European Commission anticipates rise in agricultural incomes until 2015

18 March 2009

In mid-March, the European Commission published its toutlook for agricultural markets and incomes for the period 2008-2015. The forecasts show that average agricultural incomes in the EU are set to rise by 7.5% compared to 2007 (a favourable year).

This rise in agricultural incomes, however, is largely attributable to Eastern European countries, which can expect to receive higher agricultural subsidies over the next few years. Compared to 2007, incomes of farmers in the ‘EU 15’ will remain the same or decrease slightly.

The report reveals that in the short term, the economic and financial crisis will also affect the agricultural sector, although the farming sector in general is better equipped to deal with economic crises than other sectors, according to the Commission. In the medium term, the Commission predicts a gradual recovery in agricultural markets. The markets are supported by long-term factors, such as the growth in global demand for food.

Milk production will rise slightly until 2015, but will remain below the milk quota set by the European Commission. The Commission concludes that the abolition of the quota will not have a major impact on the milk price.

The EU also reports that the calculations do not take account of the current world trade talks. Moreover, prospects for agricultural markets remain uncertain, partly because of the future climate issues.