- (Photo: www.schlechterfarms.com)
Normally, prices for agricultural products are determined by the market, based on the level of supply and demand. Within the EU agricultural prices are affected by the Common Agricultural Policy (CAP).
The EU intervenes in agricultural markets to stabilise prices by building up stocks when prices are fallingnsd releasing these later when they are rising. Prices in the EU are therefore normally higher than on the world market.
The CAP has been revised in recent years and recent reforms have changed subsidies from price supports to money payments based on the amount of agricultural land held by farmers and prevous levels of farm production on that land.