HGCA denies talk of EU-USA grain war

By Philip Clarke, Europe editor

SPECULATION that the European Union is at war with the USA over subsidised grain shipments is being downplayed by analysts at the Home-Grown Cereals Authority.

US retaliation to a recent subsidised shipment of grain to California was politically motivated, says Home-Grown Cereals Authority economist, Stephen Thornhill. But the fact it was on a “one for one” basis suggests it was designed to satisfy internal pressures, rather than start a trade war, he adds.

“The US is not excluded from the list of possible destinations when traders are granted export licences,” says Mr Thornhill. “The interior barley price in the US is significantly above the world price, at about $125/ t compared with just $75/ t. It must have looked attractive.”

US agriculture secretary Dan Glickman announced late last week that he would be offering subsidies on 30,000t of barley under the countrys export enhancement programme – the first time they have been used in three years. The sales will be targeted at traditional EU markets, Algeria, Cyprus and Norway.

The move was made in direct retaliation for a 30,000t cargo of Finnish grain which arrived in California last weekend, assisted by a $50/ t (£32/ tonne) export restitution.

But counter-measures by the EU are thought unlikely. The commission has made it clear from the start that the original 30,000-tonne load was a “one off”, due to a particular trade opportunity, rather than any policy in Brussels.

The barley was originally intended for shipment to Saudi Arabia, following a major buying spree in March. But high prices in the US meant it made economic sense to transfer the load to California, claim EU officials in Brussels.