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The Common Agricultural Policy is a system of state grants to farmers in the EU.

Why do farms warrant public funding in this way? Isn’t this, in effect a form of protectionism?

JJJ
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52d6c6af
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  • See also https://politics.stackexchange.com/questions/18805/why-do-farms-need-subsidies/18819#18819 - this is almost a duplicate. – MSalters Jan 21 '19 at 13:31
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    Just to clarify definitions - giving a private enterprise public funds is usually called a subsidy. Protectionism, on the other hand refers to government regulation (other than giving money) that makes life harder for foreign companies (often via tariffs). So they are similar, but not the same. – sleske Jan 30 '19 at 10:29

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Farmers receive subsidies in many many countries around the world, including EU countries prior to the CAP, the US, or Switzerland. One justification that's commonly offered is that self-sufficiency is a strategic goal that requires state support. The original policy was also devised when Europe was just coming out of food rationing that lasted for a decade after WWII. Nowadays, this productivity objective has partly been replaced with policies designed to safeguard the landscape and ecosystems through specific agricultural practices. And of course other sectors of the economy also receive subsidies and support from states in various ways.

So what's specific to the CAP is not that farmers receive subsidies, it's that they may not receive subsidies from individual states, instead getting them solely through EU programmes. That's why the CAP was such a large part of the EU budget for many decades (less so now). EU federalists hoped that other sectors would follow but that never happened. In other domains (industry, defense, research, education, healthcare, etc.) individual EU member states fund specific policies or directly subsidizes businesses within the bounds set by EU rules (in particular the rules on “state aid”).

