ABSTRACT
The idea of a set-aside program gained increasing acceptance in European Economic Community (EEC) circles in the mid-eighties, under the pressure of a mounting crisis of the Common Agricultural Policy (CAP), which had been unable to reduce or even contain production surpluses and budget deficits. A set-aside program was finally adopted at the end of 1988 (Regulation 1765/88) alongside with potentially more powerful supply-restrictive measures such as “maximum guaranteed quantities” (MGQ) for the surplus commodities (with automatic price reduction in case of production exceeding the allowed quantity) and budget stabilizers. The EEC set-aside regulation provided for voluntary participation by grain producers and also left it to some regions to decide whether to participate at all. While it can be suspected that the policymakers were not very confident that the set-aside program would make a substantial contribution toward solving the surplus problem, the E.C. Regulation may be more fairly interpreted a posteriori as a “trial balloon” for determining the farmer reactions towards such a policy innovation. Being paid for not producing was a total novelty among European farmers, who, for a long time, had been stimulated by the CAP to do exactly the opposite, i.e., enlarge the production capacity and increase land productivity. This sort of encouragement was implicit in the special features of the price support system, which meant an almost total elimination of uncertainty as to market outlets, together with relatively high and stable prices. The simple fact that farmers were often producing for waste (as in the case of fruits) or for dumping (as in the case of cereals and dairy products) 388generally did not undermine their belief that they were producing food commodities for a market. Understandably, therefore, it could only be guessed how farmers would react to a set-aside program. As we shall see, the response from farmers of the member countries and regions has been highly uneven.
