Figure 8.2 Dairy producti

Figure 8.2 Dairy production volume of selected regions under different 200.0 180.0 160.0 140.0 120.0 100.0 80.0 scenarios in 2015, relative to initial level in 2001=100 EU Nafta Brazil China Rest of Asia Australia New Zealand Base Quota Lib HPDairy HPMilk EqualGR Rest of world Higher rates of productivity in the dairy sector will have a positive effect on the output level in EU. As already discussed for the aggregated food sector, the New Zealand and Australian dairy sector strongly expand dairy production under full market access conditions. 8.5 Food export and international competitiveness The following figures present results for the export performance of the food industries of the different policy scenarios calculated for this study. In general, the first scenario which analyses the consequences of the continuation of the current polices (Base) and the scenarios analysing the abolition of milk quotas (Quota) and the full withdrawal of any support in the dairy sector (Lib) show a decline in competitiveness of European food processing industries both at international level and at national level. 79

80 Figure 8.3 Food export shares of selected regions under different scenarios for 2015 (in % of world food expert, 2001=100) Figure 8.3 describes the development of food export shares in the total world food export. Under the initial 2001 situation (Initial) the EU has a food export share of more than 25%. It should be mentioned that under all scenarios calculated for this study the EU remains together with the Nafta region one of the largest exporter of processed foods. However, the declining export shares between 2001 and 2015 indicate a loss in international competitiveness, see Base. This decline is due to the consequences of the decline in agricultural support as the consequence of the implementation of reform of the CAP between 2001 and 2007. The CAP instruments also affect the prices of processed food prices. As a consequence, production in agri-food sectors decline in the EU-15 and excess supply disappears. In this scenario other regions in the world gain export shares: highest relative increases are in the Nafta region and Brazil. Strongly growing economies such as China also loose export share in world food markets which is mainly due to a strong growth in domestic demand which reduces the excess supply available for exports. An enhanced productivity growth in European dairy industries (scenario HP Dairy) will compensate for the above mentioned decline in European share of food products in world total food exports. It is assumed that productivity growth