The restructured CAP and the periphery of the EU

Agriculture is a vital element not only of the rural economy but also of the wider national economy for the peripheral countries of the European Union (EU), namely Greece, Ireland, Portugal and Spain. It accounts for a significant part of their economies with the highest share in national income and employment among the member states of the EU. The purpose of this paper is to evaluate and examine in a broad sense the consequences of Common Agricultural Policy (CAP) reform for the peripheral countries of the Union. The major conclusion is that the redistributive effects of the reform for cereals, though in favour of the Mediterannean states, are minor. In the milk and beef sectors, given that market prices (until the BSE scare) did not fall in line with institutional prices in conjuction with the compensation payments, the reform had a beneficiary impact on Irish livestock producers in the early years. For the southern European countries, post-reform changes are limited, although a positive effect is observed on milk output and farmers' income in Greece and Spain. Moreover, although there is no significant change in the sheep-goat sector, there is a net loss for tobacco producers. Finally, the most positive aspect of the reform for these countries appears to be the early retirement scheme for older farmers.