Volume 44, Number 173,
April-June 2013
Common Agricultural and Cohesion Policy
in the Europe 2020 Strategy
Antonio González Temprano

The transformations that the cap has undergone since its implementation in 1962 have had an impact on the following three objectives: increasing productivity, guaranteeing a supply at reasonable prices and ensuring a certain income level for the active population. Other objectives have been incorporated as well, derived from changes both within and outside of the eu, such as preserving the quality and safety of food, respecting the environment and the welfare of animals, developing rural zones and fostering competitiveness.

The cap in its current form came into being in the 1990s. The 1992 reform implied a break from the stage when measures were centered around supply, by reducing the institutional prices of some basic products and compensating for this by direct payments. These cuts had a direct effect on the income of producers. In 1995, the Commission presented the member States with a new strategy highlighting the need to adapt to changes on the agricultural stage and promote rural development. This change in direction is laid out in the 1996 Cohesion Report, which advocates for reforming the cap through an approach based on institutional market prices and multifunctional rural development. In 1997, the Commission launched a project on the future of the Union policy (Agenda 2000), which contains a set of modifications to the cap. This sought to respond to the challenges of the new millennium for agriculture and rural environments. In response to these proposals, the 1999 European Council in Berlin approved the cap reform with ten new Regulations and the resources to finance them.

The 1999 reform can be summarized in the following way: it introduced lower institutional prices in order to foster competition, increased direct aid to compensate institutional price reductions, broadened the food quality assurance and safety standards and animal welfare, integrated environmental objectives, laid the groundwork for a new rural development policy and turned it into the second pillar of the cap, decentralized management, and finally, simplified the structure of the cap.

These changes culminated with a series of reforms from 2003 to 2006. According to Regulation (ec) No. 1782/2003, the 2004 and 2006 Council Regulations and the 2005 Commission Regulations, there was a new set of changes that would notably modify the mechanisms in place. The foundation of this new model was the decoupling (Single Payment Regime), modulation and conditionality of direct aid . This is an aid model in line with commercial opening in order to facilitate wto agreements.

The principle of decoupling of direct aid, or the Single Payment Regime, established a system of direct payments to producers dissociated from production. The principle of modulation and financial discipline implemented a mandatory price reduction mechanism for the entire eu destined for major crops between 2005 and 2012, and served the needs of future reforms in order to maintain cap payments within the limits set by the Council in Brussels in 2002. The conditionality principle implies subordinating the concession of direct aid to the compliance of community standards in terms of public health, environment, health and animal welfare.

The so-called health check agreement in the cap, decided on by the 2008 European Council of Ministers, and the document, A Simplified cap for Europe: A Success for All, presented by the Commission in March 2009, closed the era of reforms began in 1999 and opened the door to a new stage of modifications that will be applied in the 2014-2020 multiannual cycle.

Two other items must be added to the cap reforms between 1999 and 2009: the financial instruments reform and agricultural guidelines .

The application of Regulation (ec) No. 1290/2005 created the European Agricultural Guarantee Fund (eagf) and the European Rural Agricultural Fund for Rural Development (erafd), which replaced the European Agriculture Guidance and Guarantee Fund. The new Funds have practically the same objectives and finance the same measures as the previous ones.

The Agricultural Guidelines established by the Brussels agreement in 2002 impose the principle of financial stability on agricultural spending. According to this principle, in the 2007-2013 Financial Framework, this spending cannot exceed the threshold set by the new Guidelines decided in Berlin for fiscal year 2006, increased 1% annually in response to inflation. Reality has shown that the established spending ceilings, rather than serving as limits, have in fact become de facto guarantees, which has emptied the fund. It is unsurprising that this element has thus disappeared from the 2007-2013 Financial Framework.

Reforms at the end of the century and the beginning of the 2000s have not precluded challenges to the cap, which will likely end the current regime in 2013 and begin a new one in the 2014-2020 multiannual cycle. The second half of the 2007-2013 Financial Framework thus played witness to the reforms that must be approved before the end of 2013. Similar to cohesion policy, the cap has been developing in a transitory environment.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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