EU Agricultural Domestic Support: Overview and Comparison with the United States

The European Union (EU) is one of the United States’ chief agricultural trading partners and a major competitor in world markets. Historically, the United States and the EU have provided significant government support for their agricultural sectors. Significant structural differences in their respective farm sectors have helped to shape differences in their farm policy. The United States has double the farmland base than that of the EU (over 1 billion acres versus 418 million acres, respectively). The EU has five times as many farms, at 10.6 million with an average size of 39 acres, compared with 2 million U.S. farms averaging 485 acres. As a result, EU outlays per acre appear much larger than in the United States, whereas U.S. outlays per farmappear much larger. The EU’s small size of farm holdings, substantially larger number of farms relative to the United States, and larger share of rural population (27% versus 18%) have all played a role in forming EU farm policy as compared with the United States.In the United States, federal farm policy traditionally has focused on price and/or income support programs concentrated on row crops, including grains, oilseeds, and cotton, as well as sugar and dairy. In contrast, the EU—under its Common
Agricultural Policy (CAP) — provides extensive support to a broader range of farm and food products, including livestock products and processed fruits and vegetables. The EU tends to have a stronger rural development emphasis and allows frequent exemptions for identifiably small farming units from certain cross compliance restrictions and payment limitations.