Call for EC to intervene to end volatility in cereal prices

By Jane Byrne

- Last updated on GMT

EU farmer representatives are urging the European Commission to intervene to stabilise cereal prices and reduce volatility in the market.

A spokeswoman for Brussels based COPA, which lobbies on behalf of farmers in the bloc, told BakeryandSnacks.com that it supports the action by 10,000 French grain farmers yesterday who took to the streets of Paris in a protest over cereal prices on the eve of the EU farm commissioner Dacian Ciolos's visit to France.

Farmers throughout the bloc are being squeezed by high production costs and low income with cereal prices having reached rock bottom.

We are calling on the Commission to use all the market management tools it has at its disposal to bring stability to the market and end fluctuation in these commodities,”​ added the spokeswoman.

Average wheat prices fell 25 per cent in France last year, and income for grain, oilseed and protein crops saw a decline of 51 per cent.

French farming union, FNSEA, is calling for the introduction of interest-free export credits to ease the situation as well as assistance with stock clearance.

Moreover, it is seeking a re-evaluation of the EU objective of cutting pesticide use by 50 per cent within an eight year timeframe as it claims that it would leave farmers unable to compete, and the French government indicated this week that it may review regulation in this respect.

Relief for bakers

But weaker wheat prices continue to bring welcome relief to baked goods manufacturers’ bottom line.

The baking and snack industry, like all other arms of the global food industry, had seen soaring prices in wheat, corn and soybeans, cutting sharply into revenues during 2008.

While the wheat spot price hit vertiginous highs between GBP180-200 a tonne in 2008, today prices have fallen by nearly 50 per cent. Earlier this month, feed wheat posted prices of GBP96.74 a tonne.

And an economist at the UK’s cereal tracker HGCA explained to our sister site FoodNavigator.com earlier this month that end wheat stocks for 2009/10 could reach 195 million tonnes globally – “the highest quantity in a decade.”

The projected 195m stock figures for wheat compare to the 165 million tonnes for 2008/09, and 130 million tonnes when food prices started to rocket, in 2007/08.

Fall in plantings

And despite the rise in stocks, plantings all over the world have only fallen by one to two per cent for the 2010/11 season, continued the HGCA economist.

With only a slight reduction in plantings, next year a generous global tonnage could feed into an already ‘heavy stock market’, encouraging prices to remain ‘depressed’.

But it is, arguably, too early to make a call on cheaper wheat-based ingredients in the near future. “Crude oil is rallying, and we still haven’t seen what the weather will be like, there is always a yield risk,”​ adds the HGCA spokesperson.

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