October 29, 2012

EU likely to extend zero import duties on feed wheat, barley

On November 8, the EU's cereals management committee will vote on whether to extend the suspension of the bloc's import duties on feed wheat and barley until the end of June 2013.

In June, the EU suspended its import duties of EUR12 (US$15.5) per tonne for low and medium-quality wheat and EUR16 (US$20.7) a tonne for feed barley until the end of this calendar year, in response to high grain prices.

With poor grain harvests this year in the US and parts of Europe keeping prices high, sources close to the committee said the proposal from the European Commission to extend the zero duties is likely to be approved.

Under EU rules, the committee of member state officials must decide to either approve or reject the decision by a weighted majority. If no majority is reached either way, the Commission has the power to approve the decision itself.

The suspension will apply to half of the EU's preferential annual import quota (TRQ) of 3.11 million tonnes for feed wheat. The quota includes volumes reserved for US and Canadian imports, while much of the remainder is usually filled by wheat from Russia and Ukraine.

This week, Ukraine announced an export ban on wheat from November 15, which led the EU's top farm official to warn the Kiev government against any moves that would increase prices and disrupt trade flows.

The suspension will also apply to half of the bloc's annual TRQ for barley of 307,000 tonnes. The EU has already filled virtually all of its TRQs for feed grains this year.

Under international rules the EU fixes maximum duties on cereal imports above the annual TRQ limits, known as bound tariffs. For imports of low and medium-quality wheat these are fixed at EUR95 (US$123) per tonne, and for barley at EUR93 (US$120.3).