Production and Income Outlook for Slovene Agriculture

Expert analyses and forecasts of economic conditions are a compulsory basis of any appropriate development and policy making. They are necessary for the preparation of different expert economic and development documents as well as the continuous adaptation of economic and development policy measures to the changes in actual developments. The significance of forecasts is even greater if we take into account that they direct the economies into the desired direction by influencing the expectations and thereby the actual events. Of course, these are not forecasts in the classic meaning of the word but rather the most probable results of developments based on certain assumptions. The current agricultural policies play a special role in the development of single markets in agriculture. These policies are usually based on subsidies to agricultural producers. In the Common Agricultural Policy of the European Union, subsidies were until the last reform in 2003 in large part tied to some agricultural commodities and they thus distorted the free market solutions regarding the supply, demand and product prices. The producers were encouraged to preserve agricultural production and at the same time to produce certain commodities. They should directly contribute to greater economic activity. The situation has only started to change in the last few years, when market principles have also been increasingly applied to agriculture. We can use the production volume, the value of production, and income as measures of economic activity. Value added, which is the mathematical difference between the value of production in basic prices and the value of intermediate consumption, is used in the National Accounts