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The Common Agricultural Policy and development

28 November 2011

The EU is committed to ensuring that its policy is coherent with its development strategy, and the issue of the coherence of the CAP with the development strategy is dealt with in a dedicated annex to the EC’s impact assessment (annex 12 to the Commission proposals). The EC analysis of policy coherence for development (PCD) contained in this annex starts by pointing out the importance of agriculture in developing countries (70% of the world’s poorest live in rural areas, with 80% of these dependent on small scale farming). It notes that ‘investments in smallholder agriculture yield the best results in terms of poverty reduction and growth’ and acknowledges that ‘the agricultural policies of industrialised countries can have an impact on the trade and development opportunities of developing countries’, and hence on the incomes of smallholder farmers.

In terms of the CAP’s influence on agriculture in other countries, the EC highlights the problems faced in identifying the specific effects of particular CAP policies via their transmission through world market prices and their effects on price volatility. It nevertheless acknowledges three types of CAP measure which could carry external effects: direct support measures; export subsidies; and EU market access restrictions.

The EC highlights how the ongoing process of CAP reform has:

  • ensured that direct aid payments are now less distorting of production and trade;
  • reduced substantially the level of export subsidy support which has traditionally been seen as the most trade-distorting form of support (from €5.6 billion in 2000, to €166 million in 2010);
  • ensured that its SPS and TBT measures are consistent with WTO rules;
  • resulted in a gradual opening up of access to EU food and agricultural markets.

In the section of the annex that deals with addressing CAP reform from a development perspective, the EC acknowledges the importance of harnessing ‘the potential growth of small farmers and small agricultural enterprises’. However it also maintains that ‘it is essential that the EU agriculture and food industries contribute to global food security by remaining important suppliers of high quality and safe agricultural and food products in a growing world market’.

The EC maintains that against this background ‘the EU’s commitment to PCD puts the principle of no harm high on the EU’s domestic policy making agenda’. It then goes on to reiterate the main components of the EU’s efforts to support agriculture in developing countries. It closes by stressing that ‘the proposals for the future CAP, alongside the EU’s multilateral trade negotiations, are in the spirit of continued market orientation’ and therefore ‘impacts on agriculture in developing countries will be further reduced’.

According to statements by representatives of the European NGO confederation CONCORD, ‘the new CAP proposals had dropped every reference to Europe's development obligations’. From the CONCORD perspective, Europe is legally bound under Article 208 of the Lisbon Treaty ‘to take all effects of its policies on developing nations into account’. This obligation, it is argued, has been ignored in elaborating the details of the EC reform proposals. CONCORD is concerned that policy measures to promote sustainable agriculture in Europe may ‘hamper food security outside of Europe, especially in developing countries’. It argues that sustainable food security can only be achieved by increasing productivity in developing countries where poor people live. According to CONCORD representatives, this is not just about agricultural subsidies but about allowing developing countries to nurture agricultural production through the use of appropriate policy tools, many of which the EU continues to use.

Editorial comment

The dedicated memorandum on the CAP and development stresses the changes in EU policies that have taken place since 1992, and the evolving global food security challenges. However from an ACP perspective it would be relevant to examine the particular effects of specific policy changes on ACP economies producing similar products. For example:

a)            the specific impact of the abolition of sugar production quotas on the market for ACP raw and refined sugar exports to the EU and globally;

b)            the impact of the commitment to a continuation of coupled supports to EU cotton farmers on West African cotton producers;

c)            the adjustment displacement effects of the impact of the EU’s more comprehensive ‘safety net’ policy (including the establishment of a €3.5 billion emergency fund) on the sectors concerned in ACP countries, and how the deployment of available ‘safety net’ policy tools can be managed in ways that minimise negative effects on the ACP sectors concerned;

d)            the impact of automatic additional direct aid payments to EU organic farmers on the relative price competitiveness of EU and third-country organic producers;

e)            the impact of the methods of application of evolving EU SPS, food safety and agricultural product quality standards on the costs incurred by small scale producers and exporters in ACP countries;

f)             the impact of reduced intervention buying and declining stock levels on global cereal price volatility.

In each of these areas (and more besides), the application of EU policy tools under a reformed CAP will impact on individual ACP economies. These dimensions need to be taken up and addressed in any ‘policy coherence for development’ measures linked to the ongoing process of CAP reform. 


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