EU enlargement and the Common Agricultural Policy: The case of Slovenia

The paper aims at assessing the economic effects of Slovenia's accession to the EU. For this purpose, a sector model of Slovenian agriculture APAS-PAM has been constructed. The methodological framework allows for assessment of market, income and competitiveness effects for ten key agricultural products with consideration of two accession scenarios (optimistic EUe and pessimistic EUp) that describe the whole range of possible accession effects. Slovenia's accession to the EU will not increase agricultural production significantly. Accession under the scenario of complete acceptance of the CAP mechanisms and quasi equal treatment by the EU (EUe) will not bring significant changes to aggregate production and income levels with moderate changes on commodity basis. Discrimination of the candidate countries in the field of direct payment, and non-competitive down-stream sector assumed by the EUp- subscenario will significantly deteriorate the income situation of domestic producers. This holds especially for cereal and beef production. For many commodities, the competitiveness of the food processing industry assuming different price levels for raw materials could have much greater impact on the economic situation of agricultural production than agricultural policy environment itself.