CAP Reform 1999: A Crisis in the Making

Abstract

In March 1999 the European Council, meeting in Berlin, agreed a reform of the Common Agricultural Policy (CAP) which superseded a deal the ministers of agriculture agreed – or thought they had agreed – two weeks earlier. This article seeks an explanation of the nature of the second reform, before indicating briefly why further reform will be needed. In suggesting possible directions for reform, three options discussed but not agreed upon during negotiations are examined: degressivity (the reduction over time of direct payments), cofinancing (sharing CAP budget costs between EU and national budgets) and modulation (targeting support towards smaller farms). Degressivity offers the best way of containing budget costs. Accompanied by the elimination of price support, this will facilitate agreement in international trade talks and accommodate enlargement.