EU Lenifies Farmers by Acquiescing in Release of Feed Stocks

The European Commission in a bid to check rising feed costs has decided to release about 3mn tonnes of grain from the EU’s intervention stocks. Most European farmers except from Germany have incurred huge losses for the past quarter as their products lost profit threshold and feed shortage triggered price rise.

The EC as a measure to assuage farmers under pressure from higher feed prices would be releasing feed on a phased manner from March to August next year, using a tendering process which has yet to be worked out. The European feed industry has been calling for intervention stocks to be released on to the grain market since prices began to rise in July.

There are close to 6mn tonnes of grain held in intervention currently, including barley at 5.47mn tonnes, 273,000tns of soft wheat and 214,000tns of maize. The bulk of these stocks are held in Germany (1.68mn tonnes), France (929,000tns), Finland (845,000tns) and Hungary (727,000tns).

Besides higher feed cost, the farmers are also beset by a series of issues including producer prices lagging recovery in world meat prices, disease crises, drought in Russia which skyrocketed wheat prices and stiff competition from emerging regions.

The French pork producers' union FNP estimates pig farmers, for whom grain-based feed represents two-thirds of production costs, have seen average price of feed rise by 50 euros ($65.67) to 230 euros a tonne since July. However, Germany seemed to be enjoying a glut in feed stocks as well as in meat production.

Some industry observers have even suggested that a tax to be imposed on grain exports to save farmers. However, the Commission's view is that imposing export taxes would further fuel the market and drive grain prices higher in the short term.

The total grain exports from Europe are currently standing at 7.2mn tonnes, around 2mn tonnes higher than 2009 when 5.2mn tonnes were exported and 400,000tns higher than the 2008 export figure. The net exports are running at 5.3mn tonnes, compared to 2.9mn tonnes in 2009.

By Jose Roy