The accession to the European Union (EU) ten years ago was for the Finnish agriculture and food sector an unprecedented rapid shift from closed and regulated markets to open and more competitive ones. Finnish farmers faced a change in output prices, relative prices and direct support which were of exceptional magnitude compared to that of any other country which had ever joined the EU. Commitment to the Common Agricultural Policy (CAP) lowered the producer price level in Finland by 40-50% right at the beginning of 1995.
On market prices alone, the survival of Finnish agricultural production would have been very difficult. A comprehensive package of compensatory payments was therefore agreed to facilitate the adjustment. Various forms of support payments have played a central role during these first ten years in the EU in ensuring that Finnish agriculture succeeded in common EU markets. In 2004, support payments rose to €1.8 billion, which was 45% of the total return on agriculture and horticulture (€3.97 billion).
Despite the growth in direct payments, agricultural income has been falling in Finland. According to figures from MTT Agrifood Research Finland, agricultural income at fixed prices was almost 34% lower in 2004 than in 1994.
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