The impact of the European enlargement and CAP reforms on agricultural markets. Much ado about nothing?

Policy reforms in the EU require careful consideration because the EU is asignificant player in international agricultural markets for many commodities. Weanalyze the effects on world agricultural markets of the 2003 Common AgriculturalPolicy (CAP) reform and the accession of ten new member states (NMS) to the EU onMay 1, 2004. Given past reforms, changes introduced in the 2003 CAP have only amoderate impact on the EU-15, causing small decreases in production for mostcommodities and raising domestic prices marginally. Beef, rice, and dairy experience thegreatest changes. Accession leads to substantial increases in domestic prices of severalcommodities in the ten NMS because their prices were historically below EU-15 prices.Consequently, consumption of agricultural products in these countries decreases whileproduction rises. Trade with the NMS causes EU-15 prices to decline modestly, and thetwo reforms combined have moderate or negligible effects on world markets.