Reflecting on EU Agricultural Policy: A Historical Perspective
As the National Farmers’ Union (NFU) contemplates its future domestic agricultural policy, it’s instructive to revisit the evolution of agricultural policy at the European Union level. This retrospective, guided by insights from former NFU Director of Strategy Martin Haworth, aims to uncover lessons from the past and provide context to the current state of agricultural policy.
The Enduring Goals of the Common Agricultural Policy
The Common Agricultural Policy (CAP), established over six decades ago, continues to be relevant today with its core objectives:
- Enhancing agricultural productivity
- Ensuring a fair standard of living for the farming community
- Market stabilization
- Securing supply availability
- Maintaining reasonable prices for consumers
A crucial yet often overlooked aspect is the link between fair living standards for the agricultural community and increasing productivity. This involves promoting technical progress, rationalizing agricultural production, and optimizing the use of production factors, particularly labor.
Foundations in the Treaty of Rome
The 1958 Treaty of Rome, which preceded the 1962 implementation of the CAP, envisioned profitability through restructuring and productivity enhancements. The treaty aimed to achieve stable markets, adequate supply, and fair consumer prices through what are now known as volatility measures.
Contrary to common belief, it was Germany that advocated for high-level price support, fearing their agriculture would struggle in a free European market. This led to a disproportionate allocation of CAP funds to the guarantee section (price support), leaving the guidance sector (productivity improvement) underfunded, a trend that persists in the current two-pillar CAP structure.
Challenges and Reforms in the CAP
The farming community initially welcomed price support, but it soon became apparent that farm earnings were lagging behind the broader economy. Sicco Mansholt, the Agriculture Commissioner from 1958 to 1972, recognized the policy’s imbalance and proposed the Mansholt Plan in 1968, aiming to shift focus towards modernization, training, early retirement incentives, and consolidation of smaller farms.
However, the plan was deemed too radical and was significantly diluted by the time it was adopted in 1972. As a result, price support continued, leading to the surplus crises of the late 70s and early 80s.
Striking a Balance in Agricultural Support
Today, there is a growing call for agricultural support to pivot exclusively towards environmental enhancement. While investing in environmental initiatives is undoubtedly valuable, a balanced approach is necessary. Public funds can also be legitimately used to boost agricultural productivity and competitiveness, reducing long-term financial dependencies.
Conversely, certain environmental measures may limit production capacity, risking farmers’ reliance on continuous public support. The failure of the Mansholt Plan serves as a cautionary tale of neglecting productivity, resulting in long-standing challenges in agricultural policy.
The Modern Context: Environmental Considerations
Modern EU policies have evolved to include environmental care as a fundamental aspect, addressing a notable omission from earlier agricultural policies. This shift reflects a broader understanding of agriculture’s role in environmental stewardship and sustainability.
Learning from Past Mistakes
The history of the CAP and the lessons from the failed Mansholt Plan highlight the complexities of agricultural policy. It underscores the importance of supporting both productivity and environmental sustainability to avoid perpetuating historical pitfalls and to ensure a balanced and forward-looking approach to agricultural policy.