Foto: Shutterstock/ Pichugin Dmitry


CAP reforms have few consequences for developing countries

Gepubliceerd op
20 juni 2013

The reformed Common Agricultural Policy (CAP) has a limited influence on developing countries. Changes to the EU’s trade policy are expected to have significantly greater consequences for farmers in developing countries than changes to the CAP. This was the conclusion of a study by LEI Wageningen UR commissioned by the Ministry of Economic Affairs. The European Council and the European Parliament may take a final decision later this month on the details of the EU’s Common Agricultural Policy for the period 2014-2020.

Photo: Shutterstock/ Pichugin Dmitry

Two important reforms of the CAP have reduced the distortion of trade for farmers in developing countries compared to the past. Firstly, price support for European farmers has been replaced by income support. Secondly, export subsidies have been scrapped for most products. As a result, European farmers will be guided more by the market forces of supply and demand rather than producing surpluses that depress world market prices.

Income support

Income support does seem to have stimulated production to a limited extent, but the negative impact of this on developing countries is hard to determine in the current tight food market. In addition, income support ensures that small European farmers are able to survive and thus moderates the tendency towards increasing farm scale. This in turn  reduces European farmers’ competitiveness on the world market.

The proposed changes to Europe's trade policy will probably have greater consequences for developing countries than the reformed CAP. The General System of Preferences (GSP), a system of trade preferences for developing countries, will be renewed in 2014. For the least developed countries, little will change. The EU will also conclude so-called Economic Partnership Agreements (EPAs) with groups of countries. These are intended to replace many of the old preferences. The conditions of EPAs are less favourable and impose additional requirements. This disadvantage for developing countries is partly compensated by the fact that a number of other upcoming countries such as Brazil will lose their preferential access to the EU market.

The LEI study also shows that changes to the trade policy may have consequences for producers of export crops like sugar, fruit and vegetables. For dairy producers in developing countries, no major consequences are anticipated. However, the study also emphasises that conclusions about effects are not always clear-cut because consumers and producers in developing countries have opposing interests.