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Common Agricultural Policy


One of the conditions of membership of the common market was acceptance of this policy, which was written into the agreement in order to protect the European farming industry. It is essentially a protectionist policy as far as farm food prices are concerned but need not remain so once the level of efficiency within the member countries rises sufficiently to bring European prices down to those charged by comp>etitors. It was the necessary loss of Commonwealth low priced farm products which was a strong argument against Britain's membership of the market, but the long-term view prevailed, i.e. the view that the establishlent of a self-sufficient European Community was an asset that would outweigh temporary inconvenience.

The operation of the Common Agricultural Policy is too complex to explain in detail and can only be outlined here. Gencrally speaking, the EU. fixes minimum prices for various farm products through the European Commission. Imports from nonmember countries must not fall below these prices and where goods are bought below the price then the Commission makes a levy on the importing country to the extent of the difference. On the other hand, where produccrs in member countries have surplus stocks for sale then the Commission may buy in these stocks at a figure slightly below the minimum price. It will also pay out an amount by way of restitution where members sell products to customers outside the market at world prices below the agreed minimum prices. The option to buy in surplus stocks is referred to as buying at an intervention price. As another way of helping the uneconomic farmers within the Community, the Commission is also empowered to aid the modernization of the farms concerned by making cash grants out of the common budget.


Reference: The Penguin Business Dictionary, 3rd edt.