Impact of EU Common Agricultural Policy reform on Uganda

Research reports and studies
November 2012
Ole Boysen and Alan Matthews

The European Union (EU)’s Common Agricultural Policy (CAP) has long been criticised for its damaging effects on developing countries, and developing country agriculture in particular.

The EU has committed itself to greater policy coherence for development in its non-aid policies, including agricultural policy. To evaluate its success in moving towards policies that are more coherent with its development cooperation objectives, estimates of how the CAP currently affects developing countries are needed.

Taking Uganda as a case study, this study examines the impact of proposed as well as potential EU agricultural policy reforms on its economic structure, poverty and food security. The objective is to contribute to the debate on how to monitor the effects of the CAP on developing countries.

Changes to the CAP can affect developing countries in different ways. Empirical evidence is needed on the magnitude and direction of these effects. This study uses a quantitative modelling methodology to examine how CAP reform might affect a particular developing country.

It adopts a three-level approach. First, it assesses the world price impacts of CAP reform. Second, it evaluates the national price-level effects, taking into account the degree of transmission between world market prices and national prices. Third, it calculates the impact of changes in national prices on household welfare and poverty, again taking into account in principle the degree of transmission of national price changes spatially within the country. In practice, the role of price transmission is only partially addressed in this report.

Uganda is selected as a case study country because of the availability of a Ugandan simulation model developed by the authors that allows us to establish the impact of world market price changes on economic welfare, the allocation of resources, consumption and poverty within Uganda. Given the structural characteristics of the Ugandan economy, CAP reform is unlikely to have major impacts, either positive or negative. However, this study is intended as a template to illustrate an approach to evaluating the impact of the CAP on a developing country.