Importance Of Agriculture Policy For European Union - Essay Example

IMPORTANCE OF AGRICULTURE POLICY FOR EUROPEAN UNION Introduction: European Union countries abound in the strong agricultural prospects. There has been a great variety of agricultural products produced in EU countries. The main agricultural products produced in EU region include cereals, rice, sugar, oil seeds, potatoes and wine. European Union region possesses a large export market for agricultural goods. Its exports value for 2010 amounted to more than 90 billion Euros (European commission 2011). European Union has become the leading exporter of agri-products. Its agricultural exports superseded that of US in 2003. In 2003 the EU exports of agricultural products amounted to $66 billion and that of US amounted to $64billion (European commission 2007). European Union also imports agricultural products that worth many billion Euros. However its exports have been significantly higher than its import of agri-goods in the past decade. The balance of trade of EU in agricultural product has also been improved in the past decade. The following table shows the European Union Exports and Imports from 2000 to 2006. The balance of trade was negative in 2000 through 2004. It, however, improved in 2005 and amounted to $6 billion in 2006. EU exports of agricultural products amounted to $135 billion in 2010 (Wall street journal 2011). Table: EU Agricultural Trade (2000-2006) In US billion Dollars Year 2000 2001 2002 2003 2004 2005 2006 Export 58.3 58.7 63.4 75.2 77.4 79.6 90.7 Import 58.6 60.5 64.2 75.5 79.6 79.5 84.7 Balance -0.5 -1.8 -0.8 -0.3 -2.2 0.1 6.0 Source: (COMEXT) European Union has Common agricultural policy (CAP). CAP came into existence in 1950’s after the destruction of World War II. CAP was formulated with the vision of avoiding any possible food shortage that EU countries might face due to the massive destruction in World War II. A budget was decided to support, invest and regulate agricultural market in EU region. Initially CAP claimed around 50% of European Union Budget (Visegrad 2010). CAP aims at such regulations and action plans that ensure the safe, healthy and competitive agri-products to be consumed inside the region and exported as well. Primarily, the CAP’s focus has been on the subsidies given to farmers to ensure high production but now due to several factors the CAP’s focus, in its new proposed policy, has been on the policies for agriculture that ensure a farming that meet the standards of environmental security as well as provide competitive products to the EU region and International community. Common agricultural policy takes a very high bite of the EU budget. In 2009 its budget amounted to 55 billion EUR which is about 44% of the total budget of European Union (European commission 2010). This paper will discuss the agricultural policy of European Union, its inception and primary objectives at the time of its formulation. The paper will discuss the importance of agricultural policy of European Union by referring to the important agricultural policies and discussing therein the importance of such policies. Moreover the paper will also discuss the new proposed policies for agriculture and their importance in the changing world scenario for European Union specifically and International community at large. Initial CAP and its importance In its early years, CAP adopted a policy where it provided the subsidies and had a system where the farmers were assured of high prices for their commodities. It also provided a policy for substantial financial assistance to improve and restructure farms and to implement new technological developments in the agricultural production. The underlying objective of CAP at the time of its establishment was to take such measures so as to avoid a possible food shortage in the region, to increase productivity of agricultural sector, to stabilize markets and to ensure price competitiveness of products (Stead 2010). These policies played a very important role. These helped EU region to get out of the fear of possible food shortage and EU achieved the self-sufficiency in food production in 1980’s. This policy played an important role in the export increase of agri-products. The large amount of production helped EU to export the agri-products to the major markets of US, China, Africa, Switzerland and many other countries. EU became the leading exporter of agri-products leaving US at second position. Shift of focus and importance of MacSharry reforms CAP had undertaken a policy to restrict the import of agricultural products so as to give a sufficient room and protection to domestic industry to grow. In 1980’s when EU got self-sufficiency in food production the focus turned on the environmental issues relating to agriculture. Earth summit (1991) was a major factor behind the environmental concern in EU agri-policy. Inclusion of environmental policy in CAP was aimed at preventing degradation of environment and preserving the sustainability of agricultural ecosystem (European commission 2010). Moreover the restriction on import of agriculture goods was also relaxed and free trade in this area was promoted by agreement that was reached in Uruguay Round of GATT. MacSharry reforms of 1992 were an important policy measure in this context. The MacSharry reforms aimed at the following three objectives as outlined in the (Rachel, Smith and Stewart 2000); (a) The new