The European Commission has implemented an import duty on corn of € 5.27 per ton.
It is the first time since March 2018 that Brussels has set an import duty for corn. The variable import duty for corn was introduced in 2010, when the European Commission adjusted the grain market regulation. The import duty protects the European corn sector against low prices, caused by cheap imported corn.
The variable import duty for corn was introduced in 2010, when the European Commission adjusted the grain market regulation. Photo: Ronald Hissink
It represents a competitive disadvantage for European livestock farming because the import duty counterbalances a fall in the feed price. The last time an import duty was applied from October 2017 to the beginning of March 2018. Now a duty has again been applied because corn has become very cheap in the US. The demand for corn has fallen because less ethanol is needed as a fuel mixture.
Overview of futures prices for: corn, wheat and soybean
Variable corn import duty
Due of the fact that the EU imports a lot of corn, the EU applies a variable import duty to corn instead of a fixed one.
The duty depends on 3 factors:
- the corn price on the future market in Chicago
- the premium for the transportation of American corn to a port in the Gulf of Mexico,
- the freight charges from that port to the European Union.
€ 157.03 is deducted from these 3 amounts, 155% of the intervention price of € 101.31. The amount that remains is the theoretical import duty.
The Commission calculates the average of the last 10 days on a daily basis. If the average is higher than € 5, that average becomes the import duty. At the moment this amounts € 5.27. The import duty will only change again if the average deviates by more than € 5 from the previously calculated duty. The expectation is that the average will exceed that limit this or early next week. On April 28, the theoretical duty was already € 14.70.