European Union sets import duty above zero for maize, sorghum and rye

The European Commission has today announced that the import duty on maize, sorghum and rye is to be set at 5.32 EUR/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.

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 2014/2015 marketing year should increase by 13 million tonnes to reach 180 million tonnes, the highest level in 5 years, including in the main exporting countries and in particular in the United States.

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

Import duties

The EU 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 United States and the EU 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 EU 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.

For many months (since 17 August 2010), the resulting duty for maize has been set at 0 EUR/tonne. The duty for sorghum and rye has also been set at 0 EUR/tonne since 19 October 2010.

Since 1 July 2011 (2011/2012 marketing year), the representative cif import price for sorghum and rye has been equal to the representative cif import price for maize1. 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-EU countries, is opened each year on 1 January. By 4 July 2014, the quota had been taken up in full.

In the cereal sector, supplementing the political and financial support that the EU has decided to provide to Ukraine, a Commission Regulation was adopted on 8 April 2014 opening tariff quotas for grain imports from Ukraine. The Regulation will open the Community market until 31 October 2014 for 400 000 t of maize subject to zero import duty. On 4 July 2014, 8 % of the quota had been taken up.

Maize and sorghum imports to Spain and Portugal have been subject to reduced import duties since these two countries joined the EU. An agreement between the EU and the USA allows a fixed quantity of third-country maize/sorghum to be imported, if necessary subject to reduced duty (‘abatement’), to compensate the United States 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 EUR 50 per tonne to guarantee the full use of the quota). For 2014, the quotas, for Spain and Portugal have been quickly filled. As at 4 July 2014, 11 % of the sorghum quota for Spain has been taken up. In view of the duty calculated at EUR 0/tonne and the sustained tempo of maize imports, no reduction was granted in 2014.

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