Recentreform of the Common Agricultural Policy (CAP) reduces support prices forselected commodities and introduces direct payments to producers based on croparea.  Single Farm Payments (SFP)that will not require production will replace current direct payments at thediscretion of member states. Producer payments in the 10 new-member states will be phased in over a10-year period.  These reforms movefrom a price support policy to an income support policy through decoupledpayments and farmers have more choices in their production decisions.  These reforms include a renewedcommitment to rural development as new-member states are more dependent onagriculture for employment and economic activity.  


Underthe Renewable Fuels Directive of 2003, member states would establish a minimumlevel of biofuels as a proportion of fuels sold from 2005, starting with 2% andreaching 5.75% of fuels sold in 2010. About 80% of biofuel production in the E.U. is biodiesel, which isproduced primarily from rapeseed. Fuel ethanol is mainly produced from cereals and sugarbeets. 


Grains (Wheat, Corn and Sorghum)

        Supportmechanisms include a mixture of price supports and supply controls. Farmersremove a percentage of their arable cropland from production in order to receivedirect (coupled) payments. The cereal intervention subsidy is 101.3 euros/MT($5.94/cwt).

        Durum wheathas a 40% coupled payment in traditional production areas.  Direct subsidy for durum wheat is 285euros/ha (roughly $149/ac).

        EU grainsreceive export subsidies to be price competitive on the world market.

        TRQin-quota tariff rates are 0%. Out-of-quota tariff rates are 86.9% for durum wheat, 71.5% for corn, and72.4% for grain sorghum.  

        Subsidized exportlimits are 14.4 MMT (530 million bu) for wheat and 10.8MMT (427 million bu) forcoarse grains.



        A decoupledpayment of at least 65% of the 2000-02 historical payment will be madebeginning in 2006. A coupled payment of up to 35% will be allowed as anarea-based subsidy with a maximum base of 455,360 hectares (about 1 millionac), split between Greece, Portugal, and Spain.