The EU enlargement and FAO cereal trade estimates

On 1 May 2004, ten countries joined the European Union (EU): Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Poland, Malta, Slovakia, and Slovenia. It is customary to treat the EU as one entity for trade accounting purposes (i.e. exclude trade flows among its individual Members). Starting in 2004/05 marketing season, therefore, the cereal trade forecasts reported in Food Outlook exclude intra-trade among the EU-25 Member States. For this reason, trade data for the EU (also Europe, the developed country group and the world trade aggregates) may not be fully comparable with those in 2003/04 (and before), when only intra-trade among the 15 Member States was excluded.

From a statistical point of view, the EU enlargement results in a smaller EU trade with the Rest of the World (RoW). This is because the ten accession countries (AC-10) are now part of the new EU and not of the RoW. The same effect can be observed at global/regional levels. For example, world trade in wheat in 2004/05 is forecast at 98 million tonnes, but if we were to include the EU-15 instead of the EU-25 grouping, global trade would appear bigger, at around 99 million tonnes. The difference being the trade among the ten new members plus each of these countries’ respective trade with the EU-15 as a single entity.

Wheat, barely, maize and small amounts of rye and oats are the main cereals traded between the EU-15 and the new members. Of these, Hungary, Poland, and the Czech Republic are the leading producers and exporters of wheat, maize and barely. In recent years, the volume of wheat that AC-10 exchanged with each other and the volume they traded with the EU-15 averaged around 1.3 million tonnes annually. In the case of maize and barley it was of the order of 1 million tonnes and 400 000 tonnes, respectively (Chart 1). In aggregate, annual cereal exports from EU-15 to AC-10 approached 500 000 tonnes (mostly wheat and barley). Conversely, annual cereal exports from the new members to EU-15 averaged around 1 million tonnes.

In order to facilitate comparison of EU-25 cereal trade forecasts for 2004/05 with previous years, some rough estimates of exports from EU-25 to RoW and imports into EU-25 from RoW are provided. As shown in Chart 2, wheat exports from EU-25 in 2004/05 are forecast to rise above the 5-year average but exports of barley to outside EU-25 are expected to decline sharply while for the other cereals they are slightly down. Regarding EU-25 imports from RoW, current indications point to a significant decline in wheat imports in 2004/05, as shown in Chart 3. The main reason being a sharp recovery in wheat production in the EU after last year’s poor harvests. For other cereals, import variations are likely to be small, with imports of barley falling but maize imports increasing.