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Common Agricultural Policy

Common Agricultural Policy (CAP) System of support for agriculture within the European Union (EU). The Treaty of Rome created CAP in 1957. CAP was designed to increase food production within the EU, and to ensure a reasonable income for farmers. The EU sets target prices for commodities. If prices fall below target, to a level known as ‘intervention prices’, the EU buys up surplus product creating the so-called ‘beef mountains’ and ‘wine lakes’. In 1988, to prevent over-production, the EU introduced a policy of paying farmers to set aside part of their land as fallow. Prices for imports from outside the EU are kept above target by means of levies. By 1994, the CAP accounted for 51% of the total EU budget, having soared to 75% in the 1970s. Reform of the CAP is one of the most contentious issues in the Union.

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