End of Project ReportThis study examines the effect of changes in agricultural policy and other important economic factors
on the outlook for milk and pig production in Ireland in future years. The analysis is conducted at an
aggregate commodity level for the dairy and pig sectors. Companion reports provides similar detail
on other agriculture sectors (including beef, sheep and cereals) and for the outlook at farm level. The
analysis summarised here took place in 2001 and 2002.
The potential effect of a change in international trade policy under the World Trade Organisation
(WTO) agreement is examined. Specifically, the analysis assumed two different possibilities for the
reduction and the elimination of export subsidies. Subsequently, the impact of a change in the EU’s
extensification regime is examined.
A series of interlinked economic models capable of projecting key price and output variables were
built for the main Irish agricultural commodities, including the dairy and pig sectors, and these in turn
were linked with models for the EU and the World. It was thus possible to estimate the implications
for the Irish dairy sector of supply, demand and policy changes at a world and EU level.
The Baseline analysis showed that under a continuation of current policy that by 2010, the Irish milk
price is projected to decline to just over 25 euro per 100 kg.
It was found that relative to the Baseline outcome for 2010:
• a reduction in EU export subsidies in the dairy sector equivalent in scale to those introduced
in the Uruguay Round Agreement would lead to a reduction in the Irish milk price of seven
per cent by 2010
• an elimination of EU export subsidies in the dairy sector would lead to a reduction in the Irish
milk price of 20 per cent by 2010
The Baseline analysis showed that, under a continuation of current policy, by 2010 the Irish pig sector
value was projected to decrease by four per cent relative to its 2000 level.
It was found that relative to the Baseline outcome for 2010:
• a reduction in EU export subsidies in the agriculture sector equivalent in scale to those
introduced in the Uruguay Round Agreement would lead to a reduction in Irish pig sector
output value of less than two per cent
• an elimination of EU export subsidies in the agriculture sector would lead to a reduction in
Irish pig sector output value of eight per cent
The implications of a reform of the extensification regime were not substantial. It was found that they
fell for the most part on the beef and sheep sectors. The effect on milk and pig production was
negligible
