News last update:7 Aug 2012

EU proposes to end maize payments

The European Union (EU) plans to abandon payments to put maize in public storage because the crop doesn't keep well and prices are being distorted as stocks increase.

The EU has tightened the criteria for accepting maize into public stocks as supplies built up to 5.1 million tonnes, or two-thirds of all stored grains. In the so-called "intervention" system the EU pays producers to remove surplus grain, meat or milk powder to balance the 25-nation market. When this system was not in place it created great wine "lakes" and butter "mountains" that plagued markets in the 1980's.

Growth in maize stocks
Maize stocks have been growing since 10 new members joined the EU in May 2004, with Hungary now accounting for 93% of the total. With Romania, Europe's number two maize producer, set to join the bloc next month, the surplus may reach almost 19 million tons in six years, according to the commission.

"Under the current market circumstances, there's no reason to be rushing this through," said Paul Temple, chairman of the cereals committee at the European farm lobby COPA-Cogeca in Brussels. „At the moment the market is strong enough that it's not needed."

The proposal to end payments in July will be presented to the European Commission, the EU's executive body, in two days. Maize for January delivery was trading on the Paris exchange at about €155 ($206) per tonne this week. The EU sets a guaranteed minimum price of €101.31 per tonne for putting the crop into storage at the start of the marketing year in July.

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