Thus (at least) from the perspective of the Treaty on European Union, (and its predecessor Treaties) funding for agriculture should be a medium for reducing or eradicating regional disparities within the European Union. Funding for agriculture within the Union has historically been dispensed under the Common Agricultural Policy.
The Common Agricultural Policy came into being in 1962 after the ratification of the Treaty of Rome in 1957 and the resultant establishment of the Common Market. The establishment of the Common Market came with Treaty requirements that guaranteed the free movement of goods (among other freedoms like the free movement of services, persons, and capital).
The member states of the then European Economic Community - France, Germany, Italy, Belgium, the Netherlands, and Luxemburg - all had different agricultural policies that had some state intervention in the sector. France was however notable for its very strong state intervention in its agricultural sector and insisted on the maintenance of subsidies for the agricultural sector as a condition for the establishment of the Common Market. (BBC Q&A, 2005) Thus the issue of free trade guarantees in the Treaty of Rome and the barriers to trade in agricultural products that individual state intervention through subsidies in the agricultural sector would bring was evident. ...
olicy thus presented a compromise through which a harmonisation of state intervention on a common basis could be maintained within the free trade guarantees of the Treaty of Rome and for the functioning of the Common Market.
The establishment of the Common Agricultural Policy had the following objectives - to increase productivity to ensure fair living standards for the agricultural community, to stabilise markets, to ensure availability of food, and to provide food at reasonable prices. (Article 39 of the Treaty of Rome)
In practice, the Common Agricultural Policy is a programme of financial subsidy paid to farmers and a trade policy that sets tariff and quota restrictions on the import of agricultural products from outside the European Union's Common Market. (El-Agraa, 2007) The financial subsidy under Common Agricultural Policy offers a guaranteed minimum price payable to producers of agricultural products, though the actual implementation and maintenance of the subsidy programme varies from different member states in the European Union.
The Common Agricultural Policy has undergone changes over time to meet with policy, structural and domestic and international demands for reform among others. Currently, the 'decoupling' scheme is one of the central reform tools being used by the European Union detach production subsidies. (Jeffery, 2003) Payment of subsidies is no longer tied to the volume of production of agricultural produce. The single payment scheme is one of the policies that have been adopted to 'decouple' subsidies from production. (El-Agraa, 2007; Anderson and Josling, 2007) The maintenance of subsidies with production had resulted in a system where farmers produced for subsidies and not necessarily for the market. This resulted in an over production of