1. CLITRAVI 50th Annual General Assembly, Portoroz, Slovenia, 8 May 2008 Lars Hoelgaard, Deputy Director-General EU Agriculture in a globalised context

2. Portoroz, Slovenia, 8 May 2008 2 Before Now Ahead?

3. Portoroz, Slovenia, 8 May 2008 3 Before – Good old days Stable framework Intervention prices Tariffs Export refunds Intervention stocks Surplus – minimum/maximum prices Monetary compensatory amounts – green rates/accession compensatory amounts

4. Portoroz, Slovenia, 8 May 2008 4 Disappearance of public stocks Composition of public stocks in the EU (mio t), 1995-2014 Butter, SMP, beef – same picture

5. Portoroz, Slovenia, 8 May 2008 5 Now – volatility - EU-related CAP-reform – market orientation Real Filet de sécurité Direct payments – income security – but price volatility Exchange rate US-dollar/Euro

6. Portoroz, Slovenia, 8 May 2008 6 Volatility - global Energy crisis – 120$/barrel Global warming Bio energy - EU: –Renewables – 20% - 2020 –Bio fuels – 10% - 2020 Others Demand for raw materials Food/feed/energy/industrial Renewables - environment

7. Portoroz, Slovenia, 8 May 2008 7 Slightly expanding cereal markets and emerging bioethanol markets…. Development of cereal markets in the EU, 1995-2014 (mio t)

8. Portoroz, Slovenia, 8 May 2008 8 Food crisis? – or price adjustment to real cost of production Energy cost of production Environment – water cost of production Global warming – renewables CO² - cost of production

9. Portoroz, Slovenia, 8 May 2008 9 Demand driven Bio ethanol – maize – US – Iraq - war Odd man out – sugarcane and bio ethanol – Brazil Emerging economies Chinda (China/India) etc. - Diet patterns Population growth – 9 billion in 2050 Hedge funds – Soros – add to speculation – gold/oil

10. Portoroz, Slovenia, 8 May 2008 10 Opportunities/supply Africa potential – high prices good or bad? GMOs – productivity and environment US-dollar – reserve currency – imbalances Deficit in federal budget (Iraq war) Deficit in trade balance (China) Low interest rates house prices inflated consumption subprime

11. Portoroz, Slovenia, 8 May 2008 11 WTO Lower tariffs No refunds 2013 Market outlook

12. Portoroz, Slovenia, 8 May 2008 12 EU to remain net importer of beef EU production, consumption, trade and intervention stocks (mio t c.w.e.)

13. Portoroz, Slovenia, 8 May 2008 13 Growth rates for pig meat production and consumption are expected to be lower than in the 90s EU production, consumption and trade (mio t c.w.e.)

14. Portoroz, Slovenia, 8 May 2008 14 Meat Beef production to continue falling below consumption throughout the projection period due to: –Declining cattle herd from dairy sector –Impact of decoupling of direct payments Pig meat production expected to keep its slight growth thanks to: –Solid demand both in the EU-15 and in the EU-12 –Exports to decline slightly due to greater competition from low cost exporters, imports to remain at low level Poultry meat demand to grow faster than production, leading to EU becoming net importer of poultry meat EU sheep/goat meat production to continue its declining trend

15. Portoroz, Slovenia, 8 May 2008 15 Imports from developing countries (2005)

16. Portoroz, Slovenia, 8 May 2008 16 Health check (HC) – how does this fit? Further decoupling Modulation Balance Pillar I and Pillar II More market orientation Article 68 (old 69) LFAs New challenges

17. Portoroz, Slovenia, 8 May 2008 17 CAP expenditure and CAP reform path EU-10EU-12EU-15EU-25

18. Portoroz, Slovenia, 8 May 2008 18 Challenges Demand is there Can Europe keep pace? RD + innovation Reinvent yourselves – value added Competition – more, not less

19. Portoroz, Slovenia, 8 May 2008 19 Conclusion - ahead More volatility More market Risk management Instruments – hedging – futures Locking in prices But public intervention still necessary – market does not solve all Future CAP post 2013?