The Commission has controversial plans for a radical overhaul of the CAP. It is already running into opposition from several national governments, notably Germany, and this month saw MEPs getting to grips with it. The Commission's plans for a Europe fit to meet the challenges of the 21st century are based on "deepening" and "enlarging" the Union.
But it is recognised that the present system of price support for a wide range of agricultural products cannot be applied to the new countries from Eastern Europe, without a substantial increase in the EU's budget. This will not happen, as can be seen from the reaction of the member states, especially the largest contributor, Germany, which is already seeking a reduction in its payments.
The Commission argues that the cost of absorbing the new countries can be accommodated within the EU's existing financial guidelines (a maximum limit of 1.27 per cent of the EU's GNP). The annual budget will gradually rise from Ecu 101.5 billion in the year 2000 to Ecu 105 billion by 2006, with the increase coming from an annual increase in the growth rate of 2.5 per cent.
In addition, applying existing CAP rules and the present level of price support to countries from Eastern and Central Europe would make their farmers rich overnight, compared to the rest of the local population, and create surpluses in the sugar, milk and meat sectors.
The Commission's response has been to build on the 1992 CAP reforms which stabilised prices and introduced production thresholds. This should bring an end to cereal and beef mountains, by further drastic cuts in, for example, cereal and beef prices. Farmers would be compensated through direct payments, or by giving them opportunities to develop alternative forms of income in, for example, tourism.
The theory is that this will bring EU prices more into line with world prices and thus enable the EU to comply with WTO rules and phase out subsidies of exports. The Commission envisages savings of Ecu 1.4 billion for cereals, Ecu 1.2 billion for beef and Ecu 900 million for dairy production. But the total amount of Ecu 3.7 billion would be offset against Ecu 7.7 billion to be paid in compensation aid.
Nevertheless, the cost of the CAP is still forecast to remain within existing guidelines, rising from Ecu 46 billion in the year 2000 to Ecu 51.6 billion by 2006. It would include around Ecu 500 million a year in pre-accession aid for modernising farms and improving distribution channels in the new countries. The cost of applying the new CAP to the applicant member states would eventually rise to an annual Ecu 3.4 billion by the year 2006.
Farming now represents on average only 5.5 per cent of total employment, and the number of farms is forecast to fall at a rate of 23 per cent per year. The intention is therefore to develop a wider rural policy, to promote alternative forms of employment in the countryside, and in ports hitherto dependent on fishing.
An annual figure of some Ecu 45 billion has been proposed for this purpose, with the accent on encouraging small firms and small scale developments. Among the aims are promoting quality products through farm shops, rural tourism and the production of renewable raw materials. Extending the farmers' role in taking care of the countryside, and the integration of environmental goals into the CAP, are other aims.
In addition, the Commission accepts that there is an urgent need for a radical simplification of EU agricultural regulations which have led to a backlash in the farming community and contributed to the unpopularity of the CAP. The challenge is to strike an acceptable balance between introducing measures to guarantee food safety without imposing too great a burden on farmers. The Commission is now in favour of "greater decentralisation of policy implementation" as long as this does not lead to "any re-nationalisation of policies".
In other words, there is recognition that the aim is no longer to impose centralised decision-making on a wider Europe, in defiance of differences in geography, climate and production patterns. But to ensure fair competition in agricultural trade across the EU, a member state should not be allowed to subsidise national products, thereby distorting the market to give their own farmers an unfair advantage.
The introduction of the euro will improve transparency and simplify the pricing system for different food products. Yet farming groups in many EU countries fear the new proposals will lead to a drop in income. This was clear from this month's debate in Parliament, with MEPs opposing measures to introduce extra "set-aside" rules designed to take more land out of production.
The solution in countries, such as Germany, may well be to allow national governments to further compensate for price cuts with an increase in national aid. But Germany, which is by far the largest contributor to the EU budget, does not see why reforms should lead to a reduction in EU financial support for its own farmers.
On the other hand, some MEPs fear this will lead to discrimination between farmers and of the dismantling of the CAP. The Commission's proposals for price cuts have already run into opposition from EU farm ministers, with France's Agricultural Minister Louis Le Pensec commenting that such a move "is not a solution".
Hence, the need for the issue to be on the EU leaders' agenda at the Cardiff Summit. Yet as one MEP pointed out, consumers could not understand why the last round of price cuts did not lead to a fall in the price of food sold in the shops. If the proposed price cuts did result in lower prices for basic goods, such as bread and beer, then perhaps at last the CAP could be viewed sympathetically by the vast majority of people.