By Nancy Cochrane and Ralph Seeley

Ten countries- Poland, Hungary, Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Malta, and Cyprus- are on track to join the European Union (EU) in May 2004. At the December 2002 Copenhagen Summit, the EU closed negotiations with the ten candidate countries and issued invitations to join in 2004. Accession could bring some significant changes in the structure of agricultural production and trade in the countries of Central and Eastern Europe (CEE).

The authors suggest short-term commodity impacts are not large. Recent ERS model results are used to suggest large increases in output of feedgrains and beef, but almost no change in CEE output of wheat, oilseed, pork or poultry output. The analysis focused on three countries Poland, Hungry, and the Czech Republic. Trade impacts are also likely to be small in the short-term. There could be increases in rye and barley, and an enlarged EU could become a small net exporter of corn. But in the longer term, however, both supply and demand side impacts could be significant.

The paper presents careful analysis and EU enlargements predictions for six main commodities; beef, wheat, course grains, pork, poultry, and oilseeds. The authors suggest on the supply side, enlargement will increase pressure for restructuring. On the demand side, EU membership could bring higher income to CEE consumers and thus higher demand. The authors concludes by restating their assumption on aggregate short term impacts of EU enlargement on EU commodity output and world agricultural trade will not be nearly as large as once feared. In addition the author also suggests that even though accession could be great for consumers as many are aware, it could bring hardship to many small farmers and processors in the CEEs. It is for this reason that while a majority of the population favor accession, a sizable segment of the farming community are bitterly opposed.

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By William Liefert, Olga Liefert, Stefan Osborne, Eugenia Serova, and Ralph Seeley

During the 1980’s, Russia (as well as the Soviet Union in the aggregate) was a large importer of grain, soybeans, and soybean meal. Most of the imports were used as feed to support the policy-driven expansion of the livestock sector. When economic reform began in the early 1990’s, Western studies showed that effective reform could turn Russia from a major grain importer to a major grain exporter. By 2000, however, these forecasts had not yet been fulfilled but in both 2001 and 2002 there were exportable surpluses and rising grain production which may be signs of an improving agricultural system that could give rise to a long-term rise in output. Could rising productivity finally fulfill the forecasts of the early 1990s by turning Russia into a major grain exporter? Might productivity growth also expand the country’s livestock sector, such that Russia substantially reduces its meat imports?

This paper examines how changes in Russian agricultural productivity, consumer income, and policies, as well as changes in other variables, could affect the country’s trade in grain and meat. The paper uses a model for Russian agriculture to forecast Russian production, consumption, and trade for grain (wheat and coarse grains) and meat.

Various scenarios are run depending on different assumptions concerning two key variables: (1) the degree of productivity growth in Russian agriculture (reflecting the effectiveness of agricultural reform); and (2) trade policy developments.

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Dramatic changes have occurred in Central and Eastern Europe and in the former Soviet Union since the Berlin Wall fell in 1989 and the Soviet Union disintegrated in 2001. Profound economic and political transitions have occurred in these countries, with major implications for their food and agricultural sectors. Most of these countries heavily subsidized their agricultural sectors, and the state sector accounted for a major portion of agricultural production. The reform agenda in these countries has included transformation of collective agriculture to individual farms, establishment of functioning markets, reductions in subsidies, and adjustments in domestic prices toward world market prices.

The transition process has been anything but smooth. During the years immediately after the disintegration of the Soviet Union, withdrawal of agricultural subsidies to consumers and producers along with a collapse of traditional marketing links within the socialist system led to a chaotic economic situation. The food and agricultural sector in the transition economies has since recovered but to varying degrees. At one end of spectrum are the eight transition economies that joined the European Union in 2004, including Poland, the Czech Republic, Hungary, and Slovakia. At the other end are countries such as Russia, Ukraine, and Belarus, where the food and agricultural sector continues to struggle.