Ag policy

What is Agricultural Policy

Any government policy that affects the economic interests of the agricultural community

Why was a common market set up post WW2

No barriers to trade between member states, Free movement of labour, capital & entrepreneurs between member states

Who is the Europena council

heads of goverment

What does the European council do

major strategic decisions, clearing house for council (budget, milk quota)

Who is part of the council of the EU

ministers

What does the council of the EU do

co decides with EP by adopting legislations

Who is the European parliment

MEPs

What does the European Parliament do

powers to codecide with council, actual decision makers

Who is the European Commission

officials

Who is the commissioner for agriculture

Christophe Hansen

What are the 5 objectives of CAP

increase ag productivity, ensure fair standard of living, stabilize markets, assure availability of supplies, ensure supplies reach consumers at reasonable price

What does inelastic mean

Consumption is not very responsive to price changes

Is consumer demand for farm produce price inelastic or elastic

inelastic

When was the CAP created

1957

What are the general problems caused by the CAP

Comparatively low & volatile farm incomes, Volatile & falling farm-gate prices due to low price & income elasticities of demand

What does the common EU wide target price do for ag commodities?

supports market for farmers, set tariffs on imports outside EU

What is A?

intervention price

What is part B?

world price

What is part C?

tarriff

What did the CAP do about surplus product?

given as food aid or subsidised exports to world markets

What is the economic theory in relation to CAP?

transfers tend to end up being capitilised into a higher purchase price of EU farm land

What is regressive impacts on consumers in regards to the ‘old’ CAP?

hits the poor harder than the rich, as the poor spend a larger % of income on food

What is progressive impact on taxpayers in regards to the ‘old’ CAP?

rich hit the hardest, as they pay more of their income on tax

What is the ‘80/20’ rule in regards to CAP?

80% benefits of CAP go to 20% of farmers

What were the problems of the old CAP?

excess supply, follow on problems (high cost to EU budget and consumer)

What was the 1980s supply controls in regards to CAP?

physical limit on production - uk decrease 10% , ireland increase 5%

What were the key MacSharry reforms?

Sizeable reductions in price support, Farmers compensated through direct payments, Extension of supply controls, ‘Accompanying measures’

What industrys recieved substantial cuts due to the MacSharry reform?

beef & cereals

How were direct payments decided due to the MacSharry reform?

Premium paid per head of livestock or per ha

Why were the new direct payments from the MacSherry reform prefered?

Subsidies not linked directly to current production, no incentive to ramp up production

What is ‘coupled’ in relation to the MacSharry reform?

Payments linked directly to production levels

What is ‘decoupled’ in relation to the MacSharry reform?

Payments not linked to current production decisions or output levels

What % of ‘set aside’ land was required to qualify for cereals direct payments?

15%

What were the accompanying measures of the MacSheery reform?

Afforestation aid, early retirement scheme, agri-enviromental schemes

What is the GATT?

General Agreement on Tariffs & Trade

When was the first GATT Round to really tackle world agricultural protectionism?

1989

When was the MacSharry CAP reform?

1992

What is the blue box accord?

agreement under the GATT/WTO allowing certain production-limiting agricultural subsidies to be exempt from reduction commitments

What caused the MacSharry reform?

Forced by Uruguay World Trade Round

When was the 2000 reform agreed?

March 1999

What was the limit put on CAP spending agreed with the 2000 reform?

€40.5bn

What compensatory increase was there for direct payments due to the 2000 reform?

Increased headage payments in beef sector, Increased area aid in cereals sector, Dairy premia

What were the reinforced rural development policies implemented due too the 2000 reform?

Clearer statement of policy objectives and rural development regulation

Why were there continued criticisms of the 2000 CAP reform?

Not full liberalisation of protectionist CAP, Inequality of CAP support continued, Farmers only received about 48c in the €

When did the UK finally leave the European Union?

31 Jan 2020

When was the EU-Mercosur Trade Agreement adopted

September 2025

What was the concern with capping a recipients SFP?

Legal splitting of holdings to avoid a cap, Need for investment & efficienc

What was the modulation introduced in pillar 2 of the 2003 reform?

