Changing Commodity Prices Impact On Common Agricultural Policy Economics Essay

Changing Commodity Prices Impact On putting green sylvan constitution Economics EssayIn the wake of an progressively sphericalized economy, one that has seen the emergence of large change over blocs and common marketplaces, the nations of the world obligate been competitively forced into becoming more(prenominal) economically corporate year afterwards year. In light of hund rose-cheekeds of old age of consumer theory, this would almost certainly conk one to a conclusion of necessarily baseer bells and more competent production on almost all products. However, as is the case in umteen nations, the European Union (EU) has succeeded in creating an artificial market for country products finished the enforce of a popular Agricultural insurance (C.A.P).The commonalty Agricultural insurance policy is a form _or_ system of government, set forth by the European Union (EU), which is comprised of a set of rules that regulate the production, work, and processing of agra rian products. The C.A.P shortly accounts for almost fifty percent of the EU budget, however, this number continues to decrease everyplace the years. The C.A.P is significant in that it emblemizes Europes switch from sovereignty on a home(a) level to a European level. (McDonald and Dearden, (2005), European Economic Integration, Prentice Hall, quaternate edition.)Common Agricultural Policy (C.A.P).The EUs bucolic policy dates gumption to 1957, when the creators of the parallelism of Rome defined the general objectives of a common sylvan policy, post-war nutriment shortages still fresh in minds. The principles and mechanisms of the Common Agricultural Policy (C.A.P) were adopted by the six founding members of the European Economic Community, and in 1962 C.A.P came into force.C.A.P was intentional to secure Europes self-sufficiency in intellectual nourishment production. The basic principles of C.A.P remained the same for decades guaranteed prices for rude products, ofte n above world price levels, and subsidies based on the bar of production, with little concern for the problem of surplus production.C.A.P has been the most fully integrated of EU policies. In the 1970s, nearly 70% of the EU budget went into agriculture. afterward a series of remediates, agriculture expenses in the budget confirm dropped to 35 % for the 2007-2013 financial period. Over the same period, more money (9.7%) has been allocated for rural instruction and the expansion of EUs different responsibilities. (Common Agricultural Policy (C.A.P).European journalism Centre (EJC) 2009).Common Agricultural Policys reforms.The C.A.P has had a long hi twaddle of reform, and is nowhere near perfect. The foremost attempt at reform came just ten years after its implementation. In 1968, the Mansholt Plan was put into effect in an attempt to abbreviate the number of hoi polloi in the agriculture business and to promote more efficient means of agricultural production. In 1972, the e xtensive feed surpluses were targeted by the creation of structural measures designed to modernize European agriculture. This attempt at reform is generally regarded as a failure because many of the problems it well-tried to fix were still left unchecked. In 1983, a publication was released entitled, The chiliad Paper, which sought to balance the ongoing disparities betwixt supply and demand through improvements in production. In 1988, the European Council agreed on various reform measures. The most most-valuable was the agricultural use guideline, which limited the percentage of C.A.P expenditure in the overall budget. In 1991-92, the future of the C.A.P was addressed through what has been called, the MacSharry Reforms. The hear aspects of the reforms included the cutback of agricultural prices to make the products more competitive, compensation for upraiseers that incur release a leaving in income, and environmental protection. The reform of 1992 was generally regarded a s successful, with positive set up on European agriculture. However, international trends, the enlargement towards Central and Eastern Europe, the breeding of the single currency causing budget constraints, the increasing fight of products from non-member countries, and a new orotund of World Trade Organization negotiations forced supercharge adaptation of the C.A.P (europa.eu.int). In July 1997, Agenda 2000 was created to address many of the important issues facing the EU and the C.A.P. The key focuses of this new agenda are the reinforcement of the competitiveness of agricultural commodities in domestic and world markets, the promotion of a honest standard of living, the creation of extra sources of income for maturateers, a new rural using policy, revamped environmental considerations, better food flavor and precaution, and the simplification of C.A.P legislation.The first cockle of C.A.P reforms had decreased over-production, brought down providedter mountains and e mptied the milk lakes. But by 2002, some(prenominal) factors made it a necessity to undertake major review of the EUs farm policy, including several food crises, the EUs planned eastward expansion, World