RIGA - A poor harvest and rising demand for bio-fuels have led to a doubling of prices for grain in some EU countries, forcing the European Commission to lift import duties on cereals.
In Latvia, despite a banner crop year, the prices of grain have doubled, and beginning Oct. 1 processors were set to raise their prices for flour some 60 percent, according to reports. Southern EU member states were bracing for similar or higher price hikes after this year's poor harvest.
In order to reduce the damage to EU consumers, the agriculture commissioner, Mariann Fischer Boel, proposed lifting imports duties for grain. She was supported by a majority of member states' agriculture ministers.
The ministers also decided to lift the compulsory fallow land regulations, according to which the farmers of the old EU countries had to leave 10 percent of their lands uncultivated. This should help boost the harvest of winter crops, including durum wheat.
Fischer Boel said the proposals to be submitted to the council of the industry ministers within days.
As Latvian Agriculture Minister Martins Roze explained, the initial idea call for lifting imports duties. Latvia, which does not import food-grade grain, would not be impacted, while poultry and pig growers, who import animal feed, stand to benefit from the decision.
Roze underscored that Latvia is one of the rare EU countries that boasted a considerable crop increase this year. Still, cereal prices continue growing. "Bread prices in the shops are not adequate to the grain market," he said, hinting that the price rise was stimulated by traders.
Rigas Dzirnavnieks, a grain processor, has said it would raise the prices for flour 60 percent staring Oct. 1, according to Dienas Bizness. The company's director, Sandis Jansons, said that grain prices have increased 100 percent so far this year.
Data from the Ministry of Agriculture's market facilitation center show that the average purchase price of food-grade wheat amounted to 118.6 lats (168.8 euros) per ton this year, up 67 percent from June 2006.
The average purchasing price of animal feed (wheat-based) in July 2007 increased 60.9 percent year-on-year to reach 96.4 lats per ton of grain, the center said.