WRITTEN QUESTION E-0378/96 by Reimer Böge (PPE) to the Commission (22 February 1996)

Subject: Trend in world grain prices

The European Union now levies an 'export tax' on wheat and barley.

What effect does such a policy have on the trend in world prices?

Is it true that the intended internal price curb means a higher import price, for example, for developing countries outside the Community which import grain?

Answer given by Mr Fischler on behalf of the Commission (8 March 1996)

The Community's exports during the 1995/96 marketing year are to be handled in a way which meets two sets of requirements: stabilizing the internal market and maintaining a presence on the world market. With this management policy the Commission also complies with the Council's request, made in September of last year, for all the management instruments available in 1995/96 and 1996/97 to be used to ensure that market prices for cereals met the objectives of the 1992 reforms.

The general export tax for common wheat was not introduced until the situation demanded (15 December 1995). Since then some 500 000 tonnes of common wheat have been subject to the tendering procedure which is under way. In parallel, since 1 January this year licences for export in the form of flour have been issued for over 300 000 tonnes (i.e. the equivalent of some 450 000 tonnes of common wheat) with a zero refund.

In order to meet the specific supply requirements of certain developing countries to which the Community has bilateral commitments (Lomé Convention), the Commission issued an initial invitation to tender in October 1995 for 500 000 tonnes of common wheat of bread-making quality for export to the ACP States which traditionally purchased from the Community. A further invitation to tender for 430 000 tonnes of common wheat of bread-making quality has been issued for the benefit of those same countries. No export tax is applied to exports effected as a result of these invitations to tender. Overall, the quantities earmarked for export during the 1995/96 marketing year for common wheat (grain, flour and food aid) now represent some 80% of the quantities committed at the same stage of the previous marketing year.

For barley, only 8 000 tonnes have been accepted since the tax was introduced (11 January this year), the main reason for this being a certain degree of reluctance on the part of traders to commit themselves in the present conditions on the world market, until the main customer, Saudi Arabia, decides to conclude contracts.

The price rise on the world market does not stem from the taxes on exports from the Community but from a set of factors each of which has in its own way contributed to the general price rise, in particular smaller crops of cereals, manioc and even rice in the exporting countries and also in some importing countries, the result being a greater overall demand for cereals. In the Community the overall cereals harvest has been particularly affected by the drought in Spain.

The taxes, which were established in accordance with the rules laid down as part of the common market organization, cannot therefore be viewed as an export ban. They will be maintained as long as the situation on the world market requires.