Dairy situation in Central and Eastern Europe. Development of dairy production in prospective first round Central and East European EU members countries and impacts for the European Union

EU enlargement negotiations with the Czech Republic, Estonia, Hungary, Poland and Slovenia have commenced in 1998. The total population of the five countries is 62.3 million (of which 62/ reside in Poland), which corresponds to 17/ of the 373 million living in the EU. The average per capita GDP is just 16/ of that of the EU. Between 1989 and 1997 milk production declined one-third to 18 million tonnes in the five countries. Most of this drop in milk production took place in the years before 1995, but so far there are only a few signs of recovery. In the 15 EU countries milk production fell 8 million tonnes to 121 million tonnes in 1997. Producers' deliveries to dairies in the five countries showed an even steeper downward trend than production. But the reserve to increase milk supplies to the dairy industry without increasing production is still large. On average, just two-thirds of the production were delivered to dairies, compared with 94/ in the EU. Milk prices are between 24 and 50/ below the EU level. As consumer prices for milk products in the five countries rose sharply, consumption of the traditional dairy products declined. Competition from imports added to this and increased the difficulties faced by the dairy industry. Despite the decline in production the even steeper decline in consumption led to surpluses in most of these countries which could no longer be disposed of on their internal markets. Some countries introduced support and intervention measures. The cheese and fresh dairy products markets seem to offer promising opportunities in the future. Milk production should stabilize at its present level over the next few years or show slight growth rates. The potential to increase the milk production is estimated at 2.5 million tonnes, if quotas are introduced. The additional quantities may enable the five countries to increase their internal consumption from domestic production and to export dairy commodities to the extent of 1.5 million tonnes of milk.