The Reform of the CAP and its Impact on Consumers

Since the early 1990s, agricultural policy-making has been undertaken against a background of fundamental change in the political environment. The conclusion of the Uruguay Round of the GATT, and the 1992 (MacSharry) reform of the CAP, have ensured that the traditionally accepted ethos of large-scale price and income support for farmers has been altered. As outlined elsewhere in this volume these policy changes may be expected to affect food producers (farmers) in a fundamental and direct manner given that the main thrust of reform is to alter the emphasis away from market price support to direct income support. The implication of this is that farmers may receive lower prices per unit for their produce when selling it in the market place, although this is still dependent on the crop considered as not all regimes (for example sugar) have been subject to reform. However, what is not so clear is the impact that the reforms may have on other groups, such as taxpayers and consumers, where any changes in their welfare are felt in a more indirect fashion. On the surface, a fall in raw food prices might be expected to result in a corresponding fall in consumer food prices so that the benefits of falling raw material prices are transmitted directly to the consumer.