Common Agricultural Policy in Italy

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Table of Contents

Introduction
Common Agricultural Policy
Objectives
Italy
Conclusions and Recommendations
Bibliography

Introduction

The human society is a complex phenomenon, and the interrelations between its members are conditioned by various political and economic factors. With the creation of such unions as EU, the issue of equality arises in the society, and the political institutions try to solve this issue by means of certain legislative acts (Sloman, 2006). One of the latter is the so called Common Agricultural Policy implemented by the EU officials in 2003 to develop for the coming decades and ensure the equal development of the agricultural spheres of all the EU member states. Not surprisingly, this legislation has affected those countries most of all that attribute paramount importance to agriculture in their economies. Among those countries, Italy is the most notable example of the effects, positive and negative, that the governmental intervention in agriculture can have.

Common Agricultural Policy

Timeframe and Main Ideas

The roots of the Common Agricultural Policy can be traced to 1962 when the most developed nations of Europe decided on the necessity of equal conditions in which their agricultural sectors have to develop (BBC, 2008). In 2003, the Fischer reform was introduced as the basis for the new policies the EU member states were to develop according to. The governments of the EU member states met to agree of the uniform price cuttings, transportation costs, etc (Sloman, 2006). The losses suffered by households and farmers because of this policy were to be compensated from the funds of EAGGF-Guarantee Section. The sum of the compensation was supposed to equal over 60% of the losses, while about 10% of the compensated sum should have been turned into special stability funds in any country (Common Agricultural Policy, 2004).

Objectives

Accordingly, the main objectives proclaimed were stability of markets, fair living conditions, availability of food, etc. The Common Agricultural Policy was to assure that the poor countries can hope for the equal competition with the rich countries in the prices of their agricultural products (BBC, 2008). Also, the consumers were targeted as the ones who should have benefited from the policies being able to buy the quality goods at the equally lower prices, irrespective of the tax climate in which a farmer works or the local legislative basis he or she has to conform to (Sloman, 2006). Nevertheless, the actual results of the policies turned out to be rather controversial. It is not surprising that nowadays Italy is one of the fiercest opponents of the Common Agricultural Policy (BBC, 2008).

Italy

Agriculture

Italy has been affected by the government interventions and the Common Agricultural Policy rather substantially, as well as France, Spain, and Germany as the EU’s largest agricultural regions. The most important aspect of the policies discussed was the cutting of prices for agricultural production to match the average EU levels (Sloman, 2006). In other words, the prices Italy had for sugar, durum wheat, etc. based on its local production conditions, specific taxing, supply and demand conditions, etc. were to be equaled to the average prices that the EU authorities calculated on some allegedly fair basis (Grant, 2005). The total sum of the cuttings that Italy experienced in 2003 amounted to €199.7 million (Common Agricultural Policy, 2004).

At the same time, the additional funding the planned compensation from EAGGF-Guarantee Section amounted to €102.6 million. Thus, the deficit remaining after the reform the farmers had to cover with their own resources which caused many of them to shut down numerous branches of their enterprises and cut the production volumes to be able to finance those they were able to (Sloman, 2006). Accordingly, the total expenditure rates of the Italian agricultural sector dropped 5.3% in 2003 as compared to 2002 figures, and amounted to €5.4 billion (Common Agricultural Policy, 2004). At the same time, the expenditure levels in the EU on the average grew 2.6% meaning that the Italian agriculture experienced the recession. This resulted in the subsequent cuttings of expenditures for rural development, and such agricultural areas as arable crops, sheep and goats.

Rural Development

Rural development became one of the basic issues for Italy in such a situation. Only 22% of the aforesaid sum of the compensation granted by EAGGF-Guarantee Section was directed at rural development, which made it difficult for Italian farmers to conform to all the agronomic and quality standards established by the government. Moreover, the country’s rural areas were divided into the Objective 1 and Objective 2 regions based on their needs and potential usefulness (Sloman, 2006). The first group of agricultural regions was singled out as the group with special environmental needs, threats to public health and agricultural food quality (Common Agricultural Policy, 2004).

The EU compensation funds financed only these regions properly, while the Objective 2 regions had to develop funded by the EAGGF-Guarantee Section, which provided only 22% of its funding for rural development. Nevertheless, the total rates of spending for rural development in Italy in 2000 – 2006 amounted to €5, 000 million. Among Italian regions, Emilia-Romagna, Piemonte, and Lombardy proved to be the most successful in rural development as their expenditures amounted to €502.3 million, €485 million, and €429.8 million respectively (Common Agricultural Policy, 2004).

Arable Crops, Sheep and Goats

As for such sectors of the country’s agriculture as arable crops, sheep and goats, the controversial tendencies have been observed in them around the recent decade. For example, the expenditure levels in the area of the arable crops dropped 27.8% after the introduction of the Common Agricultural Policy in 2003 (Sloman, 2006). Although they still topped the European Union figures in the area, Italian producers of the arable crops experienced a substantial loss at that period. So did the farmers dealing with grapes and wine, as their expenditure levels decreased by 11.8% for the same period of time. Finally, the representatives of the fruit and vegetable farming suffered 7.2% losses in expenditure in 2003 (Common Agricultural Policy, 2004). Total loss of the expenditure levels in the Italian agriculture amounted to 10% that year, and the only thing that saved the economic balance of the country was the contradicting situation in beef cattle and sheep and goats sectors which experienced the growth of expenditure levels for 87.8% and 157% respectively (Common Agricultural Policy, 2004). All these data demonstrate the need for the refinement of the Common Agricultural Policy in Italy for it to reach its proclaimed objectives.

Conclusions and Recommendations

To conclude, Common Agricultural Policy was implemented by the EU officials in 2003 to develop for the coming decades and ensure the equal development of the agricultural spheres of all the EU member states. Italy is the most notable example of the effects, positive and negative, that the governmental intervention in agriculture can have. As the data show, Italian agriculture and rural development experienced more losses than benefits from the Common Agricultural Policy. That is why, the Government needs to refine the policy locally to adjust it to the demands of each Italian region with its whole specificity so that not damage interests of any of the parties concerned.

Bibliography

BBC. 2008, ‘Q & A: Common Agricultural Policies’, BBC News, Web.

Common Agricultural Policy. 2004, ‘Market Policies’, Inea. Web.

Grant, W. 2005, ‘Sweeteners lead to sugar deal’, Commonagpolicy, Web.

Sloman, J. 2006, Economics, Financial Times/ Prentice Hall.

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