This chapter examines the European Union’s policy on agriculture. The importance that the EU has given to the agricultural sector can be attributed in large part to food shortages at the end of the Second World War. Governments agreed that it was important to ensure adequate supplies of food at reasonable prices. To achieve this, it was necessary to provide an adequate income to farmers, while taking measures to increase their productivity. The Common Agricultural Policy (CAP) was the first redistributive policy of the European Community, and for many years the only one. The chapter first provides a historical background on European agriculture in the 1980s and 1990s before discussing the Agenda 2000 budget negotiations and the 2003 reform of the CAP. It also explores the cumulative effect on the CAP of the reform process that started in 1992.