Trade Organizations objections to the C.A.P and the sustainable suppuration strategy defined during the Gothenburg Summit. In 2003, Franz Fischler, then the focussinger for cultivation, Fisheries and country culture, presented a C.A.P reform package he described as the most ingrained improvement to the EUs agricultural policy ever. His main proposals includeddecoupling of subsidies and production extravagantly requirements of environmental, food precaution and animal welfare standards as prerequisite for acquire subsidiesmore money to rural development as opposed to repoint and market subsidiescuts in intervention prices in many sectorsAfter heat up debate, farm ministers agreed to go through with the C.A.P reform. Although, the link between farm subsidies and the amount of production was not totally abolished, as originally proposed, a major shift did take place, with the bulk of farmers income now coming from turn to aid, based on the size of their holdings and not production. (Common Agricultural Policy (C.A.P).European Journalism Centre (EJC) 2009).The reform in any case prepared the EU for the WTO Doha round of international trade liberalization talks, where the EU offered to eliminate export subsidies completely by 2013. The talks were put on hold in 2006. any(prenominal) the result of the trade talks, the EU remains the worlds largest importer of food, especially from developing countries.A number of sensitive sectors were left out of the 2003 C.A.P reform, including sugar, wine, bananas and other fruits and vegetables. Since then, a scholarly reform of the sugar sector was agreed on in 2005. In 2006 and early 2007 the Commission also proposed reforms for the wine, banana and fruit and vegetables sectors. (Common Agricultural Policy (C.A. P).European Journalism Centre (EJC) 2009).Under the Barroso Commission, Mariann Fischer Boel took over stewardship of the renamed Agriculture and Rural growth DG. She continues to strive for higher food quality and safety, efficient application of the Rural Development Policy 2007-2013, energy crop schemes and simplification of the C.A.P and cutting of red tape.The enlargement of the EU from 15 to 27 members has brought new challenges to C.A.P the number of farmers in the EU increased by over 70%.Meanwhile, farming organisations be possessed of welcomed the EUs decision to set a minimum 10% target for the use of biofuels for transport by 2020. The EU has also created the possibility for agriculture to run for a bigger role in the fight against climate change, jibe to the COPA organisation.A key aim of the 2008 French EU Presidency was to realize the C.A.P up to speed with new global challenges. To this end, with the backing of the Commission and a vast majority of member state s, four texts were adopted in November 2008, instruction on rural development, direct aid to farmers, and regulation mechanisms for the single market (dairy quotas, interventions, etc.). (A health check( peak)by Europa (European Commission) (2009)).These agreements officially launched the EU debate on the future of the C.A.P post-2013, also taking stock of global food balances, competitiveness, sustainable development, and the economic zing of rural areas.The Czech Presidency of the EU, in the first semester 2009, failed to secure an agreement on the future of the C.A.P post-2013. However, the Agriculture Council did agree unanimous conclusions on agricultural product quality and the retargeting of aid in Less Favoured Areas (LFA). (Common Agricultural Policy (C.A.P).European Journalism Centre (EJC) 2009).The quality policy paves the way to clearer tailling and, it is hoped, better conversation and understanding among farmers, wholesalers and consumers. The Council also said it would consider national and private food certificates that follow Commission good practice guidelines and pledged to cut red tape for farmers and producers who want to apply for EU schemes like the organic label and geographical indications.The LFA programme is designed to improve the targeting of aid to farmers in areas with natural handiC.A.Ps. Member states have been asked to produce maps by 31 January 2010, including specific flesh out on climate, soil, and terrain. (Common Agricultural Policy (C.A.P).European Journalism Centre (EJC) 2009).Global food prices and C.A.P reform.The European Unions common agricultural policy protects and subsidizes agriculture so heavily as to bring serious social losses to the Economic Union. The policy creates inefficiencies in the agriculture sector as well as other sectors of society such as manufacturing, textiles, and service industries. Furthermore, there have been many economic consequences of the C.A.P, including the high level of protec tion, the burdens on consumers, taxpayers, and the EU budget, environmental damage, the trauma to international trading relations, and the failure to raise farmers incomes (The Common Agricultural PolicyPast, Present and Future. Brain E.Hill. Metheuen Co. Ltd, London. (page 117). There are a lot factors prudent of the food price rise speculation in commodity markets, low global food stocks, subsidies, high cost of energy, concentration of important