Lecture 7
The CAP

The
Solow Growth
Common
Model
Agricultural
Capital Mkt
and Fisheries
Integration
Policies

Common Agricultural Policy (CAP)

Handout
Simple Price Support with Tariff

Food Tax
Interpretation

Farm Size Distribution in 1987
Share of EU-12
Average
Farm Size N. Farms as Far,m Land in
N. Farms Farm Size
(hc) Sare of Total Size Class
(hc)
7.1%
1––5 3.411 49.2% 2.4
7.
5––10 1.163 16.89% 7.1% 7.0
10––20 0.936 13.5% 11.5% 14.1
20––50 0.946 13.7% 25.7% 31.2
> 50 0.473 6.89% 48.6% 117.6
Total 6.929 100% 115 (mill ha) 16.5
Source: Table 3.4--4.1, The Agricultural Situation in the Community, 1993

Average Size
(hc)
1-5 5-10 10-20 20-50 >50

The CAP Causes Problems
1: The supply problem

Handout
The Supply Problem

The CAP Causes Problems
2: World Market Impact

The CAP Causes Problems
3: Budget & Storage

The CAP Causes Problems
4: Effect on Farm Size

Other CAP Problems

CAP
Reforms

Evaluation of
Today’s CAP

Farm Incomes and CAP
Support Inequity

Future Challenges
Eastern Enlargement:
number of farms will rise from 7 million to
30 million
farmland rise from 130 million hectares to
170 million.

EU Newcomers: Farm
Facts

Summary
• Enlargement & the CAP
• CAP reforms & Doha Round
• Simple Price changes with tariffs

➡Competition Policies, Regional Policies and
Environmental Policies in the EU
Read El-Agraa, A. M., The European Union:
Economics and Policies, 6th ed., pgs. 388-399
and 187-199, 337.142 AGR.