy and to make it more market-oriented. Hence, in order to achieve this goal, the Europe 2020 Strategy provides a new perspective. Thus, by addressing to the new economic, social, environmental, climate-related and technological challenges of our society, the Common Agricultural Policy may contribute further to developing of an intelligent, sustainable and inclusive growth. Besides, the Common Agricultural Policy must also pay a greater attention to the wealth and diversity of agriculture within the EU-27 Member States.

1. The main challenges for the common agricultural policy future development

Agriculture is an integral part of the economy and society, having a major role in tenus of economic growth and social sustainability at European Community level. Like other economic sectors within the EU, the agricultural sector was affected by the financial and economic crisis by reduction of financial lending, which had direct effects on producers in the Member States and also by increasing demand imbalances created as a result of the EU internal market. Recent analysis (Kyed, Karsten & Kaergard, Niels & Zobbe, Henrik, 2012) show that any significant reduction in EU agricultural activities w?ould have adverse effects on economic growth, leading, consequently, to economic failures and job losses in the related sectors, especially in the agro-food production chains, which are based on primary agricultural sector to achieve high quality materials, to become more competitive and secure. Consequently, we have identified several areas that represent major "challenges" for the future of the EU Common Agricultural Policy, being decisive for the entire reform process.

1.1. Economic challenges

EU agriculture is currently facing a more competitive international market, as the w7orld economy becomes more integrated, and the trade system is increasingly liberalized. According to some analysts (Fennel, 2007), this trend will continue in the coming years and will represent a major challenge for EU fanners, but also an opportunity for them and for the agro-food products exporters. Therefore, it is extremely important to increase productivity and competitiveness of EU agriculture. …

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