November 16, 2007

 

Hungary wins court case vs EU on public corn storage

 

 

Hungary won its case on Thursday (November 15, 2007) against European Commission regulation intended to raise the quality of corn submitted to the public grain-storage system.

 

Europe's Court of First Instance said the commission failed to make known the intentions to farmers in sufficient time. The court said the decision was made in late 2006 after farmers had already planted and harvested the 2006 corn crop.

 

The EU regulation had reduced allowances for maximum moisture content, the percentage of broken grains and grains overheated during drying. In addition, a maximum specific weight of 71 kilogrammes per hectoliter was introduced.

 

These measures excluded most Hungarian corn from the intervention system, which offers farmers a set price for their grain.

 

The Court ruled because producers had already sown the seeds, they could no longer influence the specific weight of the crop. Hungary first brought the action to the Court in November 2006.

 

The Court also ruled that the commission failed to explain how the specific weight measure could be considered relevant in determining corn quality.

 

During Hungary's initial years as an EU member, large amounts of Hungarian corn were offered into public intervention, burdening the system. Because Hungary is landlocked, the intervention price was more attractive to Hungarian farmer than paying to transport corn out of the country.

 

In 2004-05, Hungarian farmers submitted 2.5 million tonnes of corn; in 2005-06 they submitted 3.1 million tonnes.

 

However, since then a shortage of grain on the EU market due to unfavorable weather has allowed the commission to resell those quantities at market price, which was higher than the original intervention price.

 

Since November 2006, the commission has resold Hungarian corn at EUR112/tonne-EUR131/tonne, well above the intervention price of EUR101.30/tonne.

 

Amid higher market prices in 2006-07 and so far in 2007-08, farmers have been mostly selling on the domestic market rather than offering grain into intervention stores.

 

Earlier this year the EU Agricultural Council ruled to end the corn intervention system by 2009-10, putting into place a ceiling of 1.5 million tonnes for the 2007-08 marketing year on the quantity of corn that can be offered to intervention and 700,000 tonnes in 2008-09.