E.U. sets import duty for first time in nearly four years

by World Grain Staff
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BRUSSELS, BELGIUM — The European Commission announced on July 17 that the import duty on maize, sorghum and rye is to be set at €5.32 per tonne. The decision is based on the basic Regulation and comes in response to the situation on the world markets for maize and the resulting low prices. Moreover, maize, sorghum and rye are not subject to export refunds.

The duty for corn has been at 0 since Aug. 17, 2010, and at 0 for sorghum, and rye since Oct. 19, 2010.

Following a forecast of world maize production in 2014 estimated by the International Grains Council at as much as 963 million tonnes, i.e. the second highest after last year's record level, the carry-over of world stocks of maize at the end of the 2014-15 marketing year should increase from 13 million tonnes to 180 million tonnes, the highest level in five years, including in the main exporting countries and in particular in the U.S.

As a result of this forecast of a bumper harvest of maize in 2014 worldwide, but particularly in the U.S., world market prices for maize fell sharply and as of July 1 stood at $203 per tonne FOB (free on board) U.S. Gulf, a price not seen since August 2010. On July 1, 2013, the quotation was $304 per tonne.

The E.U. has bound duties for all cereals set under the GATT agreement. However, for some cereals, the rates applied are different. The system originates in the Blair House Agreement between the U.S. and the E.U. and involves setting tariffs on the basis of individual world reference prices for specific cereal types. The mechanism is triggered automatically. The duty is fixed on the basis of the difference between the effective E.U. intervention price for cereals multiplied by 1.55 and a representative cif (i.e. cost, insurance and freight) import price for these cereals at the port of Rotterdam.

Since July 1, 2011 (2011-12 marketing year), the representative cif import price for sorghum and rye has been equal to the representative cif import price for maize. Since that date, therefore, the import duty for sorghum and rye has been equal to the import duty for maize.

The individual tariff quotas are not affected by the measure. A duty-free quota of 277,988 tonnes of maize, split into two equal tranches open to all non-E.U. countries, is opened each year on Jan. 1. By July 4, the quota had been taken up in full.

In the cereal sector, supplementing the political and financial support that the E.U. has decided to provide to Ukraine, a Commission Regulation was adopted on April 8 opening tariff quotas for grain imports from Ukraine. The regulation will open the community market until  Oct. 31 for 400,000 tonnes of corn subject to zero import duty. On July 4, 8% of the quota had been taken up.

Corn and sorghum imports to Spain and Portugal have been subject to reduced import duties since these two countries joined the E.U. An agreement between the E.U. and the U.S. allows a fixed quantity of third-country corn/sorghum to be imported, if necessary subject to reduced duty ('abatement'), to compensate the U.S. for the loss of its Iberian Peninsula markets. 

The current agreement covers 2 million tonnes of maize and 300,000 tonnes of sorghum to be imported into Spain each year. These amounts are reduced by any quantity of grain substitutes (e.g. starch residues, corn gluten feed and citrus pulp) imported into Spain in the same year. 

A tariff quota of 500,000 tonnes of maize to be imported into Portugal has also been agreed (duty fixed at a maximum €50 per tonne to guarantee the full use of the quota). For 2014, the quotas, for Spain and Portugal have been quickly filled. As of July 4, 11% of the sorghum quota for Spain has been taken up. In view of the duty calculated at 0 per tonne and the sustained tempo of corn imports, no reduction was granted in 2014.

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