Agricultural Policy and the European Union :: Political Politics

Agricultural insurance policy and the European UnionDiscuss the relative merits/demerits of an country indemnity oriented to price reform rather than one based upon structural reorganisationThe common market shall extend to agriculture and trade in agriculturalproducts. Agricultural products means the products of the soil, ofstock-farming and of fisheries and products of first-stage processingdirectly related to these products....The operation and development of thecommon market for agricultural products must be accompanied by theestablishment of a common agricultural policy among the Member States (1)From the beginning of the European Union, EU policy has given dialect tothe agricultural sector. To this end, a Common Agricultural Policy (CAP)was established in 1963. (2) Provisions for this policy were made in theTreaty of Rome. The aims of this policy were to increase agriculturalproductivity, to ensure a fair standard of hold for the agriculturalcommunity, to stabilise markets and to ensure reasonable prices for theconsumer. (3) This is unusual in the context of the Treaty of Rome whichprovided for free trade and movement of resources. Agriculture wasill-adapted for this approach. Protection was given, not only by customsduties, but also by a variety of agricultural policies. This essay willdiscuss the merits and demerits of a the pre-1992 CAP with its emphasis onprice reform, in comparison with the post-1992 CAP which was oriented tostructural reform. It cannot be denied that there were merits of the pre-1992 price reformpolicy. thither was a bountiful fodder supply with an increased variety andquantity of food. Farmers yields increased, particularly the largefarmers. Producers were protected from the external market due to communitypreference and, therefore, domestic agriculture could develop. There werealso spin offs in food production. Although some of the policies createdgood returns for farmers, the demerits of said policies far outweighed anyadv antages they had. The core-periphery divide was widened, quantity becamemore important than quality and consumers had to move over higher prices.Agricultural practices caused damage to the environment and internationaltrading relations were strained.Until 1993 the EU rarely supported farmers by paying them direct subsidiesfrom the taxpayers. (4) Instead the 30 billion ECU (and often more) wasspent in the buying up of surplus commodities at minimum official pricesand was also used to pay subsidies to traders to sell surpluses on thelower-priced world markets. (5) During the 1960s the price system wasdevised. The first problem with price policies is that of fluctuating anddiffering exchange rates. Green Money was the first solution to bedeveloped to call the problem of differing exchange rates.