Positive Environment News

Spain Seeks Huge EU Grain Transfer Due to Drought

Date: 16-May-05
Country: BELGIUM

"The drought on top of frosts is continuing to cause damage to Spanish agriculture and livestock in this campaign," Spain's farm minister Elena Espinosa told the European Commission in a letter obtained by Reuters.

"We currently estimate there will be a 50 percent reduction with respect to the average harvest in the cereals sector," it said, adding losses could be even higher for oilseed crops.

The letter requested an estimated 6-8 million tonnes "be placed on the Spanish cereals market from (European) Community intervention".

The amount, if granted in full, would be more than half of all the grain currently offered by farmers into EU intervention stores. The latest data from the Commission show offers at around 13 million tonnes of wheat, barley and maize.

In addition, a large portion of the stocks is held in central European countries, many of which are landlocked and have difficulties exporting surpluses to world markets.

Under the EU's intervention system, farmers can sell grain into public-financed stores for a guaranteed price. The EU than keeps the grain until market conditions allow it to be re-sold on the domestic market or exported to the third countries.

However, traders noted the amount requested might be a bargaining position from the Spanish government and that any final transfer would be much smaller.

"The quantity seems very high...judging from the past, it's one thing that they ask for it, and quite another whether it is awarded...It could be that we don't achieve anything," one Madrid-based trader said.

Spain's move follows a similar request from Portugal, which has also suffered severe drought this year. Lisbon and Brussels are currently in talks over the transfer of 400,000 tonnes of grain from Hungarian stocks.

Spain's letter also requested advance payment of EU subsidies for sheep, goats and cattle as well as aid for its organic farmers and to re-forest some damaged areas.

© Thomson Reuters 2005 All rights reserved

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