Why Does the Eu Need the Common Agricultural Policy

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Dr. Mojmir Mrak, Dr. Vasja Rant UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS Economics Policies of the EU

Why does the EU need the Common agricultural Policy?

Kujtim Islamaj Erasmus Exchange ID#: 19534497 kujtim.islamaj@gmail.com Matevž Gantar Information Management ID#: 19467790 gantarmatevz@hotmail.com Study year: 2011/12 Submission Date: 14th December 2011

Andreas Tichonenko Erasmus Exchange ID#: 19535771 andreas.tichonenko@gmail.com

Executive Summary
The following research paper is focused on the illustration of the significance of a political cooperation within the agricultural sector. Since more than 40 years the Common Agricultural Policy (CAP) constitutes one of the most important and financial significant policies of the European Union (EU). In the early fifties, the member countries of the European Economic Community (ECC) were hardly able to supply their population with agricultural products. The reminiscence of hunger and food shortage during and after the Second World War characterized the mindset of the politicians. They prioritized to overcome the lack of food and to ensure the supply of the population in the long run. Since its establishment, the primarily beneficiaries of the CAP are the farmers. From the beginning, one of the main objectives was to ensure the income of the farmers. The regularity of the income is quite important in a sector, which is particular vulnerable for losses caused by uncontrollable weather conditions. The advantages for consumer are also numerous. These comprise, inter alia, the increased diversity of products, the cost for agricultural products, which have remained relatively stable and the increased quality of food by uniform determined quality and health standards. From the political perspective, the benefits of the CAP are tremendous. By the CAP, it has been prevented the ruinous competition, where underbidding of prices between the concerned parties would have taken place. The CAP exhibits also negative implications. By the intensification and industrialization of the agriculture, more and more habitats get lost. The consequence is a drastic loss in biodiversity with respect to animals and plants. The actual agricultural subsidies serves primarily the income maintenance of large agricultural enterprises, while small farms, by comparison, receive much less. Many of the small farmers are incapable to cover their costs and are therefore obliged to go out of business. Consequently, jobs will be lost steadily. Furthermore the tourism is also hit by the negative implications, especially in those regions, where traditionally cultural and natural landscapes will be destroyed by factory farming. All in one: the CAP promotes an agriculture, which is targeted on quantity instead of quality or expressed in simpler terms, mass instead of class, wherefore production surpluses often arise. Subsidized by the EU, these surpluses will be exported, inter alia, to developing countries at dumping prices. Market distortions and negative implications on small farmers in those countries will be accepted. Apart from the negative implications, the CAP is the symbol of a common European policy and contributes a crucial proportion to the food safety in Europe and worldwide. The renationalization of the CAP would be the dissolution of a really integrated policy and would lead to serious competitive distortions and consequentially, it would be counterproductive in terms of the realization of the internal market. Finally, the CAP contributes to public welfare. With this in mind, the farmers play the key role at the maintenance and conservation of the countryside. I

Table of Contents
List of Abbreviations ........................................................................................................ ...III List of Illustriations ............................................................................................................. III List of Tables...
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