Prospects for agricultural markets and income 2005-2012
Update December 2005
This publication provides a picture of the likely developments of agricultural markets up to 2012, based on a certain number of assumptions and on the statistical information available in December 2005. The report, which constitutes an update of the medium-term projections published at the end of July 2005, contains two chapters. Chapter I centres on the market and income prospects for the 2005-2012 period within the EU and covers the following products: cereals, oilseeds, meat, eggs, milk and the main dairy products. Chapter II is dedicated to a presentation of these perspectives on a regional basis, together with a regional analysis of the market and income impact of alternative decoupling systems.
This report does not take into account the recent decisions adopted in the framework of the WTO negotiations in Hong Kong in December 2005 and the conclusions of the European Council from December 2005 on the 2007-2013 financial perspectives. It shows that the medium-term perspectives for the EU cereals, meat and dairy markets appear relatively favourable. The build-up of high levels of stock in 2004 is expected to continue to leave the cereal markets in a fragile situation over the short-term, with the risk of regional imbalance in the landlocked new Member States of central Europe. In the medium-term, there should be a gradual fall in stock levels supported by further, though moderate demand increases on the domestic market, more favourable conditions on world markets and the better integration of new Member States into the single market. EU meat markets have returned to a more normal situation after the extreme market conditions of the past few years. The current situation in the beef market - where consumption is higher than domestic production - is expected to persist over the 2005-2012 period with a further increase in EU net imports. Pig and poultry production and consumption are expected to keep growing over the medium term, though at a lower pace than in the 1990s. It should be acknowledged that these relatively positive projections for the meat markets do not take into account any effects of Avian influenza. The EU dairy sector is foreseen to display a decline in the production of butter and SMP over the medium term as more milk is used for the production of cheese and other high value-added dairy products. These medium-term projections should lead to a 12.8 % growth in EU-25 agricultural income between 2004 and 2012 in real terms and per labour unit (6 % in the old member States and a steady 50.3 % rise for the new Member States -i.e. +182 % against 2003 before enlargement). If the outlook for EU agricultural markets and income over the next seven years appears relatively favourable, it clearly remains subject to some important uncertainties, in particular the outcome of the Doha Development Round of trade negotiations and the risks linked to animal disease such as Avian Influenza.
Published in February 2006
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