Relaxed
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  • CAP was 39% of the goal EU budget in 2013. That seems vast. Is it? – 52d6c6af Jan 20 '19 at 17:27
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    @Ben Yes, that's what I am referring to in the second paragraph. It's not necessarily a lot of money relative to EU GDP or farm subsidies elsewhere but it's large compared to the EU budget because other “traditional” big spending items (including defense, education or subsidies to industry or transportation) are mostly covered through the member states budget, not the EU budget. The EU budget is far from negligible but not that large relative to the total GDP. – Relaxed Jan 20 '19 at 17:30
  • Thank you. UK CAP farm payments are about £3.6 billion a year for the current MAF (by my calculations). Do any other sectors receive comparable subsidy? – 52d6c6af Jan 20 '19 at 18:22
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    It is often argued that the reason for massive agricultural subsidies in the EU is that French and German farmers possess massive political clout. It is also argued that agriculture in those countries and throughout much of continental Europe is far less efficient than it is in the UK and the Anglo world. One reason for this has to do with ancient systems of land inheritance, which led to average farm sizes being far larger in Britain. This, in turn, led to much greater economies of scale and hence financial efficiency. Many in Britain argue that the EU "feather-beds" inefficient agriculture. – WS2 Jan 20 '19 at 19:06
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    @WS2 Of course small-scale inefficiency is more resilient, and resilience is a clear strategic goal of farm subsidies. – sgf Jan 20 '19 at 20:14
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    @WS2 Do you have any sources of increased efficiency? Certainly for cereal crops, there doesn't seem to be a significant advantage to the Anglo world over France and Germany: https://data.worldbank.org/indicator/AG.YLD.CREL.KG?end=2016&start=1961&view=map&year=2016&year_high_desc=false – James Jan 20 '19 at 21:15
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    @Ben this article puts fossil fuels subsidy at 6bn on th UK. https://www.google.com/amp/s/www.independent.co.uk/news/uk/politics/uk-government-pays-6bn-a-year-in-subsidies-to-fossil-fuel-industry-a6730946.html%3famp – Jontia Jan 21 '19 at 08:31
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    @Ben and this one puts Rail Industry subsidies at £6.4bn (including 2bn for HS2). http://orr.gov.uk/__data/assets/pdf_file/0006/39381/rail-finance-statistical-release-2017-18.pdf – Jontia Jan 21 '19 at 11:11
  • @WS2 Didn't the ancient system of land inheritance in the UK actually lead to farms being infeasibly small and fragmented? Hence the need for enclosure, mostly in the 18th and 19th centuries. – David Richerby Jan 21 '19 at 17:47
  • @WS The data I can find suggests that the average farm size is pretty much the same in the UK and France, about 55 hectares. – Mike Scott Jan 21 '19 at 21:53
  • @DavidRicherby The "enclosures" were all about taking over "common land", which peasants had had the right to use, and enclosing the land in side larger farms. Together with the English system of "entailment" of estates, where the eldest son of a family inherited everything, and the siblings got very little created very large estates - and also the class of people who were the modern world's first "capitalists". Some historians argue that without this the industrial revolution could not have happened. (continued) – WS2 Jan 21 '19 at 23:21
  • If you compare the situation in France it was quite different. Novels such as La Terre by Emile Zola illustrate the way that farm holdings got smaller and smaller as the population increased, due to the holdings having to be split into ever diminishing units. – WS2 Jan 21 '19 at 23:24
  • @MikeScott I would be interested to hear where you found that. Typically, in France, you will find "farmers" who have half a dozen cows, a BMW car and a job as a Cost Accountant or an Engineer in the nearby town. In Britain modern farming is more typically controlled by large corporations, who have taken over most of the great aristocratic land-holdings I described in my comment to David Richerby. – WS2 Jan 21 '19 at 23:29
  • @WS2 Official EU data contradicts me, and says UK farms are 50% bigger than French ones. But an awful lot depends on definitions. I have two acres of field and a couple of horses grazing it. That's definitely agricultural use for planning purposes. Do I count as a farm? – Mike Scott Jan 22 '19 at 09:27
  • @WS2 There might have been some historical merit to your original comments (less so today) but the last one is just nonsense. In fact, one common complaint about the CAP is in fact that it encouraged this type of agriculture and that a large share of the subsidies goes to large scale cereal farming in the north of France. In any case, that's hardly relevant to the question at hand. – Relaxed Jan 22 '19 at 11:17
  • @MikeScott It will also depend a lot on what you're producing (and therefore varies a lot between regions of France). But since the UK isn't producing much of its food and importing a lot of fruit and vegetable (where smaller scale operations are more viable than for cereal farming or meat and dairy production) the comparison is meaningless to begin with (i.e. it's not a model of efficient production of anything, it just accepted the fact it wasn't good at it and better off importing the stuff). – Relaxed Jan 22 '19 at 11:19
  • @Relaxed From a history course, I recall that in 1914 about 9% of the British workforce was in agriculture. The figure for France and Germany was well into thirty something per cent. The reason was that Britain had offloaded a large share of its food production, not only to the "Empire" but also to Europe. Hence WW2 food rationing went on long after the end of the war. It wasn't shortage of food, simply shortage of ships. Today Britain produces a far higher volume of its own food, and still sets aside land. Agriculture is organised completely differently in Britain to the rest of the EU. – WS2 Jan 22 '19 at 15:12
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    @WS2 Sure and it's also organised completely differently in different parts of the EU (or regions of France for that matter) and changed a lot since 1914 or even 1960 so what's the relevance of all this? – Relaxed Jan 22 '19 at 22:08
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Not all of the so-called "CAP" has its primary goal of agricultural output. For example, in the UK there are large areas of land where the weather and soil conditions are only suitable for low-intensity sheep farming. However grazing sheep have been a part of the stable ecosystem of these areas for centuries, and removing them because they are "uneconomic" would cause the entire ecosystem to change dramatically, by destroying important habitats for wildlife, increasing soil erosion and hence changing the ecosystem of downstream river systems, increasing the risk of long-burning peat wildfires, etc.

In effect the farmers in these areas are being subsidized to maintain the environment, not to produce meat and wool.

In fact the policy of subsidies to these areas was changed to focus on the environmental protection issues, since the original payment rules led to environmental damage through attempts at unsustainable over-production to maximize the subsidy payments.

