Discuss the relative merits/demerits of an agricultural policy oriented to price reform rather than one based upon structural reorganisation "The common market shall extend to agriculture and trade in agricultural products. Agricultural products' means the products of the soil, of stock-farming and of fisheries and products of first-stage processing directly related to these products....The operation and development of the common market for agricultural products must be accompanied by the establishment of a common agricultural policy among the Member States" (1) >From the beginning of the European Union, EU policy has given emphasis to the agricultural sector. To this end, a Common Agricultural Policy (CAP) was established in 1963. (2) Provisions for this policy were made in the Treaty of Rome. The aims of this policy were to increase agricultural productivity, to ensure a fair standard of living for the agricultural community, to stabilise markets and to ensure reasonable prices for the consumer. (3) This is unusual in the context of the Treaty of Rome which provided for free trade and movement of resources. Agriculture was ill-adapted for this approach. Protection was given, not only by customs duties, but also by a variety of agricultural policies. This essay will discuss the merits and demerits of a the pre-1992 CAP with its emphasis on price reform, in comparison with the post-1992 CAP which was oriented to structural reform.
It cannot be denied that there were merits of the pre-1992 price reform policy. There was a bountiful food supply with an increased variety and quantity of food. Farmer's yields increased, particularly the large farmers. Producers were protected from the external market due to community preference and, therefore, domestic agriculture could develop. There were also spin offs in food production. Although some of the policies created good returns for farmers, the demerits of said policies far...