Accession of the Czech Republic, Hungary, and Poland to the European Union: Impacts on Agricultural Markets

Using a world agricultural multimarket model, we analyze the consequences of enlargement of the European Union (EU) to include the Czech Republic, Hungary, and Poland for agricultural markets. We produce a market outlook through the year 2010 for two enlargement scenarios, which are based on different assumptions regarding the restrictions on grain and dairy production in the acceding countries. In both scenarios, accession of the three Central and Eastern European countries (CEECs) leads to a permanent but moderate decrease in EU prices for virtually all commodities. For the three acceding CEECs, domestic prices increase dramatically. Their final consumption of agricultural products decreases in most instances, while production rises. Higher domestic prices in the CEECs reduce exports of most commodities to non-union countries. Consequently, excess supplies are placed in stocks or exported to the original 15 member countries. The imposition of supply management mechanisms in the dairy and grain sectors reduces the buildup of surpluses in the new member states. However, supply constraints limit the ability of the new members to take advantage of the expanded market.