The CAP in the face of the economic and financial crisis

The current economic and financial crisis is disrupting a number of the parameters of the Common Agricultural Policy (CAP). The impact of the recession on the trends of agricultural commodity markets, and most particularly on world food demand, must be considered first of all. Within this context, it may now be perceived that the crisis has put an end to the commodities bubble prevailing between 2006 and 2008, and world prices for agricultural products and food have already dropped to pre-2006 levels. The crisis is likewise affecting various sectors and trends in agricultural production costs and revenue, which reassert the stabilising role of CAP aid. Lastly, some account must be taken of the (asymmetric but global) impact on public finances, on the Community budget (in terms of own resources and expenditure) or on national budgets; an impact that may even force a review of the multi-annual financial perspective in force (2007/2013) and seriously affect negotiation of the EU’s future financial framework. The sway held by the CAP over the Community budget could well have a major impact on the future expenditure allocated to agriculture. Moreover, increases in public debt and spending commitments already in place at national level to tackle the economic and banking crisis weaken the Member States’ co-financing capacity.