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EU restores import tariffs on cereals

“We have now seen, since February of this year, a strong drop in prices below the level that we had actually expected.”

– Mariann Fischer Boel

The European Union agreed Oct. 16 to restore import tariffs on all cereals due to recent price slides in internal wheat and other key grain markets, the European Commission said.

Given the interdependence of markets for various cereals and the rapid impact of changes in the price of one cereal on others, tariffs were being reintroduced simultaneously on all cereals, it said after a meeting of national EU grain experts.

Restoring duties would not have any disruptive effect on the EU market or any significant impact on prices, it said in a statement, adding that the move was being taken to “avoid undue risk” when EU public intervention buying restarted in November.

EU Agriculture Commissioner Mariann Fischer Boel said recent price falls had now made it important to restore tariffs.

“We have now seen, since February of this year, a strong drop in prices below the level that we had actually expected,” she said, speaking at a rural development conference in Cyprus.

“That is the reason why we reintroduced the import duties because if we face a situation where we would suddenly have to use our stocks in our intervention systems at the same time as we open the door completely for imports … then we would shoot ourselves in the foot,” she said.

In order to counter a surge in grain prices and tight supplies last season, the European Union suspended tariffs on most grain imports at the start of the year, a decision that was extended to the 2008-09 (July-June) season.

Since then, prices have come off their highs on good crop prospects: this year’s cereals harvest has shown a significant improvement from last year’s poor output. The commission has estimated EU 2008 production at 306 million tonnes, 19 per cent higher than in 2007.

Timing key

The exact date for the tariffs to take effect is not exactly clear but would probably be within one week and depend on the timing of the EU’s internal procedures, officials said. That will be keenly awaited by grain traders and importers.

“They are doing that (restoring tariffs) to be pleasant, because they promised to do so when prices would be low,” a European trader said. “What will be important is the timing because there are shipments already underway.”

First, the full European Commission has to endorse the decision for it to be published in the EU’s daily Official Journal. The tariffs would then enter into force on the third day after the decision’s publication.

“As traders must not be penalized when cereals are already en route into the community, transport time will be taken into account, the commission statement said.

“Traders will be therefore allowed to release cereals for free circulation under the customs-duty suspension regime … if their transport to the community starts, at the latest, on the day on which this regulation is published,” it said.

Under international agreements, the EU has bound tariffs for all cereals. It also applies variable duties to import high-quality wheat, durum wheat, rye, maize and sorghum – duties that can never be higher than the bound tariff.

In 2003, the EU introduced import quotas, with import tariffs attached, on low-and medium-quality wheat, and barley, with exclusive rights for Canada and the United States.

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