EU Releases Cereal Intervention Stocks

EU - The European Commission has decided to release stocks from cereal intervention stores later this month, to curb the increase in feed prices.
calendar icon 3 November 2010
clock icon 3 minute read

The Commission and Member States have agreed that 88,112 tonnes of soft wheat and 2.71 million tonnes of barley should be sold from the EU intervention stocks through a tender system. Much of the remaining stocks – around 2.8 million tonnes – will be used as part of the Commission’s aid programme. The regulation for opening the sale will be published shortly in the official journal and the deadline for the first round of tenders is to be 24 November.

The National Farmers' Union (NFU) Scotland believes that while cereal prices remain buoyant, there is a delicate balance to be struck that avoids the long-expected release of stocks undermining the market while making more grain available to end users in the livestock sector would be welcome at this time.

Speaking from London, where he was meeting representatives of the malting industry, NFU Scotland Vice-President Allan Bowie said: “The Commission have, for a number of months now, been warming up the cereal sector to the likely release intervention stocks of barley and wheat this winter. This announcement is not a surprise and there is a feeling that its announcement has already been factored into the market. However, its implementation may still take a degree of management if volatility is to be avoided.

“In making the announcement, Commissioner Ciolos has said that he plans to keep close control of both volume and the price of the stocks coming onto the market to make sure that the market is not disrupted. We welcome that commitment.

“Knowing that stocks were likely to be released, growers have had a period of time this autumn when they can tap into risk management tools including futures, hedging and forward contracts. Hopefully these tools will allow many Scottish arable farmers to make the most of the opportunity that the current spike in grain prices presents and that the current return to profitability for many growers lasts for much longer than just this season.

“Growers also appreciate that the livestock sector is a huge market for our products and it is in the interests of both growers and livestock producers that our wheat and barley remains affordable to them. The release of intervention stocks should free up supplies of grain for livestock businesses across Europe and with careful management, the impact on the cereal sector will be muted.

“The ability to manage cereal markets through the use of management tools such as intervention remains of fundamental importance to Europe. As we enter a period of intense discussions on the future of the Common Agricultural Policy, we would argue that the availability of safety net measures such as intervention is a crucial part of the debate. At the same time, the world faces challenges over food security. Intervention is a tool that allows Europe to keep strategic reserves during increasingly volatile and food insecure times.

“The availability of cereals at a world level is currently subject to much speculation and global stocks are currently thought to be lower than those seen in 2007. Further US figures on planting are expected next week while the influence of China on availability of current stocks continues to grow. The Chinese are still regarded as buyers rather than sellers of grain and now hold around 40 percent of world grain supplies. With world demand for grain expected to increase in the coming years, China’s influence on the market will be considerable.”

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