The reform of the European Union's common agricultural policy and some implications for Malta in the context of European Union membership

Abstract

The Common Agricultural Policy of the EU was the first common policy which came about as a result of a delicate balance of the national interests of the contracting parties to the Treaty of Rome. The inclusion of agriculture in the Treaty was imperative due to its implications on other sectors, implications which could have hampered the progress towards increased integration. A discussion on the development and continued existence of the policy requires an analysis beyond what could be afforded by basic economic theoretical reasoning, as the policy, whilst initially achieving the principal objectives set out in the Treaty of Rome, soon developed into a policy that was beyond economic rationale. A justification in this respect may be found by the application of public choice and rent seeking theories to the context of European Agriculture which would immediately show that the small yet better organised and highly motivated farmers' interest groups have been able to shape a policy and secure considerable transfers from the large yet less organised consumer lobbies. Since its inception, the Common Agricultural Policy was and increasingly became an administratively complicated policy, a fact that may have contributed to its derelict development into a financially impeding policy and that had harmful affects to other contexts such as the environment and the Community's international trade relations. These difficulties were compounded by the various accession of new member states The first attempt to reform the policy in the late 1960s was largely unsuccessful, as would be other attempts during the period preceding the MacSharry reforms of 1992. Whilst prior to the MacSharry reforms the main reforming catalysts were budgetary considerations, these reforms marked a radical shift in this process. With the introduction of the compensatory payments to mitigate the reduction in price support, budgetary expenditure was bound to increase. However, this system would allow for greater transparency of the cost of the Common Agricultural Policy, that apart from meeting the requests of increasingly stronger consumer and environmental interest groups established the principle that the Common Agricultural Policy was no longer an open-ended policy.

The latest reforms agreed in Berlin in May 1999, had been launched by the Commission's Agenda 2000 proposals which sought to further modernise the policy, bringing it closer to world trade obligations, prepare the Community for further enlargement and incorporate rural policy as a second pillar to the Common Agricultural Policy. The outcome of the Berlin agreement, as is generally the case with major reforms in the EU, turned out to be a watered down version of the original proposals which might make further reform, before the end of the implementing period which was set at 2006, unavoidable. Considering the vast provisions of the Common Agricultural Policy it will require a considerable effort by the Maltese authorities to adopt the acquis to Maltese agricultural. Moreover, an important fact that has to be taken in consideration is that Maltese agricultural activity is limited by natural conditions which impede the Maltese farmer from achieving the level of competitivity essential at EU level. The survival of Maltese agriculture thus requires an administrative and cultural change which is ideally brought about by closer cooperation between all interested partners. In the context of membership apart from possible negotiated derogations and transitional periods, the inclusion of rural policy in the latest Common Agricultural Policy reform secures an invaluable safeguard to the Maltese agricultural sector.