The Negative Effects of the CAP on the EU

In the wake of an increasingly global economy, one that has seen the emergence of large trade blocs and common markets, the nations of the world have been competitively forced into becoming more economically integrated year after year. In light of hundreds of years of consumer theory, this would almost certainly lead one to a conclusion of necessarily lower prices and more efficient production on almost all products. However, as is the case in many nations, the European Union has succeeded in creating an artificial market for agricultural products through the implementation and use of a Common Agricultural Policy, which has had grave implications for producers and consumers alike. It is the focus of this analysis to outline the framework of the Common Agricultural Policy of the European Union, to analyze strictly the negative effects it creates on welfare, and to attempt to exhibit such effects through an exclusive examination of Great Britain’s struggle with the Common Agricultural Policy.

Background of the Common Agricultural Policy

The Common Agricultural Policy (CAP) is a policy, set forth by the European

In 1973, Great Britain entered the European Community and therefore accepted the Common Agricultural Policy. The acceptance of the CAP caused Britain to move from an agricultural market of free trade and cheap food to an agricultural market that became the pawn of the European Union’s protectionism (Harvey, D., 2001, p.2). The CAP’s main goal was “to keep agricultural markets stable, ensure that farmers earn a fair living, and provide consumers with affordable food supplies” (Thinkquest Library p.2). The CAP achieved many goals it set out to accomplish, however the very generous price support to farmers and technological innovation has caused surpluses that are not being offset by a decreasing demand.

-- Covers the transition of some products from traditional imports to exports as well as the CAP’s effects on the EU’s budget.

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