Managing food supply: strategies to control the level and nature of

productionCommon Agricultural Policy (CAP)

Starter

What do you know about the European Union?

Get into teams for a quick quiz!

1. What does the EU flag look like?

2. How many countries are members of the EU?

28

3. Name 10 member states!

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,

Germany , Greece, Hungary, Ireland, Italy Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,

Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom

4. Which country was the most recent to join?

a) Croatiab) Romaniac) Latvia

5. What is the EU’s 2014 budget?

€142.6 billion

The European Union• A trading bloc• Emerged since WW2• Aims:

o to ensure peace in the uniono to encourage trading between member

stateso to ensure certain standards of living for

the people of member states

• To understand the aims of the CAP.• To find out how the EU manages food production

using subsidies, tariffs, intervention, pricing and quotas as part of the CAP.

Learning objectives

Farming in the EUGovernments try to protect farmers from wildly fluctuating

food prices. They attempt to ensure food security as fluctuations that are too great could put farmers out of

business, reducing national food supply.

During WW2 much of Europe suffered severe

food shortages and famine was a problem in parts of central Europe

In the 1950s a strategy was designed to control food

supply and increase food security by maximising

production. This policy was known as the CAP.

What is the CAP?

It was introduced in 1962 after the signing of the Treaty of Rome (1957) by the original six members of the EEC (Italy, France, West Germany, Belgium, the

Netherlands and Luxembourg).The CAP

is awesome!

The CAP, more like

CRAP!

Aims of the CAP

1. To increase productivity within its member states2. To ensure fair living standards for the agricultural

community 3. To stabilise markets within and between member

states4. To ensure availability of food 5. To provide food at reasonable prices 6. To maintain employment in agricultural areas

From Treaty of Rome, article 39

The CAP has three basic principles

Create a single market for the free movement

of goods.

To encourage purchase of

products from within the EU,

rather than outside it.

Financing of the CAP

comes from the EU.

Activity: How did the CAP achieve its aims?

Describe the four economic mechanisms through which the CAP operates:

• Import tariffs• Quotas• Intervention prices• Subsidies

Study pages 222-223 in your textbook.

Economic mechanisms summaryImport tariffs

• Setting tariffs (import taxes) on certain imported foods.• Raised prices of imported foods relative to EU products.• Cheaper foreign foods became artificially expensive and

European shoppers were encouraged to buy EU produced foods.

• E.g. certain rice types have tariffs, not basmati rice – food fraud! Quotas

• A quota is a limit or a fixed amount.• To protect member state farmers from cheap foreign

competition.• Quotas were used to reduce production of a particular good, or

from a particular area (non-EU countries). • E.g. bananas from Ecuador, Guatemala and Honduras –

discrimination in favour of former higher cost European colonies.

Economic mechanisms summaryIntervention prices

• Guaranteed prices for commodities. • If the internal market price falls below the intervention level,

the EU would buy up any surplus produce from its farmers to ensure their incomes were protected.

Subsidies• A subsidy is a grant or benefit. • These were paid to farmers growing particular crops to

encourage and ensure home grown supplies. • Based on the amount of land under production (not yield).• Provided a guaranteed income.