The internal market, as defined by Article 26 of the Treaty on the Functioning of the European Union (TFEU), aims to create an area without internal frontiers, facilitating the free movement of goods, persons, services, and capital across the 27 EU member states. This integration eliminates barriers and simplifies regulations, enabling all EU citizens to benefit from direct access to a market of 450 million people. The Common Agricultural Policy (CAP), initiated in 1962, represents the EU's largest investment, ensuring agricultural productivity, affordable goods, support for farmers, market stabilization, and job creation in the agricultural sector. Market unity under the CAP includes common agricultural prices, financial solidarity, and community preferences within the EU.
Over time, the CAP has evolved to address new objectives and priorities. For example, the MacSharry reform of 1992 encouraged farmers to consider market forces while receiving direct income aid, aligning with changing public priorities such as environmental and humanitarian concerns. The "Agenda 2000" reform focused on rural development and agricultural competitiveness, prompting farmers to restructure and improve marketing. Subsequent reforms, such as the introduction of the Single Farm Payment (SFP) in 2003 and the 2013 CAP reform, which allocated 30% of direct payments as "greening payment" to incentivize environmental actions, reflect the CAP's adaptation to consumer and taxpayer expectations.
Direct payments, which constitute 71% of total CAP funding, aim to address the lower agricultural income compared to other sectors and provide support for public goods. However, the current system of decoupled direct payments, based on land area, has drawbacks, particularly for tenant farmers who may not benefit directly. Large farms, which receive a significant share of direct payments, raise concerns about distributional equity. To improve distribution among farmers, some propose implementing an upper ceiling on payments.
The CAP's main challenges revolve around costs and distributional inequality. The CAP 2014-2020 accounted for 37.6% of the EU budget, with €408.31 billion allocated, primarily to the first pillar. However, the proposed 2021-2027 budget reduces the CAP's share to 28.5% post-Brexit, leading to a €12 billion gap and 5% cuts compared to the previous program."
References
3. European Commission. The Common Agricultural Policy at a Glance. 2018. Available online: https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/cap-glance_en