7 July 1995

CAP cost well worth it – Europe

By Liz Mason

EUROPE does not share the UK governments concern over the cost of the CAP, economist Sean Rickard told farmers.

Mr Rickard, of the Cranfield School of Management, said the prevailing European view was that the cost, about 1% of gross domestic product, was well worth it.

"They are frustrated and bemused, and do not understand the British governments criticism of the cost of the CAP," he said.

Europes farm budget would grow and more funds would be made available to Brussels policy makers to run the CAP in the next 4-5 years, said Mr Rickard.

But price support was under severe threat. The GATT world trade deal would end subsidised exports to world markets. In addition, the move to slowly cut border protection for farm products meant Europe could not continue to hold commodity prices above world levels. "Long-term the Americans have engineered a situation where it (price support) has to go," he said.

Applying present CAP support levels to central and eastern Europe would also prompt a "fantastic" growth in production.

Unless prices under the CAP fell to world levels the only direction for their exports was back into western Europe, and that would lead to more set-aside and milk quota cutbacks.