Beyond Wine Lakes and Butter Mountains - A Study on the Effects of the Common Agricultural Policy on Sustainable Agriculture in Sweden

Sammanfattning: It is well known that industrial agriculture has extensive negative social, economic and environmental effects. Sustainable agriculture has been designed as a way of out this negative cycle, and is meant to create an agricultural system with temporal stability. With this starting point, this thesis investigates how the Common Agricultural Policy (CAP) has affected sustainable agriculture in Sweden. Since sustainable agriculture is a very broad term, this essay will focus on three metrics instead: how CAP has affected farm size, price of milk and pesticide use in Sweden. The secondary EU legislation that makes up the most of CAP is divided into two pillars. Pillar I is concerned with two aspects of the policy: the common organization of the market, which regulates market intervention, and direct payments given to farmers based on their acreage. The direct payments were previously based on production levels. Pillar II makes up the rural development policy, with aid that is supposed to benefit rural communities. This thesis shows that CAP has had, and continues to have, great consequences for these three metrics. The direct payments get capitalized into land values, which means that land becomes more expensive. This means, in turn, that farm sizes increase, which has great negative effects on the surrounding environment. However, these rate of farm size increase has been mitigated somewhat after the direct payments were decoupled (that is, when they were based on acreage rather than production levels). For the past decades, the EU has enforced a milk quota, putting a cap on how much milk each member state can produce. This has created artificially high prices on milk, which has created a higher income for dairy farmers, thereby letting them avoid bankruptcy. This quota was removed in 2015, and prices are expected to drop as a result. CAP has also affected, or failed to affect, the use of pesticides in Sweden. The previous coupled direct payments incentivized farmers to keep high production levels. This requires using a lot of pesticides. Pesticide levels have increased steadily over the past decades, despite some efforts to reduce them, such as promoting organic farming and introducing decoupled payments. In total, this means that CAP has had negative effects on sustainable agriculture in Sweden, with consequences such as an increased rate of agricultural concentration, soil depletion and social isolation for the remaining farmers. With this said, CAP has also contributed positively to the development of agriculture. Its milk quotas have, for example, ensured that more farmers can stay in business. The conclusion is therefore that a reform of CAP is necessary to ensure a sustainable agriculture for the future.