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The changing shape of the CAP?

January 5, 2010
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Even though the EU will not write a new budget until 2013, debate has already begun on the future shape of the EU’s Common Agricultural Policy (CAP). While spending on the farm sector has demised since the CAP’s inception in 1957, it still accounts for 43% of the EU budget in 2009.  However, the program was restructured in 1999 and 2003 to incorporate more environmental protection and rural development and less direct subsidies.  In addition subsidies were decoupled from production, reducing the “mountains of butter and lakes of wine” that EU farmers had previously been known for.  The question is now whither to take this a step farther by shifting more money away from subsidies or to maintain the status quo, which is popular among farmers, particularly in France.

At the European Union Regulatory Policy: Lessons for Indiana forum that was co-sponsored by WEST, Charles Fluharty and Paulette Kurzer argued that if EU member states wanted to continue the high level of subsidies for their farmers, the member states will have to start subsidizing the producers themselves.  This is because the cap is not popular in all 27 member states.  In addition, Mr. Fluharty argued that this decoupling of subsidies and production will make it harder for American farm interests to defend farm subsidies in the U.S., and the new U.S. Farm Bill (which will also be crafted in 2013) may shift more towards environmental protection and rural development as well.  The result is that EU farm debate will have a direct impact on American farmers.

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