The Treaty of Rome made little more than a passing reference to the delicate matter of how the common agricultural policy was to be financed. Article 40 contained the vague provision that ‘one or more agricultural orientation and guarantee funds may be established’. (The word ‘orientation’ is Eurojargon for guidance or structural.) Difficult though it may be to comprehend with the benefit of hindsight, there was a presumption that the CAP would be broadly self-financing. The theory was that the price-stabilisation function would lead to profits and losses which would balance out over a period of years. The intervention agencies would need funds to absorb surpluses when market prices were tending to fall below target prices; these would be recovered, however, as they disposed of those surpluses in due course when market prices were tending to rise above the target. Indeed, by buying at relatively low prices and selling at relatively high prices the intervention agencies should have been profit-making concerns. So far as the long-term structural side of the policy was concerned, sufficient finance would be raised through the proceeds of the variable levies on imports.
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