EU raises wheat export subsidies

The European Commission raised the level of wheat export subsidies on Thursday, granting a 10 euro ($13.21) per tonne refund on 451,750 tonnes - around the level exporters say is needed to avoid a build up in domestic stocks. The move follows steady increases in the refunds since they were revived last month after a gap of 18 months. The EU began with a relatively low level of four euros, then raised it to six before granting an eight euro subsidy last week.
The latest award takes EU subsidised wheat exports to just over 1.2 million tonnes (760,000) since the start of tenders. The tender is open for up to two million tonnes.
The first four awards disappointed exporters, who said they were insufficient to make EU wheat competitive. They had been seeking refunds above 10 euros. However, Argentine prices - the EU's main competitor - have been increasing and are now less than $10 cheaper than French wheat.
French grains office ONIC has joined in the criticism, saying the Commission should be granting subsidies high enough to allow at least 350,000 tonnes of wheat a week be exported, or the bloc would face an "avalanche" of offers into storage.
And the EU's intervention stocks have continued to rise. The latest data shows there are now 5.3 million tonnes of wheat in store, out of a total of 10.1 million tonnes of grain.
A large part of the total is stored in landlocked Hungary, with 4.12 million tonnes, presenting a tricky problem for the country which has no easy access to ports and insufficient capacity to store the grain on its own soil.
As a result the EU has said it will launch intervention tenders to sell off some of the grain held in eastern and central Europe. However, the timing and scope of the tenders has yet to be fixed, officials said.
EU officials have said the legislation was weeks rather than months away, stressing it would apply equally to the landlocked states that have experienced problems with stocks.
While free-market subsides mostly benefit big, established exporters with good port access such as France, the intervention tenders would be restricted to eastern member states. However, the destinations for the grain would be the same.