In its annual update of the longer term prospects for the European dairy industry, the EU Commission has forecast a well balanced dairy situation over the next seven years. Milk output is expected to show little change because of the milk quota system, the life of which is virtually guaranteed up to at least 2006. Cheese is expected to be the main growth area with output rising by about 7% up to 2008, matched by a similar increase in consumption but also with 10% growth in EU exports and 16% growth in current modest imports. Butter consumption is forecast to fall nearly 5% and with output almost static there could, it is suggested, be a small build up in stocks from around 2006. Bigger changes are expected with skim milk powder where output is forecast to drop by 11% and to reflect a 16% drop in consumption, mainly in the use of powder for animal feed. Powder stocks, which are currently zero, could also be a slight problem after 2007. In parallel forecasts for the 10 CEEC countries in Eastern Europe, most of who hope to join the EU in the next few years, the EU Commission is projecting somewhat more radical changes. Cow numbers between 2001 and 2008 are forecast to drop by 12%, milk output will be down by 3% and consumption down by 1.2%. If these forecasts come true the net export balance of the 10 countries concerned will drop from 1.5 to 0.9 million tonnes milk equivalent by 2008. Perhaps the forecasts are designed to reassure current EU member states that enlarging the EU will not be costly, at least in terms of disposing of large dairy surpluses. {{M/E CANNED GOODS }}