Common Agricultural Policy (CAP)

The CAP was established in the 1960's, before Ireland's entry into the European Economic Community (EEC) the original title of the European Union, in 1973, to secure Europe's food supply and to stabilise prices to the benefit of both producers and consumers. In the 1950'sfood was scarce and expensive, choice and quality were poor. The CAP encouraged a constant supply of home produced food by providing farm price supports.

In this way, the instability in 'world market' food prices was avoided through a combination of food import tariffs, export refunds and market management.

It was the necessary first step in building the 'Common Market'. Without this agreement different food prices in different member states would have resulted in different labour costs and the removal of internal trade barriers would have been impossible. The CAP remains the single biggest common policy in the EU.

Since the foundation of the EEC, European agriculture has been subject to political intervention and financial supports, which have proved beneficial to both food producers and consumers.

Consumers benefit through cheaper food prices and by being assured of quality food that is produced with the highest food safety and traceability standards. Consumers are also assured that the highest animal welfare and environmental controls are enforced.

Prior to 1992, farm product prices were supported through 'price and market' support mechanisms, such as the removal of surplus products from the market and restricting imports from outside the EU. The first CAP Reform in 1992 coupled with the inclusion of agriculture for the first time in the General Agreement on Tariffs and Trade (GATT) forced a major change in European farm support systems.

European farmers were asked to produce less, get paid less for what they produce, import more food from outside the Community and in return receive direct compensatory payments from the European Union. In addition, quotas on the production of most farm produce were introduced over the years to curtail production and balance market demands.

EU farmers were expected to reach increasingly high standards, yet received lower farm product prices as they triedto cope with ongoing reforms. As a result, many beef, sheep and cereal farmers in the EU were being forced to produce food below the cost of production and in return accept direct compensatory payments to make up the production costs and provide an income.

All EU cattle, dairy, sheep and cereal farmers received direct payments. Pigs, poultry, potatoes, sugar beet and vegetable producers get no direct income supports.

These payments are standard across Europe and the rules and regulations pertaining to them are the same for all EU farmers.