"Price Formation in the CAP: Agrapolitical Success and Economic Failure"

Kelch, David R. (1993) "Price Formation in the CAP: Agrapolitical Success and Economic Failure". In: UNSPECIFIED, Washington, DC. (Unpublished)

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Abstract

[From the Introduction]. The distractions of the creation of the EC’s Single Market and the struggle for ratification of the Treaty of Maastricht were instrumental in allowing the CAP to be reformed. Nevertheless, the “success” of the CAP in producing agricultural surpluses may not be reduced unless there is a GATT agreement in agriculture or a single currency is established within the EC’s Single Market. Unfortunately, the drive to a single currency and a single market has perversely allowed CAP prices to surreptitiously rise in the short term in spite of mounting budgetary costs and claims of lower prices. Continued overproduction of agricultural products because of high prices and subsidization of surpluses onto the world market not only distorts the EC’s economy but blunts economic growth in its more agrarian-based neighbors to the east. Hence, the CAP not only fouls its own economy but prevents its own trading partners in Europe from prospering which would help the EC economy recover from another bout of Eurosclerosis.

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