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Not because of any virtue of factory farming - I am not a big fan of that - but because the logistics of storing, transporting and distributing the food needed to sustain a modern industrial society is itself an industrial operation. And industrial operations like to liaison with other industrial operations - they do not like small, independent (and thus unpredictable) enterprises like family farms.
So with that in mind, I think it would be fruitful to turn the question around: Instead of asking "whether CAP?" we should be asking "what rural policy?" Note that I am saying rural policy, not agricultural policy. The former is much broader than the latter.
In my view, any rural policy is constrained by the following set of objectives:
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