The report, the European Union's Common Agricultural Policy: a stocktake of reforms was released today by Phillip Glyde, ABARE Executive Director. It appraises changes in the CAP and implications for EU production and trade.

"The EU has a history of high agricultural support that depresses world prices and adversely affects Australian farmers. Recently the EU has made positive changes in its agricultural support policies – moving away from price support to less market distorting "decoupled" payments to farmers. However, many market distorting elements remain," Mr Glyde explained.

"While the EU has changed the forms of support, it has done very little to reduce the levels of support. The EU has been progressively reducing commodity support prices and compensating farmers by direct, ongoing government payments," Mr Glyde said.

The commodities covered now constitute much of EU agriculture and the payments are being aggregated per farm or per hectare under a 'single payment scheme' (SPS).

In the EU, claims are made that the SPS payments are "decoupled" from production and prices, and are minimally market distorting. However, ABARE's report points out that the large compensatory payments enable farmers to continue to produce with the aid of that support, with little incentive to change. 

Some positive changes to EU agricultural support policies include the move to SPS payments that are not linked to current production and/or prices as the main method for providing domestic support, sugar policy reforms to meet WTO commitments and the reduction in direct costs to consumers.