agricultural markets in the hands of a few firms, trade restrictions by important exporters to protect domestic consumers, depreciation of the US dollar and lower productivity growth due to low investment in agricultural lookAs global priceshit new highs,the European Commission had to intervene. start-off they sold its intervention stocks, removed the obligation to set aside 10% of arable land for the 2008 harvest, increased milk quotas by 2% and hang up import duties on cereals. (Global food prices and poll reform by Euractiv. (2 009). Then, theCommissionproposedpolicymeasures aimed at improving market transparency. It decided to enhance observe ofdevelopments in agricultural markets andanalyze the impact of price speculation.The EU decision maker also announced plans toinvestigate the functioning of the food supply cosmic string for potential unfair commercial practices, which may be holding back competitionanddriving up prices.Overall, the Commissionspolicy to address rising global food prices comprises threestrands of actionMitigating short and medium-term effects of the food price shockby monitoring price developments and speculative investments, changing the CAPIncreasing agricultural supply and ensuring food security in the longstanding termby strengthening the sustainabilityof EU and global policies on biofuels, boosting agricultural researchto increase productivity and maintaining an open but vigilant GMO policy,and add to the global effort to help the poorby promoting an open trade policy and co ncluding the Doha round of World Trade government activity (WTO) talks,offering humanitarianaid and supportingagricultural and rural development policy changes in developing countries. (Global food prices and CAP reform by Euractiv. (2009).C.A.P effects upon the environment.The C.A.P has also caused concern for the environment as well as concerns for the economy. Because of the subsidies provided to farmers, they have the incentive to produce more agricultural products because they will throw more money. The C.A.P price policies have encouraged intensive farming and the utilise of antibiotics, pesticides, and nitrates. This has put a strain on the environment and has interested the people of the European Union. The policy did not foresee farmers overproducing and over using chemicals, but this has become an indirect cost created by the policy. Europeans are also concerned with food safety because of farmers using so many chemicals in production. Farmers have been getting away wit h using the chemicals and unsafe practices because of the limited food safety regulations. Policymakers believed that high price supports would lead to higher food safety and quality. noble support prices do not increase either food safety or quality indeed, minimum prices and intervention guarantees encourage low quality and standardized produce (The European Community Economic and Political Aspects. (V.Lintner and S.Mazey. Mcgraw-Hill, Maidenhead. (page 107) (1991).CCL C.A.P has been seen as a monument to the determination of politicians, especially in the early years of integration, to work together for a united Community. It has become a symbol of co-operation. C.A.P has economic and social dimensions.There are many reasons put front to explainrisingfood prices. These range from changing eating habits to trade restrictions and climate change. TheEuropean Commissioninsists that there is no connection between EU agricultural subsidies and rising food prices, andstresses that the C.A.P ismuch less trade-distorting than the American policy.(Global food prices and CAP reform by Euractiv. (2009).ANNEXES see to it 2 EU agricultural payments, 1963-2013.Source Agriculture 2009 revised.pptFigure 3 EU expenditure 1988-2006.Source Agriculture 2009 revised.pptFigure 4Source Agriculture 2009 revised.pptFigure 5 and 6Source Europa.REFERENCESWEB SITESGlobal food prices and CAP reform by Euractiv. (2009)http//www.euractiv.com/en/cap/global-food-prices-cap-reform/article-184329Accessed 15th February 2010.Common Agricultural Policy (CAP) by European Journalism Centre (EJC). (2009)http//www.eu4journalists.eu/index.php/dossiers/english/C8Accessed sixteenth February 2010.Agriculture CAP by Europa (European Commission) (2009)http//europa.eu/pol/agr/index_en.htmaccessed 16th February 2010.The Doha Development Round of trade negotiations understanding the issues by OCDE. (2008).http//www.oecd.org/ enter/45/0,3343,en_2649_201185_35738477_1_1_1_1,00HYPERLINK http//www.oecd.org/doc ument/45/0,3343,en_2649_201185_35738477_1_1_1_1,00en-USS_01DBC.htmlHYPERLINK http//www.oecd.org/document/45/0,3343,en_2649_201185_35738477_1_1_1_1,00en-USS_01DBC.htmlHYPERLINK http//www.oecd.org/document/45/0,3343,en_2649_201185_35738477_1_1_1_1,00en-USS_01DBC.htmlen-USS_01DBC.htmlAccessed 17th February 2010. apology EuropeOne vision, one market Europe as a success story? (2008)http//www.groupedebruges.eu/Word docs/manifest_chapter_4_(draft_version_1).docAccessed 20th February 2010.LECTURELecture 11 Agriculture.SEMINARSeminar 11 Agriculture.Agriculture 2009 revised.pptREPORTSCAP reform document 970 Future CAP.pdf 981 Future CAP.pdfCAP cut across Open Europe CAP report.pdf