1. Medium-term prospects for agricultural markets 2004 - 2011 Update for EU-25 1 European Commission - Agriculture Directorate-General

2. Analytical approach –Methodology –Main assumptions Structure of the presentation Introduction Medium-term prospects for the EU-25 –Cereals –Oilseeds –Meats and eggs –Milk and main dairy products Main results 2 European Commission - Agriculture Directorate-General

3. Methodological approach DG AGRI market projections carried out using a recursive dynamic partial equilibrium model and a comparative static model (ESIM) Model output: balance sheets for main commodities, market prices Detailed results for –Old (EU-15) –New (EU-N10) Member States for main commodities/variables Type of models 3 Results European Commission - Agriculture Directorate-General

4. Methodological approach Uruguay Round Agreement on Agriculture maintained constant Favourable, though moderate world agricultural market outlook Return to modest economic and population growth $/euro exchange rate stable at 1.1 over the medium-term By 2011 direct payments are assumed to be 90% decoupled (milk 100 %, arable crops 93 %, beef 78 %, sheep 73 %) Main assumptions 4 European Commission - Agriculture Directorate-General

5. Results for the crops Favourable outlook for cereals markets Only moderately increasing domestic use due to –less expansive growth of livestock sector –gain in feeding efficiency in new Member States Transport costs separate the maize markets in the EU –increasing use of maize for feed –increasing exports of maize Loss of competitiveness of barley as feed grain and moderately increasing public barley stock Developments depend on world grain markets and currency environment 5 European Commission - Agriculture Directorate-General

6. Broadly balanced cereal market over the medium-term Production and consumption, 1995 - 2011 (mio t) 6 European Commission - Agriculture Directorate-General

7. Positive medium-term outlook stabilises cereal markets Cereal trade and stocks, 1995 - 2011 (mio t) 7 European Commission - Agriculture Directorate-General

8. Cereal markets : limited build up in cereal stocks Total public stocks, 1995 - 2011 (mio t) 8 European Commission - Agriculture Directorate-General

9. Good medium-term perspectives on soft wheat markets Soft wheat production, domestic use and trade, 1995 - 2011 (mio t) 9 European Commission - Agriculture Directorate-General

10. Barley: decline of competitiveness Barley production, domestic use, trade and public stocks, 1995 - 2011 (mio t) 10 European Commission - Agriculture Directorate-General

11. Maize: segmented markets, increasing use and exports Maize production, domestic use, and trade 1995 - 2011 (mio t) 11 European Commission - Agriculture Directorate-General

12. Rye: returning to stable market conditions Rye production, domestic use, trade and public stocks 1995 - 2011 (mio t) 12 European Commission - Agriculture Directorate-General

13. P ositive medium-term perspectives for the oilseed markets Market developments for the oilseed sector 1995 - 2011 13 European Commission - Agriculture Directorate-General

14. Results for the meat and dairy sector Favourable outlook for the meat sector –Return to more normal situation after market disruptions due to animal diseases (2 nd BSE crisis, FMD, avian flu) –EU-25 beef consumption higher than production in 2003 for the first time in 20 years (and throughout the forecast period) –Pork and poultry production to keep growing over the medium term, with increased trade flows between old and new Member States Improvement in EU dairy markets –Milk production in EU-25 to increase slightly in line with quota increases –EU-25 butter and SMP market equilibrium to gradually improve, with decreasing production and stocks –Cheese production in the EU-25 to keep its sustained growth 14 European Commission - Agriculture Directorate-General

15. EU beef demand to exceed production over the medium-term EU Production, Consumption, Trade and Stocks (mio t) 15 European Commission - Agriculture Directorate-General

16. EU pig meat sector to continue to expand over the medium-term EU Production, Consumption and Trade (mio t) 16 European Commission - Agriculture Directorate-General

17. EU poultry production to recover after avian flu in the Netherlands EU Production, Consumption and Trade (mio t) 17 European Commission - Agriculture Directorate-General

18. EU sheep/goat meat sector only slightly affected by enlargement EU Production, Consumption and Trade (mio t) 18 European Commission - Agriculture Directorate-General

19. Milk quotas to constrain EU milk production while growing milk yields reduce dairy cow herd EU Milk Production, Deliveries to dairies, Dairy Cows 19 European Commission - Agriculture Directorate-General

20. EU butter balance to improve over the medium-term EU Production, Consumption, Trade and Stocks 20 European Commission - Agriculture Directorate-General

21. EU cheese market keeps its steady growth over the medium term EU Production, Consumption and Trade 21 European Commission - Agriculture Directorate-General

22. EU Skimmed Milk Powder (SMP) market to shrink over the medium term EU Production, Consumption, Trade and Stocks 22 European Commission - Agriculture Directorate-General