The Common Agricultural Policy (CAP) is a system of European Union agricultural subsidies and programmes. It represents about 44% of the EU's budget (€43 billion scheduled spending for 2005 blank">http://news.bbc.co.uk/2/hi/europe/4407792.stm).

The CAP guarantees a _minimum price to producers, imposes import tariffs and quotas on certain goods from outside the EU and provides a direct subsidy payment for cultivated land. Reforms of the system are currently underway, including a phased transfer of subsidy to land stewardship rather than specific crop production from 2005 to 2012. Detailed implementation of the scheme varies in different member countries of the EU, but a Single Payment Scheme for direct farm payments is being introduced in the UK. Direct payments are now made:

• per hectare of farmland that is maintained in 'Good Agricultural Condition',
• in return for specific rural development activities (such as diversification or setting up producer groups), or
• for carrying out particular land management activities considered to benefit the environment (For a list of the 18 requirements Statutory Management Requirements, using Scotland as an example, see )

Until 1992 the agriculture expenditure of the European Union represented nearly 61% of the EU's budget. By 2013, the share of traditional CAP spending will have almost halved (32%), following a decrease in real terms in the current financing period. In contrast, the amounts for the EU's Regional Policy represented 17% of the EU budget in 1988. They will more than double to reach almost 36% in 2013.

The aim of the common agricultural policy (CAP) is to provide farmers with a reasonable standard of living, consumers with quality food at fair prices and to preserve rural heritage. The policy has evolved to meet society’s changing needs, so that food safety, preservation of the environment, value for money and agriculture as a source of crops to convert to fuel have acquired steadily growing importance.