framework was introduced that ensured agricultural masses of an stable and competitive income (b) A mechanism of ne support was introduced for farmers that played an important part to control production and market stability. (c) Farmers were incentivized to use less-intensive production methods that would result in environmental friendliness. These reforms were amongst the most significant ones in the CAP. There was criticism on them mainly because of production quotas introduced for certain products like milk. However, low production, due to production quota, and thus loss of income was covered by the compensation plan in MacSharry reforms. MacSharry reforms thus played a very important role in the market competitiveness of EU agri-products, compatibility to free trade policy, environmental-friendliness in agriculture production and elimination of surplus production in the agricultural sector of European Union. Policy of ‘Labeling’ and ‘Quality logos’ and their importance: CAP has the policy for the labeling of its agricultural products whether they are used in the region or used for exports. There is specific labeling for wine, olive oil and fruit market products. Moreover there is specific quality labeling for specific exceptional products. Special quality logos identify the producer and area where the particular product was produced. Consumers show enormous interest in knowing these details. Various quality logos that are used include ‘PDO TSG and PGI’. Quality logos serve as the guarantee for product’s special characteristics and features which is of growing importance to the consumer market. Such policy has played a very important role in the following three ways; a) These quality logos ensure a consumer within EU and abroad of particular origin of products and the specific procedure used in their production. b) These quality logos also play an important role in effective marketing of the products. A complete awareness of product features and stable quality is a very important factor in ensuring customer loyalty and stable market share. c) These quality logos also give a business protection against the fraudulent copying of products. It is, thus, playing an important part in ensuring long term and profitable survival of producers of agricultural goods in rural areas of European Union. Policy of Organic Farming and its Importance: Organic farming is the production method where the traditional agricultural inputs like pesticides and other chemical products are not used for the production of agri-products. EU has maintained the policy of organic farming that is very important in preserving the productivity of soil and that offers congenial environment for the welfare of live stock. The new regulation of (Council Regulation (EC) No 834/2007 of 28 June 2007 specifies the legal provisions regarding the organic Farming (Research institute of organic culture 2010) EU has managed the implementation of policy on organic farming by taking the following policy measures; a) EU provides financial assistance to those farmers who adopt the methodology of organic farming. b) EU insists on organic farming by making the direct payment to farmers conditioned upon their adaptation of the organic farming methods. Policy on products containing Genetically-Modified Organisms (GMOs): Products that contain GMOs are injurious to human health and may also cause the death of people. EU agri-policy has enacted a legislation that requires the investigation of products containing GMOs, such as maize and oil seeds, before those products can be launched in the market. This policy is very important in ensuring the people’s safety and care. EU Food Strategy and its importance: EU agriculture policy includes a comprehensive policy for food strategy that includes policies upon the food safety, animal feed and provision of effective scientific advice on these areas. Such policy is aimed at consumer health and hygiene consciousness. This policy is very important for it specifies the quantity of pesticides to be used in food products, food supplements and other vitamin requirements in the food related agricultural products. A research conducted by European commission shows that consumers rank the food safety at the higher level in the agricultural priorities of EU agricultural policies (European commission 2010). Policy to support agriculture of new member states of EU: European Union has added 10 new members to it in the past decade. Because of the increased rural income and their low incomes EU agricultural policy has undertaken many rural development programs to ensure security and health to the agricultural sector as a whole. Some of the important rural development programs include training to the new farmers for effective farming, assisting people in rural areas to establish new farms and helping farmers to meet the standards of EU products like food safety standards. New Proposed Policies for EU agriculture European commission has introduced a proposal for the new agri-policies for the EU in 2010. New policy proposal mainly aims at redirecting the CAP to meet new challenges posed by the regional and international factors. Significant proposed policy measures and discussion as to why these measures are important is discussed under the following headings. a) Policy to address sustainability issue Environment today in agriculture sector offer various important challenge that stands at the core of