EU to keep surplus grains on lack of sales outlet

The EU will be forced to retain its growing mountain of 4.2 millions tonnes of unwanted grain as no disposal outlets are feasible in an era when subsidised sales on world markets are no option, according to analysts.

This may mean the EU faces a storage bill of up to EUR74 million (US$100.7 million) annually if the grain mountain grows to forecast levels, they said.

Selling the current grain mountain in the EU's internal market could further depress prices as the bloc will cut its safety net of minimum guaranteed prices for grain farmers this summer, allowing lower grain prices than in the past.

"There is no easy, single method of selling this grain, there is just too much," said commodity analyst, Claus Keller.

The EU supports farmers by guaranteeing to buy crops, including grain, at a minimum price in its intervention scheme. Unwanted cereals are stored in intervention stocks, its grain mountain, while the bloc seeks methods of selling them.

EU farmers have already offered 4.2 million tonnes of grain, mostly animal feed barley, into intervention this season, and this could rise to 6-7 million tonnes as farmers take the last chance for intervention subsidies before big subsidy cuts this summer, traders said.

The EU has rejected a call from Finland for renewed export subsidies to cut the expanding stocks, and analysts rule out export subsidies in the current global trade scene.

"I think these surplus stocks in the feed sector may simply be retained," Keller said. "It may be possible to gradually reduce the stocks over a long period, but there is no easy option to sell them in a short period of time."

Emmanuel Jayet, head of agricultural commodities research at France's Societe Generale, agreed, expecting sales to be spread over several years.