August 31, 2007

 

High grain costs seen hitting world meat price

 

 

High grain costs will "lead to adjustments in world meat prices" European Commissioner for Agriculture and Rural Development Mariann Fischer Boel is expected to say in her online blog Thursday (August 30).

 

Pig and poultry producers around the world are being hit by high cereal prices, even in low cost producers like Brazil, Boel said in comments emailed ahead of publication on her website.

 

"I hope European consumers will put their money where their mouth is and be prepared to pay a little bit more for EU produce," said Boel.

 

The price of wheat, the major European Union grain crop, has nearly doubled from lows seen in April. Liffe Paris-based milling wheat set a record high of EUR252.50 a tonne early Thursday (August 30).

 

The commissioner rejected ideas that biofuels are driving up prices, saying that at best they play a marginal role in the EU. A more significant factor, she added, have been the low harvests in many regions of the world.

 

Earlier in the season analysts and traders were forecasting the EU would rebound from last season's poor cereal harvest. But adverse weather ranging from overly wet conditions in the western EU to drought in the eastern countries has meant that output will actually be lower on the year.

 

"We find ourselves in a world no one would have imagined a year ago," said Boel.

 

"The dairy sector has moved from a market under pressure to a situation where prices are surging," she said. "Likewise, for grain, we suddenly find ourselves in a situation where supplies are tight and prices are way above recent levels."

 

Earlier this summer Boel proposed the EU cut its 10 percent mandatory arable land set-aside rate for the 2008-09 growing season, which would allow farmers to plant more winter crop starting this autumn. The program was originally set up during the early 1990s when the EU suffered from a glut of supplies.

 

Boel said that as raw materials such as wheat contribute a relatively small percentage to the final price of foods like bread, she hoped supermarkets would act responsibly.