With granaries close to bursting, EU ends maize price guarantee

(LUXEMBOURG) - The European Union agreed Monday to stop buying maize its farmers could not sell above a set price, as the 27-nation bloc's grain silos were close to bursting with unsold stocks.

Until now, the EU has bought up all the maize its farmers could not sell on the market for more than 101.31 euros (135 dollars) per tonne in order to provide a safety net when prices slumped.

However, with maize prices soaring worldwide amid a general commodities boom, is is mainly uncompetitive Hungarian farmers who still need the EU price guarantees owing to outdated production techniques and their distance from big consumer markets.

Hungarian production has driven up the amount of maize held in EU grain silos, which are nearly brimming over with 5.6 million tonnes in stocks and little chance of selling it profitably on the market.

"The situation of growing stocks was rapidly becoming untenable -- as well as expensive for the EU budget," European Farm Commissioner Mariann Fischer-Boel said. "Farmers should be growing for the market."

Putting an end to the price guarantee is expected to save the EU budget about 620 million euros (827 million dollars) in purchase and storage costs from 2008 to 2014, according to an estimate from the European Commission.

In addition to maize, the EU also offers its farmers a 101.31 euro per tonne price guarantee for breadmaking wheat, durum wheat, barley and sorghum.

Agriculture and Fisheries Council of Ministers - Conclusions