Designed to transfer € from Pillar 1 → 2, Reductions in SFP, Most modulation € remained in Member State to help finance its rural development programme

What are some Reasons Why Decoupled Payments May Still Influence Behaviour?

payments slowed down restructuring by allowing farmers continue to operate at a loss, enhance liquidity, allowing for more investment

What were the impacts of the old CAP on the rest of the world?

Downward pressure on world agricultural commodity prices and high import tariff (& non-tariff) barriers

What is a producer support estimate (PSE)?

Quantifies the annual monetary value of transfers from consumers and taxpayers to agricultural producers arising from government policies.

What is a partially decoupled direct payments(blue box)?

distort decision but have a ceiling, no extra payments above this ceiling

What is a decoupled direct payments (green box)?

there is no direct link between on farm activity and support from CAP

What is a coupled support (orange box)?

intervention purchases, no limits

What triggered the 2005 CAP sugar reform?

2005 WTO legal ruling

What are ag modalities?

A technical framework for implementing agricultural trade reform, concrete proposols

How many countries joined the EU in the 2004 enlargement?

10

The 2004 enlargement mainly involved countries from

Central and Eastern Europe

Before joining the EU, many Central and Eastern European countries transitioned from

Command economies to market economies

One key feature of the economic transition in Central and Eastern Europe after 1989 was

Privatization of land

Which of the following occurred during the transition period after the collapse of communism?

Large falls in national income

Before enlargement, agricultural prices in the EU-15 were generally

Higher than EU-N10

The Single Area Payment Scheme (SAP) was mainly used in

EU-N10 countries

Which agreement helped phase in free trade before EU enlargement?

Association Agreements

The Copenhagen meeting in 1993 was significant because:

Membership was agreed in principle

Final accession negotiations for the 2004 enlargement were completed at

Brussels 2003

After accession, many new member states initially struggled with

Administering CAP policies

Which issue increased pressure on the CAP budget after enlargement?

Increased number of farmers eligible for support

Which country is often cited as having the best agricultural performance among the new member states?

Poland

Accession talks between Ukraine and the EU began in

2024

Ukraine could potentially join the EU

Before 2035 or after 2040

Ukraine has approximately how much arable land?

33 million ha

Ukraine’s main agricultural sectors include

Wheat, maize, and sunflower

Agriculture contributes approximately what percentage of Ukraine’s GDP?

10%

If Ukraine joined the EU today, it would receive approximately how much CAP funding?

€11 billion

Rural development funding during 2007–2013 totalled approximately

€96.2 billion

The rural development programme was funded by which EU fund?

EAFRD

Axis 1 of rural development focused mainly on:

Competitiveness

Axis 2 mainly addressed

Environment and land management

Axis 3 focused on:

Diversification and quality of life

The largest share of rural development funding was allocated to:

Axis 2

The CAP Health Check was agreed in

2008

The purpose of the Health Check was mainly to

Conduct a scheduled policy review

One key change introduced in the Health Check was

Abolition of compulsory set-aside

Set-aside was abolished mainly because

Tight global cereal supplies

The Health Check increased funding for “new challenges” such as

Climate change and biodiversity

EU milk quotas officially ended on

1 April 2015

The end of milk quotas was expected to:

Allow greater freedom to increase production

Increasing milk supply could lead to:

Lower farm-gate prices

The Irish Suckler Cow Welfare Scheme began in:

2008

The original payment under the scheme was approximately:

€80 per cow

When did discussions on the 2013 CAP reform begin?

2009

The 2013 CAP reform was negotiated alongside which major EU framework?

Multiannual Financial Framework (MFF)

What was significant about the decision-making process of the 2013 reform?

European Parliament had co-decision power

What effect did European Parliament involvement have?

Complicated the process

Why was 2014 considered a transitional year?

Old rules with new budget applied

What cut was applied to large Single Farm Payments in 2014?

10.5%

What happened to the CAP budget in real terms (2014–2020)?

Decreased

Approximately what percentage of the EU budget did CAP represent (2014–2020)?

37.8%