29 January 1999

Grain supplies face threat of more imports

GRAIN imports could rise under Agenda 2000 proposals, placing extra price pressure on UK supplies, warns HGCA economist Peter King.

Import duty on grains roughly equals the difference between one-and-a-half times the intervention price and the world price. At present values, the proposed 20% cut in intervention prices would reduce the duty by about £30/t.

"High quality wheat could enter the UK at zero duty," says Mr King. It could also tempt Italian and Spanish buyers, hitting UK exports.

Some low quality east European wheat may also become available at bargain prices, since relatively expensive US soft wheat is used to set low quality wheat duties, says Mr King.

The impact on UK farm revenues depends on the degree to which the arable area payment offsets the new intervention price, says Mr King. If the proposals are adopted, the direct payment is set to rise by the equivalent of about £9/t, half the cut in the intervention price.

"One thing is clear," says Mr King. "Grain marketing is going to become increasingly important to the viability of farming businesses in the future." &#42