Farmers represent roughly 3% of the EU’s population. Yet the Common Agricultural Policy (CAP) accounts for 39% of the EU’s total budget. Does it make sense, in times of economic hardship, for Europe’s taxpayers to hand over €58 billion in subsidies to a tiny minority of people?
The CAP was founded in the post-WWII era, when much of Europe experienced severe food shortages and rationing. Food security was of central importance, and by the 1980s the CAP represented over 70% of the EU (then-EEC) budget. Critics pointed to so-called “butter mountains” and “wine lakes”, caused by quotas and other market controls, as indicative of inefficiency and waste.
Want to know more about the reasons in favour and against the EU’s Common Agricultural Policy? Check out our Infobox on Arguments For and Against the Common Agricultural Policy!
Since its creation, the CAP has been through a series of reforms (the most recent in 2013). However, judging from the comments we’ve received about the CAP, it is still viewed with a great deal of suspicion. For example, we had a comment from Peter, wondering if anybody could justify the continued existence of agricultural subsidies in today’s economy:
Is there anyone in Europe who can give a good reason to keep the Common Agricultural Policy when it costs 45% of the EU budget but only employs 5% of the population and generates only 1.6% of the EU GDP?
To get a response, we spoke to Sophia Davidova, Professor of European Agricultural Policy at the University of Kent’s School of Economics. How would she respond to Peter?
Agriculture is a very specific sector, and that’s why all developed countries, and many developing countries, protect and support it. First of all, agricultural prices are very volatile… This means that farmer’s revenues go up and down frequently, while they incur costs that are more or less constant, such as labour, machinery, seeds, and so forth.
The second thing is that farmers maintain our countryside, they maintain beautiful landscapes, and they provide many more benefits than directly measuring agricultural output as a contribution to GDP. All the landscape around countryside villages, the beautiful forests, and so on, everything is maintained by farmers. This can, for example, attract tourism, which contributes to GDP but isn’t directly linked to the agricultural sector. So, these are two of the reasons we spend money on agricultural policy and farmers.
For another perspective, we also spoke to Ana Rocha, European Affairs Advisor at the European Landowners Organization (ELO). What would she say?
It is true that the agricultural sector doesn’t employ a lot of people in farming directly, and actually the number of farmers is decreasing. But if you consider the agri-food chain as a whole, then it represents 46% of all employees in the EU.
It is also true that agriculture contributes 1.7% of GDP, but we spend less than 1% of total public expenditure on the Common Agricultural Policy. Plus, not only for food, but also for land management in the 47% of the European territory.
Is the EU’s Common Agricultural Policy a waste of money? Or does the CAP provide food security, and help to maintain the unique rural European landscape and way of life? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!