June 13, 2007

EU to cease corn price guarantees as granaries overflow from unsold stocks

The European Union agreed Monday (June 11) to end buying corn its farmers could not sell above the established price, as the 27-nation bloc's grain silos were close to bursting with unsold stocks.

The farmers are having a hard time selling corn for more than 101.31 euros (US$135) per tonne in order to provide a safety net when prices slumped.

But soaring corn prices worldwide, farmers from Hungary still need the EU price guarantees due to its antiquated production techniques and its poor infrastructure from big markets.

Hungarian production has steered up the amount of corn held in EU grain silos, which are estimated to cram up 5.6 million tonnes in stocks with little chance of selling it profitably. 

European Farm Commissioner Mariann Fischer-Boel said the situation of growing stocks is quickly becoming unsustainable and expensive for the EU budget.

The end to price guarantee is expected to save the EU budget about 620 million euros (US$827 million) in purchase and storage costs from 2008 to 2014, according to an estimate from the European Commission.

In addition to corn, the EU also offers its farmers a 101.31 euro per tonne price guarantee for breadmaking wheat, durum wheat, barley and sorghum.