Reforms in agricultural trade - benefits and the potential harms for France

May 04, 2020
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Reforms in agricultural trade - benefits and the potential harms for France

Agriculture has undergone many upheavals in recent years. All over the world, various crises have led states to take measures to preserve their agricultural sector. Europe has not remained on the sidelines of these structural changes. Thus, to make a better account of regional and global trade issues, the EU has carried out several reforms of its Common Agricultural Policy, the last of which, in force since 1995, has seen significant changes happen. One of the most significant changes has been the removal of quotas for dairy products. In the same dynamic as the EU, the member states have harmonized their local agricultural policies.

This latest reform had several repercussions. In France, the objective of sector liberalization was highly praised by the government but finally ended in the farmers' refusal. The farmers did not believe in the effectiveness of the risk management tools proposed and already predicted a European overproduction. This overproduction would imply an invasion of local markets and lower incomes for farmers. And this fear was justified. Since the quotas ended on April 1, 2015, with a change in the Common Agricultural Policy, production has started racing again. Thus, prices have fallen, and a crisis has set in. Today, depending on the country, 25 to 35% of production costs are not covered. The big beneficiary of this situation would seem to be the consumer because the available offer is full, and the selling prices are low because of products from other European countries, especially Eastern Europe.

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This context of the crisis has given rise to several challenges in France and Europe, such as the survival of agricultural businesses, the sustainability of agricultural companies, the guarantee of decent incomes for farmers, and more. In this desire to achieve ever more liberal agriculture, a new reform of the Common Agricultural Policy is planned. Within the framework of this CAP (2021-2027), the member states will have to apply by themselves nine priorities defined by the European Commission and develop themselves the strategic plans to achieve them. This new provision allows more flexibility than the previous because it will take into account the specific needs of each Member State. Hopefully, it will enable farmers and governments to find a point of agreement.

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