12 January 1996

Gulf growing

on EU & US cereal policies

The world wheat demand and supply balance, the future of farm subsidies and the role of new technology took centre stage at the 50th Oxford Farming Conference. The subject of help for new entrants also received attention. Tony McDougal reports the highlights of the conference which aims to set the agenda for the farming year ahead.

CONFLICTING approaches to coping with the world cereal supply and demand, highlighted the growing gulf between EU and US agri-political thinking at the Oxford Farming Conference.

With global wheat stocks at a 20-year-low, and demand outstripping supply for the third successive year, US under-secretary for agriculture Eugene Moos stressed the need to promote free trade and guarantee food to large importers in the Far East.

But his outward-looking views were not shared by EU farm commissioner Franz Fischler, who said more favourable climatic conditions could completely change the world cereals market.

Declining to comment on future set-aside rates, Mr Fischler said: "It is dangerous to change all the rules on the basis of an untypical harvest result."

Mr Fischler acknowledged the need to keep intervention stocks at a low level, and help farmers export goods without subsidies: "We have reduced to almost nothing the enormous intervention stocks, which weighed on domestic and international markets and which cost the taxpayer dearly. At the beginning of 1993, cereals stocks stood at over 30m tonnes. Today we have less than 7m." Mr Moos was particularly scathing on the EUs decision to impose an export tax on wheat to satisfy domestic demand, saying it was against the spirit of the world trade agreement.

The £21/t export tax, which was introduced last month, has put an effective brake on exports and lowered internal EU prices but has sent inflationary waves through world markets. "We in the United States have no intention of doing so. This market interference sends a very mixed signal to importing countries that need stable access to grain supplies," he added.

Mr Moos said the prospective increase in global population from 5.7bn last year to 8.5bn in 2030 (World Bank) would double world food aid needs in the next decade, particularly sub-Saharan nations.

The current tight supply and demand situation provided a perfect time for more market-orientated policies, said Mr Moos. He advised European politicians they should move away from the mentality of surpluses which have prevailed over the past 20-30 years.

He said it would be necessary for the agricultural producing nations to use biotechnology and hormones to meet the growing demand. But Mr Fischler stressed farmers had to take note of consumer opinion: "We are in a situation when the consumer is king." Mr Fischler said in the past farmers had used growth additives in beef simply to get carcasses placed in intervention: "Before the reform, the single major outlet for beef was public intervention. The heavier the animal, the more money the farmers and the traders and the owners of refrigerated warehouses and exporters made."

Robin Malim of Velcourt summed up many farmers views by pointing out the two speakers different visions for the future. "Mr Moos sees the need for a doubling of food aid supply, while Mr Fischler returned to the problems of surpluses and avoiding unnecessary budgetary costs of the future CAP," he said.

Wheat market – world estimates (m tons)




Source – International Grains Council

A tale of two politicians. Left: The USs Eugene Moos warned of cereal shortages. In sharp contrast, the EUs Franz Fischler said further CAP reform was needed to prevent the return of surpluses.