The Economic and Historical Foundation of the Common Agricultural Policy in Europe

Henrik Zobbe

No 24212, Unit of Economics Working Papers from Royal Veterinary and Agricultural University, Food and Resource Economic Institute

Abstract: The Common Agricultural Policy (CAP) was founded in the 1950s with price support as the main policy instrument. Despite massive criticism from both within and outside the EU, price support remains the backbone of the CAP. This paper argues that the choice of price support was logical viewed in both historical and economical perspectives, and gives three reasons for this. First, even though talks on agricultural integration began immediately after the war, the CAP was a result of general economic integration in Europe rather than the reason for it. Second, the structure of the CAP was determined by the agricultural policies of the six founding countries. The third and last reason is related to the economic characteristics of running a price support system. The six countries together were net importers of agricultural products and could thereby benefit from import levies. Price support is paid for by the consumers, and European consumers had been paying high prices for food for a long time. This, together with a high level of economic growth in Europe in the 1960s, made it easier for the governments to choose this policy rather than a policy based on direct payments financed by taxpayers that would have put pressure on the national fiscal budgets of the six countries.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 21
Date: 2001
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:rvaewp:24212

DOI: 10.22004/ag.econ.24212

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