to customersSince its inception in 1962 the CAP depended largely on price management’s to achieve its objectives, paying attractive prices for food products. This proved to have an affect of its own as the generous market support measures encouraged the farmers to increase productivity and by the 1970s the result was huge surplus stocks of butter and wine.The main policy instruments used by the EU today to attain the same objectives include price supports, direct payments to farmers and supply controls.The current system is the result of two reform packages. The first, adopted in 1992 and implemented in 1994 began the process of moving support from prices to direct payments, reducing support prices, creating direct compensation payments and introducing new supply control measures.The second reform, Agenda 2000 was adopted in 1999 and implemented in 2000, this policy further removed the EU from prices supports in favour of direct payments, it also further modified supply control measures.The complexities of the system of financial support for the European Farming industry are huge but the effects of the distortions created by the Common Agricultural Policy clear, notably in the inflated prices consumers are expected to pay for a range of basic foods. EU Farming Ministers meeting in March 1999 agreed a new package of reform for the CAP – although the changes are unlikely to feed through into lower prices in the shops for several years. Over forty years on, the CAP has become an acronym for waste and distortion. The policy takes up almost half the total EU Budget with over 30 billion per year handed out in guaranteed payments to producers. The scale of this support is vast – especially when we consider that less than 6% of the EU workforce is employed in farming. The common perception of the CAP is of a policy that has generated wine lakes plus butter and grain mountains on an unprecedented scale all of which are incredi...
