The Common Agricultural Policy
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Transcript of The Common Agricultural Policy
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THE COMMON AGRICULTURAL POLICY
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EXPORT SUBSIDIES
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IMPACT ON INTERNATIONAL TRADE
Lower export subsidies
Higher direct payments
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IMPACT ON INTERNATIONAL TRADE
EU prices closer to world prices
International agricultural trade liberalization
Fall in cereal prices by 50%
Fall in income of African countries, which were making profits on selling goods to Europe (under Lomé convention)
An increase in the export price competitiveness of basic EU food and agricultural exports for African countries
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FURTHER REFORMS
The Agenda 2000
“multi-functionality” of farming activities
The reform in 2003
A reduction in direct payments for bigger farms to finance the new rural development policy
CAP “Health Check“ 2008
Increase of milk quotas, ...
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„CAP VS. AFRICA“ CASE
African exporters seem to be sensitive to EU reforms
Pros and cons of CAP reforms (from African point of view)
Future prospects
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PROS AND CONS
+ Large food surpluses exported
to Africa as a food aid (before Mac Sharry)
Certain African (sugar) exporters profited from Lomé convention (€500 mil. in 99/2000)
— 2001: free access to the market
granted to the least developed countries under „Everything Buts Arms“ initiative.
Problem? – sugar, rice and bananas excluded
After Mac Sharry reform, EU price reductions drove some African exporters out of the EU market
Undermining of African markets by price-competitive EU goods (wheat) – „markets of last resort“
EU policy emphasis shift – „from quantity to quality“
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lower value food
hig
her v
alue
food
Ql
Qh
PPF
SITUATION WHEN AFRICA REJECTS TO
TRADE WITH EU
Africa
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TRADING SITUATIONRICARDIAN MODEL
Africa has comparative advantage in producing lower value food
lower value food
hig
her v
alue
food
Africa EU
hig
her v
alue
food
lower value food
PPF
PPF
IA
IFT
TT TT
Ql
QH QH
QH
IFT
IA
PA = CA
PFT
CFT
PA = CA
PFT
CFT
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FUTURE PROSPECT
African exporters:
lower value food and agricultural products distributors
European exporters:
higher value food and agricultural products
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CONCLUSION
Trend in reforms of CAP – lower direct payments
Decoupling:
↑ economic prosperity
↓ negative impacts on the environment
From import levy to direct subsidies – before and after Mac Sharry reform
Africa has to trade with lower value food
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Petra AndrlíkováRadovan Parrák
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REFERENCES
Institure for Agriculture and Trade Policy: The Common Agricultural Policy: A Brief Introduction, Prepared for the Global Dialogue Meeting (May 14 and 15, 2007, Washington, D.C.)
European Economic Policies: Common Agricultural Policy; Laurent Weill: Université de Strasbourg, Charles University - Prague , April 2009
Policy Notes 2009/7: The Impact of Common Agricultural Policy (CAP): Reformon Africa-EU Trade in Food and Agricultural Products
http://ec.europa.eu/budget/index_en.htm