The future of the Common Agricultural Policy and its implications for New Zealand

Abstract

The development and continued viability of the New Zealand economy is based on the competitiveness of the agricultural sector and the opportunities for sales of its output on the main world markets for food. This competitiveness of farming has continued to improve, primarily through a more efficient use of inputs rather than through any significant growth in total output, as the growth in output has been constrained by the problems of finding remunerative external markets. This problem has become of increasing complexity with the development of stronger protectionist policies in agricultural products in many areas of the world. This has been most evident in the case of the European Community (EC) where the Common Agricultural Policy has had a substantial impact on New Zealand's agriculture and therefore on the New Zealand economy as a whole. Agriculture in Europe, however, also faces major difficulties on its own domestic market, as the growth in output has created enormous problems of finding remunerative markets. The present study sets out to explain the underlying forces which have fashioned the evolution of the Common Agricultural Policy; the factors which are dominating the current developments in that policy and which will continue to determine its course over the coming years. The basic horizon for the consideration of future events is the end of the present decade. Even that may be too long a period over which to project the economic social and political factors which shape the decisions taken by the European Commission and the Council of Ministers. The purpose of the study is to present a reasonably comprehensive, but not too detailed, account of the CAP and an assessment of its current development for New Zealand agriculture, in the hope that a better understanding of the European situation might help to contribute towards a solution of the economic difficulties between New Zealand and the European Community.