Tear down the Common Agricultural Policy

BusinessDaily.eu By Mikkel Roland Egesberg – European leaders are right now looking at the future EU budget. The EU’s annual budget is equivalent to around 1% of the Union’s national wealth, which is about EUR 244 per EU citizen.

But much of this is channeled into the Common Agricultural Policy (CAP) (around 42%). The CAP was born in 1962 after a decade of severe food shortages during and after World War II.

The CAP is often explained as the result of a political compromise between France and Germany: German industry would have access to the French market; in exchange, Germany would help pay for France’s farmers. Germany is still the largest net contributor into the EU budget; however, as of 2005 France is also a net contributor and the more agriculture-focused Spain, Greece and Portugal are the biggest beneficiaries – Watch 2009 net contributions here. (Transitional rules apply to the newly admitted member states, which limit the subsidies which they currently receive).

Meanwhile particularly urbanised member states, such as the Netherlands and the United Kingdom, are much smaller beneficiaries, which is why UK Prime Minister Margaret Thatcher in 1984 negotiated a rebate for the UK contribution to the EU budget. At that time a high proportion of the EU budget was spent on the CAP (80% vs. around 42% today).

In May 2007, Sweden became the first EU country to take the position that all EU farm subsidies should be abolished, a trend that hopefully grows.

The status in the EU today is not severe food shortages. We have a lot of efficient farmers, but also some that are not, and the CAP reward them. It’s time we tear down the Common Agricultural Policy and let the market reward efficient farmers, and shut down those that are not. It should not be EU citizens role to subsidize farmers, instead the money should be spent on infrastructure, research and development (R&D).

Credits to EUROPEAN COMMISSION and Wikipedia

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