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Evaluation of Agricultural Policy Reforms in the European Union

image of Evaluation of Agricultural Policy Reforms in the European Union

This report provides an overview of the main characteristics and structure of the current Common Agricultural Policy (CAP) and its developments in the last 25 years in a changing environment within and outside the EU.

Drawing on material presented at the OECD Workshop on the Disaggregated Impacts of CAP Reform, held on 10-11 March 2010, and model-based scenarios, it analyses the impacts of policy changes on production, trade, land use, farm structure, the environment and some aspects of rural development, using changes in the level and composition of OECD indicators of support, notably the Producer Support Estimate (PSE).

This report further suggests improvements in the market orientation, competitiveness and risk management at all levels of the food chain, and pleads for clarifying the link between policy measures and objectives through better targeting, and strengthening evidence on which to base policies.

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Executive Summary

The Common Agricultural Policy (CAP) is the first common policy adopted by the European Community under the Treaty of Rome. It was originally put in place to regulate agricultural markets and to support domestic commodity prices, while structural and environmental measures were gradually developed afterwards. The 1992 MacSharry reform marked the beginning of a series of reforms by which expected income losses due to reductions in price support and protection were partly compensated by direct payments, originally based on current area and animal numbers. The 2003 reform introduced fixed payment entitlements based on historical, regional or hybrid references, which do not require production of any commodity, to replace part or all of MacSharry payments. Subsequent reforms of commodity sectors and the Health Check of the CAP in 2009 have consolidated the movement towards de-linking payments from current production parameters initiated by the 2003 reform and strengthening measures, whose declared objectives are to contribute to improving the competitiveness of the agricultural and forestry sectors, the environment and the countryside, as well as the quality of life in rural areas.

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