Aims of CAP - Economics Help

Common Agricultural Policy

Stated Aims of CAP

To Increase Productivity
To Increase Farm’s incomes
To Stabilize markets
To assure the availability of supplies
To ensure reasonable prices for consumers

The most important is the second aim of increasing farm incomes

Why Subsidise Agriculture?

Declining income of farmers.

With increased income in the economy the proportion spent on agriculture is low. The YED of food is low. Therefore farmers lose out during economic growth.

Positive Externalities of farming.

If farmers go out of business, rural communities will suffer. This could also have consequences for the environment and tourism

Fluctuating prices

PED and PES for agricultural commodities are low therefore, prices can fluctuate significantly, causing problems for farmers and consumers

Farmers subject to unpredictable shocks such as disease and bad weather

Price Support in the CAP

This CAP policy involves a system of “Target Prices” and “Variable Import levy”

CAP involves

Import Tariffs on Cheap Imports
Guaranteeing Minimum Prices for Farmers - Buying Surplus if necessary

Essays and Revision Notes On Common Agricultural Policy CAP

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