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This report is presented in accordance with the procedure laid down in the declaration on the system for fixing Community farm prices contained in the Accession Documents of 22 January 1972. It was completed in December 1998. As in previous years, the report falls into two parts. The first part presents the agricultural situation and 1998's out-turn. The economic situation, the trends on principal markets, issues affecting rural development, financing of the common agricultural policy and external trade relations are then discussed. The second part of the report provides the main statistics on European Union agriculture and gives, in a form that has now become standard, updates of the tables produced in previous reports.