It’s now several years since the process of world agricultural reform began under the Uruguay Round and there have been significant changes in a number of key markets. Perhaps most striking has been the relative decline of the European Union as a provider of the world’s food.

The recent annual report of the Agriculture Committee of the World Trade Organisation graphically shows how much ground Europe has lost to its competitors throughout the 90s in a range of products including beef, wheat, dairy goods and poultry.

But there are a lot of factors at work here of which the reform process is only one. Beef is a conspicuous example of how the EU has gone from being the world’s leading supplier in the late 80’s, with 25% of the market, to 3rd place (in 1998) with just 12.8%. In wheat and wheat flour the EU market share has fallen from 19.3% to 14.6% in the past ten years. Similarly with skim milk powder – down from 41.5% to 18% – and butter and butter oil where there has been a particularly dramatic slump from 54.8% to 20.9% in the EU world market share. In poultry the EU market share is down from 23.3% to 16.9%. In almost all these cases the gains have been made by Australia and New Zealand and to a lesser extent the US and Canada. Only in the supply of pigmeat, where its market share is up from an average of 29.1% in the late 80s to 34.7% in 1998, has the EU made ground though it has held its own in the fruit and vegetable markets.

There are however reasons to distrust these figures since they may well disguise a shift of food exports from the “raw” into the manufactured or semi-manufactured food categories.

One has to read the tables alongside those for “other products” where items are not individually identified. “Other products” is an enormous sector running from basics like lamb, coffee and cocoa to processed items like chocolate, cereal preparations, margarine, wine, and olive and other vegetable oils. The category represents well over half of all agricultural produce and the EU share of it has risen from 17.2% in the late 80s to 20.9% in 1998.

At the same time the world market for these products has risen by some 70%, so that the actual value of EU exports has doubled, from US$17.6bn to US$36bn. In financial terms, this quite handsomely outweighs the EU’s loss of its market shares in the individually listed products.

Nobody knows with any certainty how much of the EU’s food trade has been diverted in this way but probably enough to undermine the Union’s complaint that the reform process has worked against it. Other factors – the poor European harvests of the mid-90s, the effects of BSE, the Asian financial crisis and the widely varying year-to-year impact of food aid – are just as imponderable.

There is also a suggestion that the reform process itself is flawed in that artificially low base lines were drawn up for the starting point in 1994. This would make subsequent claims about subsidy reduction less real than they looked.

Certainly the EU has lost market share in many basic agricultural products to Australia and others in recent years. It has almost certainly lost out in the fishing sector as well, though this is not covered by WTO. But what is not yet clear is precisely why this has happened nor whether it matters very much at a global level, given the EU’s gains in other sectors.

By Alan Osborn, correspondent