Reform of the CAP needs reform of the constitution

Combine harvester (picture Cyron / Flickr)

By Richard Laming

Published in EUobserver, 18 October 2006

I wrote last week in these pages about how the Common Agricultural Policy was first set up to encourage enough production, but actually had the effect of encouraging over-production. This phenomenon of people changing their behaviour in order to get the most out of the regulatory system is known as “moral hazard”.

The designers of the regulations must also take responsibility for the foreseeable way in which people would act in response to them. This strengthens the case, in my view, for CAP reform.

But moral hazard brings with it another dimension. If farmers have borrowed money and invested in businesses in order to make the most of the prevailing CAP, and if we accept that the CAP itself bears a responsibility for this, it is also the case that reform of the CAP must also take account of the foreseeable consequences.

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