Adjustment of the Finnish Agriculture in 1995
Kettunen, Lauri (1996)
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Maatalouden taloudellinen tutkimuslaitos. Julkaisuja
Maatalouden taloudellinen tutkimuslaitos
MTT Taloustutkimus (MTTL)
MTT Taloustutkimus (MTTL)
The adjustment of Finnish agriculture to the EU membership has largely gone as was expected, except that the market prices have been somewhat lower than was forecast before joining the EU. This was partly caused by the strengthening of Finnish markka, but the prices of beef, mutton, and eggs have been clearly below the average levels in the EU. Overproduction may be one reason for the collapse in the price of eggs, but in the case of beef and especially mutton there is no excess supply that might affect the prices. Livestock production, in particular, has stayed at about the same level as in 1994. The area under cereals grew to some extent, mainly due to the considerable decrease in the required set-aside area. Trade between Finland and the other member states increased as was expected. Especially meat imports increased considerably from the earlier levels. This was made possible by the fact that the decrease in the consumer prices (about 9 % by the end of 1995) led to an increase in the consumption of pigmeat and poultry meat. The trade in dairy products, like cheeses and yoghurt, increased as well. Some decrease occurred in the food imports to Russia and Estonia. During a transitional period of five years a degressive support is paid to agriculture, and in the first year this was quite high. The purpose of the support is to alleviate the adjustment of farms to the toughening competition in the single market. Because of the support, farm income stayed at about the same level as earlier. Farmers managed the first year as EU members quite well, even if some of the support was postponed to be paid in 1996. Income development looks relatively good still in 1996, but in the long run the situation is likely to be much more difficult. The first year as EU members was characterized by delays in the decisions on support, which led to uncertainty about the income development among farmers. Farmers had to learn to operate in a new bureaucratic system, but things have started to run quite smoothly. Support for the transitional period will keep the incomes at a satisfactory level, but the future involves a great deal of uncertainty.
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