The European community common agricultural policy and the search for a unit of account

Abstract

Abstract The EC's agri‐monetary system (AMS) is an exceedingly complex and important facet of the Common Agricultural Policy (CAP). Until 1993, the levies on agricultural trade created by this system effectively divided the EC's “common” agricultural market into a set of separate national markets. Although these levies have been eliminated, agri‐monetary questions remain at the top of the CAP agenda. The question that underlies the AMS is: In what unit of account should CAP prices be expressed? The history of the AMS is a history of repeated changes in the CAP's unit of account and of the resulting implications for agriculture in the EC's member states. While this history is specific to the EC, the underlying principles apply whenever a group of nations adopts a common sectoral policy while maintaining distinct currencies.