Brussels, 08/11/2001 (Agence Europe) - Responding to a request by the European Parliament (formulated in July in the report by Costa Neves on the Preliminary Draft Budget for 2002), the European Commission has drawn up a preliminary balance sheet of changes to the Common Agricultural Policy (CAP) since Agenda 2000 was introduced in 1999, but without unveiling the proposals it is planning for 2002 for the mid-term review of the CAP. The Commission wants to examine the review of the dairy quotas scheme in 2002 (originally scheduled for 2003) since the sector is closely connected with the beef industry. As indicated in its most recent report on the prospects for the EU's agriculture markets (see EUROPE of 14 July, p.15), the Commission believes that improvements have to be made to the beef and rye industries.
The Commission stresses that despite the BSE crisis, the EU has achieved good results in agriculture since Agenda 2000 decisions came into force, particularly due to a good world price situation and these favourable changes, particularly for cereals and dairy products, will continue into 2002. The Commission's comments and forecasts can be resumed as follows:
Milk. Reductions in the intervention price will not be made until 2005/06 and the quotas were increased in 2000/01, but the dairy industry has faced a favourable situation in the last couple of years, noted the Commission, particularly for skimmed milk powder (SMP) and butter, where stockpiles have been eliminated. The Commission feels that the dairy markets should do quite well since global demand is increasing and world prices for butter, SMP and cheese are expected to develop favourably (expressed in US$).
Cereals. Total EU cereal production is expected to rise to 220 million tonnes in 2005 and 227 million tonnes in 228 as cereal yield is progressing faster than expected (5.9 tonnes/ha in 2005 as opposed to 5.5 t/hectare forecast in Agenda 2000). As the result of poor weather conditions, the 2001 harvest is expected to be 202 million tonnes (as opposed to 212.6 in 2000). The Commission noted that if the current world market prices and dollar/euro exchange rates hold, then export refunds for wheat and barley will not be needed (70% of wheat and barley exports in 2000/01 were not subject to refunds). Without Agenda 2000, the Commission argues that cereal intervention stocks would build up substantially in 2000-2005 to reach a level of around 72 million tonnes in 2005. At the beginning of the 2000/01 year, only 7 million tonnes of cereals (half of it rye) were subject to the intervention price mechanism. "without policy changes, total stocks of rye are… projected to continue to rise rapidly in the coming years", comments the Commission. The latest estimates include very limited intervention stocks in the future, except for rye (10 million tonnes in 2005 and 13 million tonnes in 2008).
Oilseeds. The area given over to oilseeds feel from 4.8 million hectares in 2001 to 4.4 million in 2002. The Commission repeated its conclusion that protein to replace meat and bone meal can most economically be imported from the world market.
Beef. Intervention stocks are expected to arise to around 350,000 tonnes by the end of 2001 and 560,000 tonnes by the end of 2002. Thereafter, the Commission expects the market to "become more balanced", stressing that 700,000 cattle have been eliminated due to foot and mouth disease. The Commission expects beef consumption for the whole of 2001 to be about 10% below 1999. For 2002, it is forecasting a prudent consumption level 5% below the 1999 level.