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Tuesday, 15 October 2013

EU Common Agricultural Policy reform and its impact on Africa

The European Union (EU) has recently reached an agreement within the Common Agricultural Policy (CAP) for the upcoming period of 2014-2020. These CAP negotiations are being made in conjunction with the Multi-annual Financial Framework (MFF), which determines how much European money is allocated to agriculture every year, the International Centre for Trade and Sustainable Development informs (ICTSD) informs.
In the coming period between 2014 and 2020, the MFF, agreed upon by the Council and the Parliament, the allocation to agriculture is expected to decrease, but not by a significant amount. Between 2007 and the expected 2020 budget, the agricultural allocation is expected to decrease by six percent to 36 percent of the total EU budget. This new legislation targets green and organic farming in each country to receive 30 percent of its agriculture allocation. Other direct payments benefit young farmers, and individuals who run small farms.
While these negotiations had no legislation concerning trade policy, these changes may have an effect on the world market. Because of the changes in recipients of direct payments, there may be some decreases in productivity in farms that previously had higher subsidies. However, the new policies set aside investment in agricultural innovations and research to strengthen EU production in the long term. These new plans will also remove milk and sugar quotas, which had been expected to remain in place until 2020.
While the removal of milk quotas allows European countries to compete, the African, Caribbean, and Pacific (ACP) countries depend on the quotas to export their own sugar product to the EU. The elimination of sugar quotas in the EU would influence a price decrease and make sugar imports less attractive. However, the market between the EU and ACP countries will depend on world market prices, ICTSD reports.

Source: International Centre for Trade and Sustainable Development