ABSTRACT
Introduction Our dear friend Secondo Tarditi had a lifelong interest in improving the efficiency of the Common Agricultural Policy (CAP). He was the organizer of the famous Siena Conference in 1984, which led to the well-known Siena Memorandum. The authors advocated a radical change in the CAP, with a move from price support to more targeted measures for less-favoured regions and the reduction of income disparities between farmers. The CAP has undoubtedly changed significantly over time, and a major step in the reform process occurred in 2000, when it was recognized that price support had to be reduced, and measures focusing on rural development (named Pillar II) were introduced. At first sight this change may seem a rational choice and a significant improvement of the CAP, but it involved the adoption of a wide range of measures, some of which appear to be more targeted and efficient than others. Figure 5.1 indicates the main the components of Pillar I and Pillar II of the CAP. The budget for Pillar I is still much higher than that of Pillar II, but there is a tendency to shift expenditure to the latter. Modulation is one of the mechanisms used to increase spending on the second Pillar.1 The elimination of quantity controls such as milk quotas, and further reduction of price support, including the payment of export subsidies, will further release funds from Pillar I. Moreover, the recent decision to publish how much individuals receive in agricultural subsidies will probably add to the pressure to reduce expenditure on Pillar I. As a result, policymakers may prove more willing in practice to realize their stated aim of expanding Pillar II measures. Most of the measures under Pillar II were in existence prior to the official birth of this Pillar. However, the relative importance of various measures used in the individual member states has changed. The division of responsibility for financing has also altered, and some measures, which were previously funded only by the member states, are now co-financed by the EU. Individual countries
are now obliged to implement certain new measures, which they had not previously used, and governance mechanisms relating to the selection of projects, control and sanctions have also changed. For reasons of space, this chapter will concentrate on the evaluation of only two types of policy: the support of farm investment and agri-environmental measures. This choice seems justified as there is a long and ample experience of farm investment support, and the focus on such measures enables certain weaknesses to be pinpointed. Some of the agri-environmental measures are new, and there is less experience with their operation, but member states are obliged to implement such policies so their analysis would seem of interest. Special emphasis will be placed on governance problems as these have been somewhat neglected both in the policy making process and in the literature.