The same also applies in the high-intensity sector of the UK, where subsidies have been awarded to improve the environment in opposition to maximizing output - for example by extending the uncultivated borders of fields to provide wildlife habitats and corridors, maintaining hedgerows rather than replacing them with fences (or removing them completely in arable farming areas) etc.

alephzero
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    In short, farmers are partly turning into the state's gardeners :) – Matthieu M. Jan 21 '19 at 08:55
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    Mind you, that risk of soil erosion is there because those sheep farmers first cut down the trees. The true environment would have been a forest, but the CAP doesn't pay for that. – MSalters Jan 21 '19 at 13:31
  • @MSalters - "True" environment is not always the best environment. For example, in some countries pastures are disppearing because they turn into intensive agriculture or, interestingly, woods, when pastures are abandoned. To keep diversity, the goal is not to maximize the area of woods (the "true" environment) but to keep some pastures to mantain biodiversity. – Pere Jan 21 '19 at 18:40
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    I find it curious, the notion of a "true" environment. As though there is something special about the random scattering of prehistoric seeds on the wind falling on fertile soil. Certainly an environment that consists of wheat grass is much better than the same land being covered varieties of weed grasses. – Stephen Jan 22 '19 at 04:11
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I'll quote from 2 books.

European Union Governance and Policy Making: A Canadian Perspective (2018). pp 214-215.

The main goals in the creation of the European Union (EU) were both political (to not have another war) and economic (to recover from the devastation of World War II). The means of achieving these goals were mainly economic, with the view that once the EU member states were economically integrated, another war would be almost impossible (see Theme 1of this book). Economic integration trumped all up until the 1990s, when other non-economic issues started to gain importance for the EU political elites and citizens. Agriculture was one of the first policy areas where market integration was seen as highly important. The six founding member states of the European Economic Community (EEC) (Belgium, Luxembourg, France, Italy, the Netherlands, and West Germany) considered the Common Agricultural Policy (CAP) a necessity in order to cope with food shortages stemming from the aftermath of World War II, prevent at any cost such future shortages, and stabilize income for farmers. The CAP was an attempt to reach these objectives by creating a common agricultural market that would facilitate the movement of goods and factors of production among the European countries.
      To achieve its original objectives, the CAP introduced several policy instruments, which had important domestic and international consequences and influenced the evolution of the CAP through the years. Over time, the EU has become larger, more diverse, increasingly focused on sustainable development, and competitive in a highly globalized world. Thus, the main question this chapter sets out to address is whether the objectives of the CAP have been altered in response to new domestic and international conditions. The chapter analyzes the impacts of the main agricultural policy instruments and whether the pressure for change was strong enough to result in policy that sustains an efficient and internationally competitive sector.

Mark Corner PhD on Karl Barth - University of Durham (1978). BA and MA in History - Cambridge University (1976). The European Union: An Introduction (2014). p 123.

There are many ways in which the Common Agricultural Policy (CAP) provides a perfect introduction to the European Union (EU) at work. In the first place, it raises fundamental economics questions concerning the nature of a managed market and, in particular, the way in which the EU organises a market in agricultural products. In the second place, it is a very important part of the work of the EU and involves a significant slice of its budget (today about one-third, though in the past it has been much more). Third, it is a policy that, in the jargon, involves ‘actors’ at many different levels. On the one hand, the EU comes under international pressure ‘from above’ – from particular nations such as the USA and institutions such as the World Trade Organization (WTO) – and, on the other hand, it faces pressure ‘from below’ involving particular countries (France is often singled out, but Germany and the United Kingdom have been just as robust in seeking to exercise influence). Fourth, the CAP throws a great deal of light – in a very practical way – on questions that are often discussed in a (sometimes) stiflingly academic manner concerning who really has power in the EU (a debate that usually leads to some conclusion claiming, for instance, that the Commission is ‘really’ steered by the member states). Fifth, the CAP is controversial and much discussed. People tend to know about ‘butter mountains’ and ‘wine lakes’, not to mention tales of farmers being ‘paid to do nothing’ under various attempts to reform the CAP.