Common Agricultural Policy (CAP)
The Common Agricultural Policy (CAP) is deeply rooted in the construction and development of the European Union. Established in the early 1960s around goals enshrined in the Treaty, it has since undergone several waves of reforms to improve the competitiveness of the agricultural sector, to foster rural development, to address new challenges and to better reply to societal demands.
Following the publication of the Communication on the Future of Food and Farming in 2017, the European Commission launched a set of proposals laying down the legislative framework for the CAP in the period 2021-2027 where the Commission aims to further improve the sustainable development of farming, food and rural areas. Consequently, a key element of the proposals is to identify and roll-out new market oriented solutions to make the farming sector more resilient and improve farmers’ position in the value chain.
As the leading futures market operator for a number of agricultural commodities in Europe, Euronext supports the Commission’s goal to increase the involvement of all stakeholders in the agricultural value chain by putting in place European platforms and networks to facilitate exchanges of experience and peer to peer learning on new risk management tools.
These platforms will provide farmers with adequate knowledge of financial instruments for investments and will help them strengthen their on-farm strategies. A robust CAP framework to facilitate farmers’ access to risk management tools can help stabilise markets, assure the availability of supplies and ensure that they reach consumers at a reasonable price.
Euronext Position on EU Agricultural Commodities Markets ahead of the Common Agricultural Policy 2020 review
Euronext supports the Commission’s efforts to make the CAP more responsive to current and future challenges via the creation of CAP Strategic Plans, which would grant flexibility to Member States in the allocation of EU funds, with a view to making the farming sector more resilient.
Euronext believes that the CAP legislative framework could benefit from additional incentives and/or measures to promote the use of risk management tools aimed at reducing the negative consequences of price volatility for agricultural market participants.
Euronext therefore welcomes the formation of the European CAP Network to provide peer-to-peer learning and awareness-raising actions for EU farmers in the management of their agricultural risks. The creation of such informative platforms should incentivise individual responsibility and enforce the position of individual farmers in the food value chain.
In addition, Euronext supports the proposal to establish a permanent EU-level platform for risk management. This should provide a forum for farmers, public authorities and stakeholders to exchange experience and best practices.
The Euronext position paper provides more details on the functioning of the futures market and the benefits it brings to the farming community.