Outlook for CEEC Agricultural Markets After EU Accession

This paper describes the development of modeling tools to simulate the effects of agricultural policy changes in new member states (NMSs) of the European Union and presents results of a modeling exercise. Partial equilibrium models simulate policy change scenarios, such as accession to the European Union, as well as other policy developments and external conditions, such as changes in exchange or economic growth rates. Results show the effects of policy change on the main agricultural product markets for a ten-year horizon. In particular, NMSs gain from higher prices and budgetary support. Projections for most sectors show real improvements on recent production levels, but less so when compared with the production of the late 1980s and early 1990s. Accession supports orientation toward crop production, for which Central and East European countries (CEECs) become important net exporters. Livestock production would also benefit from accession, with beef and pork most likely to exhibit appreciable growth, driven by higher, postaccession prices. Production growth in the dairy sector is more limited under the accession scenario than under the baseline, due to milk quota introduction. Scenario results indicate that, in the aggregate, CEEC agriculture has less favorable growth potential if it remains outside the European Union and retains the policy instruments in place before accession.