TALKING POINT

31 March 2000




TALKING POINT

The grain intervention

system in the UK

needs a radical

overhaul…and now,

says Richard Butler

THE intervention system for cereals is failing British farmers at a time when we are in the grip of record low grain prices. Rather than acting for all European grain producers, recent decisions from the commission in Brussels mean intervention supports the market only if you farm elsewhere in Europe not in Britain.

Complex operating procedures, nonsensical qualifying tests, and high costs are all conspiring to make the grain intervention system less effective.

Change is needed and fast. A working group was set up by farm minister Nick Brown and the NFU to look at the intervention system from cereals to dairy products and beef. It has now reported back and has recognised the need for change particularly for grain.

Nowhere is the situation illustrated more starkly than the difference between France and the UK.There is a vast difference in wheat testing costs. A French co-op offering 10,000t faces a bill for £120 compared with a bill for technical costs of, until recently, £5500 for the same offer. The UK authority insists on 20 samples, one for every 500t, but in France this is aggregated to one test.

Since the issue was highlighted by the Red Tape group, the UK Intervention Board has just announced a significant reduction in wheat testing costs. But the gulf remains.

The report recognises that post Agenda 2000, the role of intervention has changed from being an alternative market for farmers to a safety net which operates only when grain prices fall to low levels.

At current exchange rates for Nov 2000, the delivered grain price for intervention is about £68/t. For harvest 2001, that falls by a further 7.5%. Deduct £5 for transport and a further £4 to get back to a harvest price and its obvious how low intervention prices will be in the future.

Nearly 70% of UK wheat is excluded from intervention by the technical standards set by the EU Commission. Soft endosperm wheat like Riband, Consort and Claire now account for nearly half of plantings and have established real export markets.

Take last season, France produced 38m tonnes of wheat and had 6m tonnes (16%) accepted into intervention. Meanwhile, on this side of the Channel, with a 16m tonne wheat crop and very low prices, only 40,000t went to intervention.

This issue is recognised in the report and the minister is urged to press for alternative protein quality tests to the machinability test, which would not exclude UK soft wheats.

Low zeleny wheat, like UK soft wheat, must pass the machinability test, which measures the stickiness of dough. That test is expensive and takes several days. Unsurprisingly, its not used commercially by UK or Continental millers and is probably only familiar to the Mad Hatter.

The EU cereals management committee has said that intervention needs to move closer to the market. To assist this process it has just raised the zeleny test on wheat from 20 to 22, making it even more difficult for UK wheat to qualify for intervention.

Machinability is retained as a test for all wheat with a zeleny figure under 30.

But the cereal with the lowest feeding value of all, rye, remains fully supported by intervention despite the fact that with 3m tonnes in intervention, no one can find any market for it!

Rye is of vital importance to German agriculture. But there is no market justification for supporting German rye.

The nightmare scenario for arable farmers is that if world grain prices remain at record low levels, we could be forced out of business while Continental grain producers rely on intervention to support their market.


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