MERCHANDISER
A NEW REPORT The European Union’s
Support as a Proportion of Total
The commodities covered now consti-
Common Agricultural Policy: A Stocktake
Gross Farm Receipts
tute much of EU agriculture and the pay-
of Reforms from ABARE Economics ments are being aggregated per farm or
appraises changes in the CAP and impli- per hectare under a ‘single payment
cations for EU production and trade. scheme’ (SPS).
The EU has a history of high agricultur- In the EU, claims are made that the SPS
al support that depresses world prices payments are ‘decoupled’ from produc-
and adversely affects farmers elsewhere. tion and prices, and are minimally market
“Recently the EU has made positive distorting. However, ABARE’s report
changes in its agricultural support poli- points out that the large compensatory
cies – moving away from price support payments enable farmers to continue to
to less market distorting ‘decoupled’ produce with the aid of that support, with
payments to farmers. However, many market distorting little incentive to change behaviour.
elements remain,” according to Phillip Glyde, ABARE Some positive changes to EU agricultural support policies
Executive Director.
“While the EU has changed the forms of
support, it has done very little to reduce
Assessing EU CAP Reforms
the levels of support. The EU has been
progressively reducing commodity support prices and com- include the move to SPS payments that are not linked to
pensating farmers by direct, ongoing government pay- current production and/or prices as the main method for
ments,” says Glyde. providing domestic support, sugar policy reforms to meet
WTO commitments, and the reduction in direct costs
to consumers. ‘Modulation’ – the transfer of money
from the CAP’s direct payments to its rural develop-
ment and agri-environmental measures – has been
introduced to advance rural development. If it
reduces direct protection of agriculture and helps to
remove obstacles to rural adjustment, then market
We invite companies and individuals wishing
distortions could be reduced, say ABARE.
to contribute to Merchandiser or discuss other
However, the report concludes that while ‘decou-
pled’ payments are helping to reduce distortions
editorial opportunities to contact:
from government policies, further progress depends
Guy Isherwood
on continuing the reform process, including reduc-
Editor, Commodities Now ing tariffs and other market access barriers.
E: gish@commodities–now.com
The report can be downloaded at:
T: + 44 (0) 20 7584 0000
www.abareconomics.com
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