57 Evolution of the Common Agricultural Policy JOÃO MARQUES, CRISTINA VASQUES, ROSÁRIO LEMOS AND BERNARDO MACHADO* Office for Planning, Policy and General Administration (GPP) Portugal applied for membership of the then European Economic Community (EEC) in 1977, beginning negotiations in November 1979 and joining on 1 January 1986. The Common Agricultural Policy (CAP) then became the main policy instrument for agriculture, with the result that the evolution of support policies began to be deeply influenced by successive changes to the CAP and the different options for its application in Portugal. Summary of the CAP evolution and its implementation in Portugal The Common Agricultural Policy (CAP) was created in 1962 and is an essential component of the EEC. The first period in the history of the CAP ran from 1962 to 1992, with the EAGGF (European Agricultural Guidance and Guarantee Fund) as its basic instrument, comprising two components: Guarantee, which protected farmers' prices (and incomes) and absorbed 95% of the Fund; and Guidance, or the socio-structural component, with only 5% of the fund, which supported investment in agriculture. In 1968, the so-called Mansholt Plan represented the first proposal for a CAP reform, with a view to large-scale modernisation of the agricultural sector, in an attempt to improve the standard of living of farmers and avoid market distortions. It mainly aimed to optimise the cultivated area and merge farms to create larger units, and was partially adopted in 1972. During this period, the Guarantee component model was based on two main instruments: protection at borders with high customs tariffs and export refunds and intervention prices, i.e. market price support measures (MPSM). In 1984, due to the fact that agricultural production exceeded demand, creating surpluses (with the famous ‘butter mountains’ and ‘wine lakes’ and leading to food being sold on the world market at much lower prices or even destroyed), supply management was established – production adapted to market needs. A quota system was then introduced for products such as milk to reduce overproduction and control supply. Each producer would now have to comply with a quota corresponding to the quantity of food that they * With contributions from Manuel Loureiro and Ana Rita Moura
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