The Common Agricultural Policy and the Common Fisheries Policy - Activity

This Activity is designed to be used in the classroom or as a homework task to support the teaching and learning of the Common Agricultural Policy and the Common Fisheries Policy.

The Common Agricultural Policy and the Common Fisheries Policy - Activity

Both the Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP) are highly controversial subjects that create emotional responses in all who are directly involved and many who are not directly involved. This Activity looks at both policies and then poses a number of questions relating to the issues that arise from them. Many of these issues relate not just to the immediate stakeholders involved, but also to a wide range of other people, groups and situations. As such, it is essential that higher order skills are utilised effectively when dealing with these normative issues.

The Common Agricultural Policy

The origins of the CAP were born in the aftermath of the Second World War. Widespread destruction to industry, re-allocation of resources on a massive scale towards military output, dislocation of population and labour all meant shortages of food and a desire to increase self sufficiency in food within Europe. The CAP was formally introduced in 1962 and aimed to achieve the following:

  • Increase production of food in Europe
  • Increase productivity of food production in Europe
  • Reduce dependence on imported food
  • Introduce a degree of price stability for consumers
  • Introduce a degree of income stability for farmers
  • Increase the overall standard of living of all those involved in agriculture

Effectively, the CAP was a method of correcting a perceived market failure through intervention in the market to manipulate supply. The methods used were subsidies, buffer stocks, import restrictions (from outside the EU), intervention pricing and income guarantee schemes.

Industry next to agriculture

The EU's agricultural policies are not always universally welcomed. © Photolibrary Group

The policy was, in part, extremely successful. Output did indeed rise - often also associated with increased productivity and farmers in many countries had a more stable and predictable environment to work in. Some farmers, protected from the working of the free market, responded positively to the offers, seeking opportunities to expand. With subsidies and income guarantee schemes, many farmers borrowed in order to finance expansion, assured of good returns in the future.

As the policy developed, it also became increasingly clear that there were massive problems associated with it. Productivity gains were not uniform; many British farmers have argued that they are very efficient compared to some of their European counterparts. The cost of setting up and running the CAP was huge. Some 50% of the EU budget in 2000 was spent on the CAP (€40 billion or £29 billion).

Method of Support Cost (billion €)
Price support €10.8 (£7.5)
Direct payments €25.5 (£17.8)
Rural development / Agri-environmental schemes €4.2 (£2.9)

Source: DEFRA

In addition, supply had risen dramatically, far outweighing demand. In order to maintain the system, huge stocks of non-perishable products were kept in storage, in itself costing massive amounts of money. The moral issue surrounding the policy when large parts of the world's population were starving did not go unnoticed but the problems of distributing surplus food to such countries could lead to even more market distortion in those countries and incurred the wrath of other nations who sold their goods to these countries.

The drive to subsidies was also in direct contrast to the wishes of many nations to see free trade. As the negotiations continued through the General Agreement on Tariffs and Trade and latterly through the World Trade Organisation (WTO), the pressure on Europe to open up its markets has become intense.

Reform of the CAP was inevitable but the way in which it should be reformed caused massive protest. Farmers throughout Europe all had different arguments as to why their particular branch of farming should be given special treatment. Arguments between countries as to who was more productive became more commonplace and stories of farming communities being destroyed more widely reported.

The main thrust of reforms has been as follows:

  • Reducing production through quotas and set aside schemes
  • Encouragement to farmers to diversify
  • Incentives to produce organic products to reduce the environmental impact of intensive farming
  • Direct payments given to farmers in compensation for cuts in prices given to them for their products - a transition towards further integration of a free market in agriculture.

The Common Fisheries Policy

At the heart of the CFP is the fact that it represents a classic market failure due to a lack of property rights. Because no-one effectively owns the seas, there is no way of controlling the extent to which fishing impacts on fish stocks. While prices are reasonable and catches can be made, there is an incentive to continue fishing - after all, if one fisherman stops because of concerns over fish stocks, there is nothing to stop other fishermen carrying on.

Successive scientific research has pointed to a rapid decline of fish stocks in a number of areas through over fishing. The delicate ecosystems on which the marine environment relies could be seriously damaged and as a result some species could become extinct or unable to survive in sufficient numbers to ensure long-term viability.

As fish stocks declined, the efficiency of fishermen in catching what they w ant increased. As a consequence of this move, larger 'factory ships' sought to exploit economies of scale. There were then accusations of large amounts of waste, with fish being caught indiscriminately and much of the unwanted fish being thrown away - dead.

As supply fell, prices on fish markets rose and went some way towards protecting the incomes of those in the fishing industry. Such problems could not, however, be ignored in the longer term.

The CFP was set up in 1983 with the following aims:

  • Monitoring fish stocks
  • Protecting the standard of living of those in the fishing industry
  • Securing the interests of the consumer
  • Developing a responsible approach to fishing and developing a sustainable approach to the fishing industry in Europe
  • Monitoring the environmental impact on the eco-systems and marine environment as a result of fishing activity
A fisheries protection vessel in Hull

Image: A fisheries protection vessel in Hull. What cost maintaining the CFP?

To implement some of these measures, fishing quotas were introduced limiting the amount of fish that could be caught by each boat. To further enforce this, the number of days and the time of year in which boats could go out fishing were also subject to restrictions in an attempt to avoid fishing during key breeding seasons. The size of nets were controlled to avoid catching small immature fish and, recently, fishermen have been given sums of money to scrap their boats and to help them find alternative employment.

In some cases, even more so than with agriculture, fishing communities are very localised and rely heavily on the fishing industry. As boats are taken out of commission, quotas increased and costs rise, fishing communities are being destroyed, not helped by the large factory ships that fish and process at the same time. The processing of fish could have provided some of these communities with alternate means of employment but this, too, is now less likely.

It seemed, despite these actions, that the problem of reduced fish stocks was not getting any better. In response, the Fisheries Commission at the EU are now proposing complete bans on the fishing of some species, measures which the fishing community in the UK are very angry about. They see such measures as sounding the death knell for fishing in the UK, arguing that the effect on fishing businesses will be so severe that if fish stocks do recover, there will not be a fishing industry left to exploit it! Many fishermen also disagree with the scientific evidence on fish numbers, claiming that the science behind the measurements is flawed.

Questions

  1. Use supply and demand analysis to explain the impact of the following market intervention methods:
    • Farm subsidies
    • Income guarantee schemes
    • Intervention payments
    • Fishing quotas
  2. Outline the difficulties facing the EU in seeking to reform the CAP while seeking to maintain the standard of living of those employed in the agricultural industry.
  3. Examine the case for and against the use of EU surplus food products being used to help relieve starvation in less developed countries.
  4. Examine the case for and against the imposition of a total ban on the fishing of cod.
  5. Examine the effectiveness of policies designed to support rural and coastal communities through the reforms of the CAP and the CFP.
  6. How far might extending property rights solve the problems facing the fishing industry?

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