Brussels, Belgium
June 19, 2002

Today, the European Commission published a report on "Prospects for Agricultural Markets:
2002-2009".(1) According to the forecasts, world markets are expected to emerge from a prolonged
downturn. Medium-term prospects for the European Union (EU) are broadly positive for most agricultural products. In particular, a continued increase in consumption and a "sustained recovery in EU cereal exports" are projected, and beef production is set to return to "more normal" levels. Conversely, preferential trade agreements notably under the "Everything But Arms" (EBA) Agreement with the Least Developed Countries (LDCs) is projected to have a "dramatic" effect on the EU rice market. Also the outlook for rye is not positive. The rye market is foreseen "to display a continuous and structural imbalance" largely due to its relatively high market prices and lack of market outlets.

The report also contains a first qualitative assessment of the potential impact of the US farm bill on
international and EU markets. According to the forecast, the increased level of US support implies higher production levels and should thus exert further downward pressure on market prices. The greatest impact would be felt in the cereal sector where the US Farm Bill is expected to increase the competitiveness of US products and entail higher production levels. In contrast, oilseed production may be foreseen to decrease somewhat, thus releasing some pressure from market prices. For the European Union, the largest impact is to be expected on the wheat sector, and, to a lower extent, on coarse grains and meat production.

The full report is available on the Internet at:
http://europa.eu.int/comm/agriculture/publi/caprep/prospects2002/index_en.htm

(1) These prospects are based on information available in April 2002, and do not incorporate the potential impact of the new US Farm Bill.