19 July 2002

Black Sea grain still a threat as EU talks fail

CEREAL producers will continue to face stiff competition from cheap imports of Black Sea grain after farm ministers failed to agree ways of improving the EUs border protection this week.

A problem has arisen this season because existing import levies are based on the difference between Chicago wheat quotations and 155% of the EU intervention price. With Black Sea grain trading significantly cheaper than Chicago, even with the levies it has undercut EU producers.

Farm commissioner, Franz Fischler, has suggested opening urgent negotiations with the World Trade Organisation to replace the current protection system with tariff quotas and fixed duties.

Some member states accepted this approach, but others believed it would be too slow, especially since Russia and the Ukraine are not even WTO signatories. They suggested holding bilateral talks to seek a solution.

Other members, led by France and Belgium, have called for a new system, with import levies based on the difference between the price of grain in Odessa and the EU intervention price.

Dr Fischler dismissed this idea at this weeks farm council in Brussels. "Be under no illusion. The commission will not accept Odessa quotations for the simple reason they do not exist. I cant base such an important regime on unreliable, uncontrollable price quotations, coming from doubtful or interested parties."

With the council split on the issue, it was agreed to send it back to the expert committees, meaning no further action will be taken at least until September.

The one bright spot, pointed to by some delegations, is that the Russian and Ukrainian crops are likely to be much smaller this year, after delayed plantings and spring drought, meaning their prices may be less competitive. &#42