sustainability in agriculture sector. Major challenges include having sufficient quantity of clean water and adapting to the climatic changes. Despite several policy measures the agricultural practices in EU region have been more are less characterizes with the following features whose effective tackling is what has appeared to be the primary challenge for new proposed policy; a) Excessive usage of water and its wastage. b) Declining trend in biodiversity c) Excessive reliance on energy sources that emit fossil fuels d) Use of production methods that pollute environment The new policy is aimed at taking steps so as to ensure a farming that is sustainable and congenial to the natural environment. The most important proposed policy measures and their importance is highlighted in the following discussion a) A look at the effectiveness of CAP budget: CAP takes around 53 billion EUR every year. The EU has got certain international commitments for environmental safety, biodiversity and water preservation. However the report on proposed policies for EU agriculture claims the unexpected details that are listed as follows; i) Ineffective use of land causes 15% erosion. ii) Agriculture sector accounts for 9% of green-house gas emission. iii) Pollution from land significantly contributes to the nitrogen quantity in Baltic Sea and Danube River. Moreover the support mechanism of CAP reaches ineffectively to the inhabitants of ‘Less favored areas’. The proposed check on CAP’s fund is an important policy measure that would give an insight into the inefficiencies in the handling of CAP’s funds and it would be a useful stance to redirect the funds of CAP to the most preferred uses in the present day circumstances and to the environmental objectives to which EU commit itself for regional and international sustainability. Discussion: The most evident part of the material presented above signifies a major shift of focus that has been undertaken by common agriculture policy of EU. The EU agri-policy has gone more conscious about the environment and other sustainability issues. A major focus has been laid to redirect CAP efforts in a way that ensure EU farming as per the commitments to the cleaner environment and satisfied customers. Conclusion: Agricultural land accounts for almost half of the EU region. A sound agricultural policy adopted by EU is ‘Common Agricultural Policy’. CAP has been committed at ensuring the reasonable availability of food products at reasonable prices for the EU citizens. It has also played its vital role in strengthening the agriculture sector by ensuring sufficient income of the farmers. Its commitment in providing policies and ensuring their implementation in the area of food safety is also notable. However with the passage of time and arousal of new challenges, the CAP’s major focus has been shifted. World today undergoes a heavy sustainability challenge that include lack of water resources, ineffective modes of agriculture production that cause environmental problems like erosion of soil, emission of fossil fuels and nitrogen and a threat to the future survival of livestock. Usage of pesticide and other chemicals in production also count a major challenge in face of objective of ensuring a sufficient health of the consumers. All these challenges have forced CAP to redirect its policies to meet such challenges. CAP has enacted policies like organic farming that enables it to tackle the challenge of unhealthy food and environmental hazards of agricultural production. Moreover its proposed policies also aim at taking the measures in agriculture that are more oriented towards the meeting of the aforementioned challenges. Hence the importance of a sound policy for agriculture for European Union cannot be denied. European Union’s CAP has been important in many agri-related aspects of life and its future policies are surely important to present EU as a responsible and environmental-friendly region in the world. References 1. European commission agriculture and rural development (2011), Agriculture in European union statistical and economic information 2010,luxemburg publication office of European union, available at 2. Directorate-General for Agriculture and Rural development (2007), Map Monitoring Agri-trade Policy. 3. European Commission, Europeans, Agriculture and Common Agriculture Policy Full Report (2010), TNS Opinion & SocialAvenue Herrmann Debroux, 401160 Brussels 1.Belgium, Available at < ec.europa.eu/public_opinion/archives/ebs/ebs_336_en.pdf>. 4. Rachel Smith Stewart (2000). The impact of the 1992 MacSharry cap reforms On agriculture in Grampian region.phd the Robert Gordon university, available at < https://openair.rgu.ac.uk/bitstream/10059/550/1/Rachel%20Stewart%20PhD.pdf> 5. Research institute of organic council. 2010. Retrieved from http://www.organic-europe.net/europe_eu/eu-regulation-on-organic-farming.asp 6. European Commission, Europeans, Agriculture and Common Agriculture Policy Full Report p.no 22(2010), TNS Opinion & SocialAvenue Herrmann Debroux, 401160 Brussels 1.Belgium, Available at < ec.europa.eu/public_opinion/archives/ebs/ebs_336_en.pdf 7. European commission, proposal for new EU agriculture policy 2010. 8. Wall street journal 2011, retrieved from 9. Visegrad.info 2010, retrieved from 10. Stead.2010, Common agriculture policy, retrieved from 11. European Commision for agriculture and rural development 2010, retrieved from Read More