The CAP is largely funded by the European Agricultural Guidance and Guarantee Fund (EAGGF), which accounts for a substantial part of the Community budget. This fund is divided into two distinct sections: the Guidance section and the Guarantee section. The Guidance section is one of the structural funds, which contributes to the structural reforms in agriculture and the development of rural areas. The Guarantee section, on the other hand, is the more integral section in that it funds expenditures concerning the common organization of the markets. Further financing of the Common Agricultural Policy comes from storage levies, manufacture levies, and portions of each member state's Gross National Product (GNP).
Attempts at Reform.
The Common Agricultural Policy has had a long history of reform, yet it is still nowhere near perfect. The first attempt at reform came just ten years after its original implementation. In 1968, the Mansholt Plan was put into effect in an attempt to reduce the number of people in the agricultural business and to promote more efficient means of agricultural production. In 1972, the extensive food surpluses were targeted through the creation of structural measures designed to modernize European agriculture. This attempt at reform is generally regarded as a failure because many of the problems it tried to fix were still left unchecked. In 1983, a publication was released entitled The Green Paper, which sought to balance the ongoing disparities between supply and demand through improvements in production. In 1988, the European Council agreed on various reform measures. The most important was the "agricultural expenditure guideline-, which limited the percentage of CAP expenditures in the overall budget. In 1991-1992, the future of the CAP was addressed through what has been called "the MacSharry Reforms-. The key aspects of the reforms included the reduction of agricultural prices to make the products more competitive, the compensation of farmers that incurred a loss in income, and environmental protection.
