The Common Agricultural Policy

Through the Common Agricultural Policy (CAP) the EU wants to ensure an economically viable agricultural sector that produces safe, high-quality food based on environmentally sustainable production. Moreover, the CAP contributes to ensuring good business and living conditions in rural areas.

Negotiations on the future agricultural policy will dominate the agenda of the AGRI Council's work during the Danish Presidency.

The Presidency will give maximum momentum to the negotiations of the Commission’s proposal for a new Common Agricultural Policy (CAP), which covers the period 2014-2020. In its proposal, the Commission suggests widening the scope of the CAP in order to support innovation, research and development, as well as measures which benefit the environment and climate.

A greener agricultural policy

Denmark supports farm subsidies which are targeted towards innovation, research and development, and will seek to ensure that in the future it is possible to target farm subsidies towards e.g. the development of biogas plants and similar actions of benefit to the environment. Moreover, it should be possible to use the entire CAP for targeted interventions towards environmentally friendly agricultural production for the benefit of e.g. climate and the environment.

Competitiveness of agriculture

The Danish Presidency will continue to work for a market orientation of the CAP. It is a Danish aim that agricultural policy should help to improve the competitiveness of agriculture - locally and globally - through innovation and the development of technology and with minimal distortion of competition.

Simplification of the CAP

The Danish Presidency will work towards a simplification of the CAP in order to alleviate administrative burdens for industry without compromising food quality or safety.

A new WTO agreement

Finally, the Danish Presidency will prioritise the multilateral negotiations on a new WTO agreement, the Doha Round. In parallel with the Doha Round, Denmark will continue its efforts to strengthen bilateral and regional free trade agreements and the European Neighbourhood Policy.

The purpose of the Common Agricultural Policy
The Agricultural policy has undergone significant development since it was launched back in the 1950s. Back then, focus was to avoid food shortage and ensure stable and reasonable prices. Therefore, the original schemes gave incentives to farmers to produce, which helped ensure abundant agricultural products.

The downside of this system was that it eventually led to an overproduction of certain goods, without benefitting consumers through lower prices.

Through the past 20 years, the Common Agricultural Policy has therefore undergone major reforms in order to make the policy more market-oriented. Farm subsidies have developed from production-linked subsidies to direct income support, so farmers are no longer encouraged to focus on a specific production, but can plan their production according to demand.

In addition, the modernisation of the CAP has meant that several other issues have been increasingly emphasised in the policy such as environmental aspects, climate, development, food safety and animal welfare.

The main elements of today’s Common Agricultural Policy
After the latest major reform of the Common Agricultural Policy in 2003, today’s CAP consists of two pillars:

  • Pillar I is the direct payments and market mechanisms. The direct payments are based on requirements of cross-compliance. Contrary to earlier schemes the direct payments are now decoupled from production. Cross-compliance means that payments to farmers are instead granted on the condition that the farmer complies with certain rules concerning the environment, food safety, animal and plant health and animal welfare.
  • Pillar II funds the rural development policy that focusses on environment and development programmes. Disbursement of funds from Pillar II requires equal national co-financing. The rural development policy provides support for structural development and new technology that can ensure European agriculture in the future and maintain living conditions in rural areas.

The future of the Common Agricultural Policy
Because of challenges in relation to climate, energy and environment, increasing global competition and enlargement of the EU, there is a need to further reform the Common Agricultural Policy.

The Commission tabled a proposal for a reform of the Common Agricultural Policy on october 12. 2011, highlighting the need for a greener Common Agricultural Policy. By requiring farmers to deliver public goods in return for the financial support, the Common Agricultural Policy is to ensure that beneficiaries deliver public goods on a range of relevant aspects, such as an improved environment and climate, innovation, technology and food quality.

Negotiations on the reform are not only taking place among the agricultural ministers in the Council. The European Parliament also participates in the negotiations on the reform as the Parliament has been given status as co-legislator in the field of agriculture after the Lisbon Treaty entered into force in 2009.