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EU proposes suspending import duties on most cereals

The European Commission Monday proposed suspending import duties on most cereals in response to the exceptionally tight situation in the European market and record-high prices.

Under the proposal, import duties on all cereals except oats will be suspended for the current marketing year, which ends on June 30, 2008. „I hope this proposal will help facilitate cereal imports from outside the European Union (EU) and reduce tensions on European grain markets,” said Mariann Fischer Boel, the EU Commissioner for Agriculture and Rural Development. The EU still applies import duties to certain types of grains in order to balance the market.

However, the European cereals markets has seen a spectacular upsurge in prices since the start of the current marketing year due to a poor harvest and tight conditions on the world market. In 2007, unfavorable weather conditions reduced the harvest and overall EU production is estimated at 256 million tons, a drop of 10 million tons or 3.5% from the already modest harvest in the previous marketing year. Output is declining at a time when EU stocks are already low. At the start of the current marketing year in July, total stocks were 13.2 million tons below levels at the same time during the previous year. As a result, the EU, traditionally a net exporter, has become a net importer of cereals since July. „We have seen a modest harvest in Europe and high prices both at home and on world markets,” Boel said.

Since the beginning of the new marketing year, the price of milling wheat in Rouen, France has risen from €179 per ton to almost €300 at the start of September 2007. In Germany, bread-making wheat was selling at a price 70% higher than the previous year by mid-August. The commission hoped the suspension of import duties on most cereals, which has to be approved by EU member states next month, could help relieve the tight supply to the European market. (