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

The reasons for a new cap reform, according to the Commission, have to do with three challenges. The first is food security: the cap must confront a growing food demand and price volatility in the international market, as well as the consequences for the quality and security of food,8 and the social demand for widespread quality standards and food security. The second challenge is environment and climate change. Although greenhouse gases from agriculture have been reduced by more than 20% since 1990 and eco-conditionality links the single payments to compliance with determined environmental standards, the prospects for climate change imply new challenges in the different zones of Europe. The third challenge is territorial balance. Expansion to twenty-seven members has increased the diversity of rural zones and agricultural crops. Taking on these three challenges will mean adapting the cap to the objectives of the Europe 2020 Strategy .

In response, the European Commission for Agriculture and Rural Development launched a public debate on the future of the cap in April 2010. The results were presented in the conference The cap Post 2013, organized in Brussels in July of the same year. Based on this event and other debates and/or decisions handed down by the Council, European Parliament, European Economic and Social Committee and Committee of the Regions, the Commission drafted the document [com (2010) 672] The Cap Towards 2020: Meeting the Food, Natural Resources and Territorial Challenges of the Future . On October 12, 2011, the Commission presented its reform project, which will be applied in the 2014-2020 cycle.9

This project implies a much sharper transformation to the cap than in the preceding decade, especially in the area of payments and the environment. It is still controversial, however, that while a system of payments is maintained that does not always incentivize agricultural modernization, greater effort is not being directed towards resolving the two major challenges to European agriculture. The first is excessive fragmentation of land property and the second is commercialization channels that generate an exaggerated gap between prices for consumers and producers, which the European citizen must pay for in taxes to finance agricultural aid and support prices very far from the revenue earned by farmers.


The cap is separated into two Pillars in the 2007-2013 Financial Framework. Pillar 1 is concerned with providing direct aid to farmers and supporting market measures. Both functions are entirely financed with community funds. The objective of Pillar ii is rural development and producing environmentally friendly public goods and driving competition in the agricultural and forestry sectors. According to Rural Development Regulation 1628/2005, the rural development measures are co-financed. States maintain autonomy in their design and the financing tool is the erafd.

Although the harmonization role of the cap is eminently sector oriented, it also plays an important role in territorial cohesion. First, the cap contributes to overall territorial cohesion from the moment when agricultural production takes place, mainly in low-income zones. This function has been made explicit in the Green Paper on Territorial Cohesion when it says, in regards to Pillar 1, “the support provided to farmers will also have an important territorial impact through the activities and income maintained in the rural zones and by fostering soil management.” Secondly, this unifying role is listed in Axes ii (agro-environmental program, Natura network 2000…), III and iv (diversification of activities) in Pillar ii. Axis I, modernization and competitiveness, is focused on productive activity.

Because this area represents practically all of cap spending under Heading 2 of the 2007-2013 Financial Framework (Table 1), the majority of what we have analyzed for this Heading is applicable to the greater cap budget. It will not be necessary to reiterate these findings, but rather to emphasize the most important.

Because of the reforms at the end of the century and beginning of the current millennium, cap spending was moderated in the annual budgets for fiscal years 2007 to 2010 (Table 6). Its growth during these years (6.6%) is substantially lower than during the total Budget (11.9%), as well as the entire cohesion policy (8.6%). The result is a loss in percentage share of total community spending. While it represented 43.4% in 2007, by 2010 it fell to 41.3% (Table 6). Despite this shrinkage, the weight of the cap in the 2010 Budget continued to be significantly higher than for cohesion policy (34.9%). Even so, the 58,498.2 million euros destined by the Union to the cap in 2010 imply an expense per community citizen of 116.7 euros.

8 While agricultural prices have risen by 50% over the past years, energy prices have jumped by 200% and fertilizers by 150%. In 2009, European agricultural income fell substantially, representing 40% of the rest of the economy. In that same year, income per resident in rural zones was 50% of that in urban zones.

9 This reform is centered on ten fundamental points: income aid to make growth more dynamic, more flexible and better adapted crisis management tools to deal with new economic challenges, environmental payment to preserve long-term productivity and ecosystems, supplementary investments for research and innovation, a more competitive food chain, stimulus for agro-environmental measures, encouragement of young farmers, stimulus for rural employment and entrepreneurship, fragile zones and simpler, more efficient cap.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 192, January-March 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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