I. Agriculture is a strategic sector for the European Union (EU)
- European agriculture ensures food security
Food security was one of the priorities set for the common agricultural policy (CAP) after the Second World War. This objective is still a priority today: agricultural production will need to increase in the coming years to meet the challenge of global food security with the world expected to exceed 9 billion inhabitants by 2050.
- European agriculture generates growth and boosts economic activity and employment
Agriculture and the agrifood sector together represent 6% of European gross domestic product (GDP). The agrifood industry generates an annual turnover of more than EUR 1,000 billion, or 15% of EU GDP. The European Union has 14 million agricultural holdings. Agriculture and the agrifood industry account for 5% and 12% respectively of jobs in the EU, a total of 46 million jobs in 300,000 businesses (90% of them SMEs). Agricultural products account for more than 8% of exports (EUR 120 billion).
- European agriculture is highly adaptive and innovative
A close link between agriculture and research and highly effective awareness-raising systems. Scientific and technological progress has always been supported by public policies and by European and national funding for agricultural research.
- European agriculture ensures balanced land use throughout Europe by keeping rural areas alive.
Rural areas make up 70% of the land area of Europe and are home to around 300 million people. 91% of Europeans think it is important to assist vulnerable farm businesses. Safeguarding vulnerable rural areas means preserving the diversity of farms in EU member countries and their typical products, know-how and traditions. Farming takes up 45% of Europe’s land area and is essential for the preservation and sustainable management of resources. Methods of production have been adapted to the new challenges of climate change and scarcity of natural resources.
II. Farm subsidies are necessary: they reward the provision of public goods which cannot be supplied by the free market
- European agricultural production meets exacting requirements for which there is wide popular support
The majority of European citizens (around 77%) support the common agricultural policy (CAP) and consider that it should guarantee food security in the European Union, maintain diversified farming systems across Europe, and ensure delivery of a range of public goods. Food safety is ensured through constant monitoring of production conditions throughout the food chain, “from farm to table.” It is guaranteed by strict standards and its requirements are technically justified, judiciously applied and never discriminatory. European farmers are subject to stringent regulatory requirements relating to environmental protection, animal welfare, etc. These requirements increase production costs.
- Farm subsidies ensure that the interests of European consumers and the choices made by European voters about the quality of food products and their method of production (e.g. animal welfare rules) are taken into account.
European farm subsidies account for just 0.5% of European GDP (€100/person/year).
- Farming is a strategic sector and a high-risk sector.
The low elasticity of supply — inherent in biological production cycles— creates uncertainty for farm incomes. The common agricultural policy helps to stabilise farmers’ incomes and enables them to take a longer-term view, allowing them to invest in modernising their farms and thereby remain competitive.
- One of the fundamental aims of the CAP is to pay European farmers for the environmental public goods that they provide to society.
In addition to providing food and non-food agricultural products, farming can provide environmental and rural services and some European farm subsidies pay the farmers who provide these services to European society: 30 % of CAP direct aid is subject to environmental criteria.
III. These subsidies do not distort competition, and they are perfectly compatible with the globalization of trade
- Today, 90% of the CAP budget is ‘green box’ subsidies, which do no distort competition or disrupt world trade and which comply with WTO rules.
The EU is not only a major producing region, it is also a large consumer market and a major importer of agricultural products. Agricultural products represent over 7% (€102 billion) of the European Union’s imports. The EU has decided to abolish milk quotas in 2015 and sugar quotas in 2017: production of these products will therefore be completely liberalised and market driven.
The EU is also the leading importer of agricultural products from developing countries and least developed countries (LDCs). In value terms, they import three times as many agricultural products from the LDCs (€2.8 billion) as all the other major developed countries together (€0.8 billion).
- Export refunds (export subsidies) have been phased out.
In 2014 they were reduced to zero, and they now only exist in the CAP as a tool for managing market crises. The European Union no longer pays any export refunds.