The “Treaties of Rome” and the development of the Common Agricultural Policy

After the Second World War, with food supplies being badly insufficient, the “Marshall Plan” as well as a policy of high producer prices provided incentives to reconstruct the agricultural production potential in Western Europe. Soon production surpluses began to emerge, and despite the high price levels farm incomes did not rise in proportion to production and productivity. Already in 1950 a debate about the organization of common agricultural markets in Europe began to develop. This paper describes the development of the Common Agricultural Policy, starting from these discussions until the implementation of the first market organizations in the early 1960s. The Treaty of Rome is seen as the formal trigger for creating a “Common Agricultural Policy” among the six founding members. Furthermore, it tries to identify impacts of the short tem oriented fixes for actual problems in this period on key deficiencies of the CAP in the long run. Here the indistinctness with respect to important long term agricultural issues of the Treaty establishing the European Economic Community (EEC) are a possible starting point. These shortcomings could not be fixed in the subsequent Stresa Conference, which tried to work out the basic outline of the CAP. The paper basically identifies two interrelated deficiencies of the early CAP as being most influential for the often disputed long term evolvement of this policy area: (i) the inability to take a decision on the “correct” support level, and (ii) the lack of a realistic structural policy objective. More or less all attempts to fix these weaknesses of the CAP in a balanced way failed. Short term-oriented and often cost-inefficient solutions dominated the subsequent development of the CAP. Examples supporting this finding are, among others, the decisions with respect to the harmonization of the common price level in the following years, the biased management of the exchange rate differences through the so called “Agrimonetary System”, or the way of introducing direct payments with and after the MacSharry Reform of 1992.