European Studies
European StudiesSUBJECT : EUROPEAN STUDIES A
TITLE : Discuss the relative merits/demerits of an agricultural policy
oriented to price reform rather than one based upon structural
reorganisation
GRADE : First Honour
AUTHOR's COMMENTS : I think it's pretty okay. Email if anyine has any
comments @ [email protected]
TUTOR'S COMMENTS: Excellent essay! Indepth, critical analysis. Watch
length!!
"The common market shall extend to agriculture and trade in agricultural
products. �Agricultural products� means the products of the soil, of
stock-farming and of fisheries and products of first-stage processing
directly related to these products....The operation and development of the
common market for agricultural products must be accompanied by the
establishment of a common agricultural policy among the Member States�
(1)
From the beginning of the European Union, EU policy has given emphasis to
the agricultural sector. To this end, a Common Agricultural Policy (CAP)
was established in 1963. (2) Provisions for this policy were made in the
Treaty of Rome. The aims of this policy were to increase agricultural
productivity, to ensure a fair standard of living for the agricultural
community, to stabilise markets and to ensure reasonable prices for the
consumer. (3) This is unusual in the context of the Treaty of Rome which
provided for free trade and movement of resources. Agriculture was ill-
adapted for this approach. Protection was given, not only by customs
duties, but also by a variety of agricultural policies. This essay will
discuss the merits and demerits of a the pre-1992 CAP with its emphasis on
price reform, in comparison with the post-1992 CAP which was oriented to
structural reform.
It cannot be denied that there were merits of the pre-1992 price reform
policy. There was a bountiful food supply with an increased variety and
quantity of food. Farmer�s yields increased, particularly the large
farmers. Producers were protected from the external market due to
community preference and, therefore, domestic agriculture could develop.
There were also spin offs in food production. Although some of the
policies created good returns for farmers, the demerits of said policies
far outweighed any advantages they had. The core-periphery divide was
widened, quantity became more important than quality and consumers had to
pay higher prices. Agricultural practices caused damage to the environment
and international trading relations were strained.
Until 1993 the EU rarely supported farmers by paying them direct subsidies
from the taxpayers. (4) Instead the 30 billion ECU (and often more) was
spent in the buying up of surplus commodities at minimum official prices
and was also used to pay subsidies to traders to sell surpluses on the
lower-priced world markets. (5) During the 1960�s the price system was
devised. The first problem with price policies is that of fluctuating and
differing exchange rates. �Green Money� was the first solution to be
developed to counter the problem of differing exchange rates. This,
however, could be manipulated by politicians to achieve different price
levels in the member states than those indicated by the common price level.
The lowering of the green currency towards a depreciating average rate,
raised farm�s price levels in the national currency. (6) This meant that
while regular citizens suffered from the devaluation of the currency,
farmers were protected from this trend. Also although the higher prices
were an advantage for the farmer, they were a nuisance...
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