The Common Agricultural Policy is a system of state grants to farmers in the EU.
Why do farms warrant public funding in this way? Isn’t this, in effect a form of protectionism?
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Farmers receive subsidies in many many countries around the world, including EU countries prior to the CAP, the US, or Switzerland. One justification that's commonly offered is that self-sufficiency is a strategic goal that requires state support. The original policy was also devised when Europe was just coming out of food rationing that lasted for a decade after WWII. Nowadays, this productivity objective has partly been replaced with policies designed to safeguard the landscape and ecosystems through specific agricultural practices. And of course other sectors of the economy also receive subsidies and support from states in various ways.
So what's specific to the CAP is not that farmers receive subsidies, it's that they may not receive subsidies from individual states, instead getting them solely through EU programmes. That's why the CAP was such a large part of the EU budget for many decades (less so now). EU federalists hoped that other sectors would follow but that never happened. In other domains (industry, defense, research, education, healthcare, etc.) individual EU member states fund specific policies or directly subsidizes businesses within the bounds set by EU rules (in particular the rules on “state aid”).
Not all of the so-called "CAP" has its primary goal of agricultural output. For example, in the UK there are large areas of land where the weather and soil conditions are only suitable for low-intensity sheep farming. However grazing sheep have been a part of the stable ecosystem of these areas for centuries, and removing them because they are "uneconomic" would cause the entire ecosystem to change dramatically, by destroying important habitats for wildlife, increasing soil erosion and hence changing the ecosystem of downstream river systems, increasing the risk of long-burning peat wildfires, etc.
In effect the farmers in these areas are being subsidized to maintain the environment, not to produce meat and wool.
In fact the policy of subsidies to these areas was changed to focus on the environmental protection issues, since the original payment rules led to environmental damage through attempts at unsustainable over-production to maximize the subsidy payments.
The same also applies in the high-intensity sector of the UK, where subsidies have been awarded to improve the environment in opposition to maximizing output - for example by extending the uncultivated borders of fields to provide wildlife habitats and corridors, maintaining hedgerows rather than replacing them with fences (or removing them completely in arable farming areas) etc.
I'll quote from 2 books.
The main goals in the creation of the European Union (EU) were both political (to not have another war) and economic (to recover from the devastation of World War II). The means of achieving these goals were mainly economic, with the view that once the EU member states were economically integrated, another war would be almost impossible (see Theme 1of this book). Economic integration trumped all up until the 1990s, when other non-economic issues started to gain importance for the EU political elites and citizens. Agriculture was one of the first policy areas where market integration was seen as highly important. The six founding member states of the European Economic Community (EEC) (Belgium, Luxembourg, France, Italy, the Netherlands, and West Germany) considered the Common Agricultural Policy (CAP) a necessity in order to cope with food shortages stemming from the aftermath of World War II, prevent at any cost such future shortages, and stabilize income for farmers. The CAP was an attempt to reach these objectives by creating a common agricultural market that would facilitate the movement of goods and factors of production among the European countries.
To achieve its original objectives, the CAP introduced several policy instruments, which had important domestic and international consequences and influenced the evolution of the CAP through the years. Over time, the EU has become larger, more diverse, increasingly focused on sustainable development, and competitive in a highly globalized world. Thus, the main question this chapter sets out to address is whether the objectives of the CAP have been altered in response to new domestic and international conditions. The chapter analyzes the impacts of the main agricultural policy instruments and whether the pressure for change was strong enough to result in policy that sustains an efficient and internationally competitive sector.
There are many ways in which the Common Agricultural Policy (CAP) provides a perfect introduction to the European Union (EU) at work. In the first place, it raises fundamental economics questions concerning the nature of a managed market and, in particular, the way in which the EU organises a market in agricultural products. In the second place, it is a very important part of the work of the EU and involves a significant slice of its budget (today about one-third, though in the past it has been much more). Third, it is a policy that, in the jargon, involves ‘actors’ at many different levels. On the one hand, the EU comes under international pressure ‘from above’ – from particular nations such as the USA and institutions such as the World Trade Organization (WTO) – and, on the other hand, it faces pressure ‘from below’ involving particular countries (France is often singled out, but Germany and the United Kingdom have been just as robust in seeking to exercise influence). Fourth, the CAP throws a great deal of light – in a very practical way – on questions that are often discussed in a (sometimes) stiflingly academic manner concerning who really has power in the EU (a debate that usually leads to some conclusion claiming, for instance, that the Commission is ‘really’ steered by the member states). Fifth, the CAP is controversial and much discussed. People tend to know about ‘butter mountains’ and ‘wine lakes’, not to mention tales of farmers being ‘paid to do nothing’ under various attempts to reform the CAP.
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