Edited by Joseph A. McMahon and Michael N. Cardwell
Chapter 22: The Common Agricultural Policy and development
The Common Agricultural Policy (CAP) of the European Union (EU) has long been criticized for its damaging effects on developing countries, and developing country agriculture in particular. EU farmers have enjoyed considerable protection as a result of the CAP, both through higher prices and budget support. The resulting stimulus to production (and disincentives to consumption) meant that the EU emerged as a significant competitor to developing country (and other) exporters, while its use of export subsidies enabled surpluses to be dumped at low prices on the markets of importing developing countries. Case studies undertaken by non-governmental organizations (NGOs) have highlighted the alleged negative impact of EU exports of particular commodities (milk powder, pig meat, tomato concentrate and poultry meat) in particular developing countries. At the same time, the EU’s high level of border protection has limited exports from efficient exporters to the EU market. Model simulations confirm that the CAP has in the past distorted both the level and the volatility of world market prices to the detriment of farmers in developing countries, even if urban consumers and net-importing developing countries reaped some benefits from lower world market prices. This chapter sets out to do two things. In practice, the impact of the CAP on developing countries is more differentiated and nuanced than this simple account would suggest.
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