Europe has moved to loosen import restrictions on important agricultural commodities in response to tightening domestic markets and skyrocketing prices.
The European Commission’s agriculture committee proposed suspending import duties on feed wheat and barley – as well as allowing additional sugar imports at lower tariffs than usual. The proposals are only in draft form and will need to be voted on at forthcoming committee meetings, which are held twice a month.
The measure is the clearest acknowledgement yet of the tightness in European agricultural markets.
Import tariffs exist in the European Union in order to support agricultural commodity prices for the region’s farmers.
The Commission said the proposal to cut the feed grain import tariff was “a reaction on the tight supplies on world cereals markets”, adding that the intention was “to help facilitate feed cereals imports from outside the EU and so reduce tensions on the European markets”.
Prices of feed grains have been rising sharply in the European market as high export demand from the Middle East and North Africa has drained the region’s stocks while Russia’s export ban has also cut supply. EU soft wheat exports since July are up 20 per cent compared with the same period last year while barley exports have jumped nearly sevenfold. The price of the benchmark European feed wheat contract in London has risen 110 per cent since June to surpass its peak of the 2007-08 food crisis, trading at £210.50 a tonne on Thursday.
The price of milling wheat in Paris is also sharply higher and traders expect it to breach its record of €300 a tonne while French feed barley prices are up 130 per cent since June.
The proposal to allow additional sugar imports comes after Portugal suffered a brief sugar shortage in December when panicked shoppers cleared supermarket shelves.
If passed, it could add to upward pressures on international food prices.
Europe could import an additional 300,000 tonnes of sugar under the new quotas, analysts said, further squeezing the market with prices near 30-year highs.
ICE March raw sugar, the global benchmark, rose 3.8 per cent to 32.69 cents a pound. Chicago wheat futures fell.
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