The Common Agricultural Policy 
   (CAP)
    • The Common Agricultural Policy (CAP) had emerged from 
     over a decade of severe food shortages during and after World 
     War II. Near-famine conditions in much of postwar europe 
     made food security s national priority. 
    • The CAP is often explained as the result of a political 
     compromise between France and Germany: German industry 
     would have access to the French market; in exchange, 
     Germany would help pay for France's farmers.
    • France wanted to shift the cost of subsidizing France’s large 
     and unproductive agricultural sector from the national to the 
     European level. 
   The Common Agricultural 
   Policy
   • The creation of a common agricultural policy was proposed in 
    1960 by the European Commission and the CAP mechanisms 
    were adopted by the six founding Member States. 
   • In 1962, the CAP came into force. General objectives of the 
    CAP:
   • İncrease agricultural productivity
   • Ensure a fair standard of living for farmers
   • Stabilize agricultural markets
   • Gurantee regular supplies of food
   • Ensure reasonable prices for consumers
   The Common Agricultural Policy
   • Three major principles had been established to guide the CAP: 
    a. Singe market: agricultural products should be able to move 
    freely throughout the EC
   • b. community preference: priority should be given to EC 
    products over that of other countries
   • c. financial solidarity: the cost of the CAP should be borne by 
    the common EC budget than by individual member states.
   The Common Agricultural 
   Policy
   • The basic elements of the CAP were:
   • Target price: The EC-wide guaranteed minimum price for a 
    particular agricultural commodity or product
   • Intervention price: the price at which specially designated 
    intervention agencies işn the member states would buy 
    surplus products in unlimited quantities (guaranteed 
    withdrawal from the market)
   • Entry price: the minimum price at which products could be 
    imported into the EC
   • Levy: a duty imposed on agricultural imports to raise their 
    price to the level of the entry price.
   • Refund: a rebate paid to EC exporters to bridge the gap 
    between lower world prices and higher EC prices.
   The Common Agricultural 
   Policy
   • The target price was supposed to ensure that farmers had 
    adequate incomes;
   •  the intervention system guarantewed the sale of products 
    regardless of market demand, 
   • the entry price protected the EC market from heavy 
    agreicultural imports,
   •  and the refund was an export subsidy that enablewd farmers 
    to sell their products on world market.