Accession boosts farm income in new Member States by more than 50%

by 5m Editor
20 December 2004, at 12:00am

EU - The first estimates of agricultural income for 2004 show a year-on-year increase of 3.3% in the European Union as a whole.

This increase was primarily thanks to the contribution of the new Member States, where agricultural income increased by an average of 53.8%. This shows the overwhelmingly positive impact of accession to the EU on the agricultural sector, through access to the Single Market and implementation of the Common Agricultural Policy. Income in the “old“ 15 Member States also increased this year, by 0.8%.

“These results are excellent news for European farmers, particularly in the new Member States,“ said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development. “They show that the concerns voiced by some in the lead-up to enlargement were unfounded. The new Member States’ accession to the CAP has brought new security and new opportunities to their farmers. I’m also delighted that real farm income in the ‘old’ Member States has returned to its long-term upward trend. I am certain that all EU farmers will be able to build on this success as the new CAP reforms come on stream.“

Income is measured as income in real terms (deflated) and per person employed full-time in agriculture.

At EU-25 level, the main factors contributing to the increase were:

  • The sharp increase in agricultural harvest as compared to 2003, notably for the cereal, oilseed, wine, olive oil and potato sectors. The total volume of crop production rose by 12.5 % which outweighed the decrease in real crop prices (-8.4%);

  • An increase in the real value of animal production, in particular for pork and poultry (+7 % and +4 % respectively);

  • The substantial increase in the level of subsidies granted to the farm sector of the new Member States in the wake of the enlargement (from 1.2 bio EUR in 2003 to 3.0 bio EUR - including national top-ups);

These favourable developments more than offset the strong rise in total input costs linked to the sharp increase in oil prices (which drove up prices for energy, lubricants and fertilizers).

Income in the ‘old’ Member States returned to its long-term upward trend, increasing by 0.8 % compared to 2003. Since 1980, agricultural income has increased by 48 % in real terms in the ‘old’ Member States (+24 % since the implementation of the 1992 CAP reform process).

Accession significantly helped agricultural income in the new Member States, which increased by 53.8%. These results confirm earlier analyses by the Commission’s DG AGRI on the income prospects after enlargement. Main factors behind the increase were:

  • A sharp improvement in market income generated by more favourable market conditions (accounting for around 60 % of the rise) and the granting of mostly decoupled public support (accounting for about 40%).

  • Agriculture in the Czech Republic (+108 %) and in Poland (+74 %) benefited most from enlargement.

To read the full report, please click here

Source: European Commission - 17th December 2004

5m Editor