Changes to EU Farm Policy

[charliep]

Ianben

Sounds as if the EU commission is comtemplating lowering or eliminating import levies on feed wheat. My source also suggests they will releasing wheat from government intervention stocks (government inventory). Both steps are to bring down rising domestic feed prices. You indicated in a previous thread prices had gone up but that poorer yields had robbed any benefit. I assume this is not a good change for you.

What are the politics in the EU around the domestic feed market/prices? Are there other background issues?

[TOM4CWB]

Charlie,

It sounds like the US farm bill has been side tracked, and there are big worries the US gov. will not put as much money into the new farm bill as previously indicated.

Does Sept 11 change domestic politics as well?

[charliep]

Nothing specific on the domestic policy (lots of things happening but nothing that has changed as a result of Sept. 11/wasn't in the works before). The biggest issue on the policy will be the slow down in the economy (potential recession) and its impact on deficits on the one hand/money available for ag. support programs on the other. Others comments.

[TOM4CWB]

Charlie,

AgLink is carring several articles like this one;

"The House of Representatives was scheduled to take up the Combest-Stenholm farm bill Sept. 12 or 13. .¤.¤. The defense bill still is expected to come up soon, but there are rumors that bringing up an expensive new farm bill might not be a high priority or politically wise at this time.
(Monday, September 17, 2001) By Jerry Hagstrom"

The world has changed, and farmers must understand and not ignore the fact that it has.

If we do....

[ianben]

Hi Charlie
Not sure this a change in policy
Intervention stocks have always been released when domestic prices above a certain level.
No feed wheat in intervention though, only high grade barley, spec for intervention much higher than normal feed mill. Spec for wheat means only milling wheat will pass, here in UK anyway.
Feed wheat prices suppose to be fixed by imports from Ukraine which is reported to be £75 on the dock.
I must admit I am not too well imformed at the moment.
Too busy harvesting and seeding,just want to see last years crop in the bin and next years seeded. I know that is a farmer failing but only so many hours in a day.
Events on the 11th haven't helped either spending too much time watching the news programs on TV.
Some terrible pictures both in US and now Afganisan.
How is creating millions of Afgan refugees and threatening to start a civil war in Pakistan going to stop terrorism.
I think it just helps their cause!!

G.W. should be trying to restore confidence in the world economy.

The recession is here now!!

Stock market losses,insurance premium hikes,all those job losses in the airline companies,tourism devestated.
The knock-on effects will affect us all.

I know the events of the 11th were
inexcusable but isn't disrupting the western economy what they really wanted.
Their target and timing was spot on

I think this is what we should be fighting against.

What are your opinions over there.

Regards Ian

[TOM4CWB]

Ian,

I saw the Docudrama "The Doomsday Gun"(1994) about the CIA/MI6 and Iraq/Saddam before the Kuwait invasion in 1990.

Gerald Bull was putting together a big gun for Saddam in Britian, with CIA MI6 approval and US funding!

What about bin Laudin and the Taliban, how did the become so powerful?

CIA/EU approval and backing?

Interesting that the Doomsday gun was financed/laundered from US agricultural subsidies!!!

The people in New York and Washington did not deserve to die.

However the whole way we run the World economy stinks, and as grain producers we understand this as well as anyone.

When we run out of grain, and millions starve to death, and then we are attacked again for not sharing food with the 3rd world, then will we get it?

Europe and North America are too comfortable believing good safe food will always be on the store shelves!!!

But we will struggle while missles are dropped, billions are spent on finding and killing people who don't exist, and poor people end up dead of starvation.

What a witness and great reputation this is for the western world to leave behind?

But who ever said life would be fair!!!

[ianben]

Hi Charlie Tom
EU grain prices are too high according to European Commission which is discussing plans to keep values in check.

This a headline from this weeks farming paper.

It is considering three steps to reduce internal prices.

First to refuse export refunds on wheat barley and oats.

Second put up to 4 million tonnes of German intervention rye on feed market.

Third remove import duty on Black Sea and Baltic cereals.

This is the kind of government involement we get in the EU.
Market manipulation!!

Is this a good deal for our subsidies?

Does this make the CWB seem better?

The EU commission is a faceless body responsible to the European parlament.

Farmers are just ordinary voters who may need to be considered in an election year.
We have no representatives in the commission!!!

I see neither system works to our best advantage.
Reform is not an option.
Global co-operation is the answer.
If the world can agree on who is a terrorist.
Why not a fair price for wheat???

Low commodity prices are not good for third world countries.
Commodities are all they have to pay their dollar debts.
Watch out for those Brazilian beans now the real has crashed again.
How many tonnes to the dollar now?

Regards Ian

[charliep]

Ianben

A friend forwarded me the article you are talking about. The European idea of stable prices is keeping them stable and low.

Just a comment that declining currency values actually work in Brazil's favor. Brazil farmers have been able to benefit from buying inputs with a higher valued real and then sell after their currency has deflated/their price in reals has improved. This has added to their profit margins.

Most export commodities/many inputs (at least in Canada) are priced in US dollars. For example purposes (I'll use the loonie because it is more familar), lets compare buying a tractor (price USD $100,000) and selling wheat (USD $4.00/bu) at two Canadian currency values - one a depressed loonie of US 62.5 cents per loonie (looking at the other way, cost of Cdn $1.60 /US buck) and one a higher at US 66.67 cents/loonie or Cdn $1.50/US buck).

If you try to buy the tractor with the low valued loonie (62.5 cent one), the cost is Cdn $160,000. If you could buy it in the time of the 66.67 cent loonie, its cost is Cdn $ 150,000. You pay an extra Cdn $10,000 with a lower valued loonie.

In the case of wheat, the low valed loonie converts to Cdn $6.40/bu. The higher valued loonie converts to Cdn $6.00/bu. In case, a farm manager is able to sell for 40 cents/bu higher in the case of a cheap loonie.

Lower valued currencies work in a farm managers favor if you are a seller of product but work against you if you are a buyer of inputs priced in US dollars.

Any thoughts are exchange rate fluctuations over the next 6 months. All bets are off after Sept. 11 but most economists were looking for the US dollar to decline relative to other currencies prior to the terrorist acts. Maybe it is worthwhile starting another link on currencies.

[melvill]

ianben
Are you aware of a publication that I can obtain easily that describes how EU farm programs work? Better still, do you know of a Web site that describes in some detail how these programs work?

[ianben]

Hi Charlie
I have learnt about currency fluctuation through experience.
I personnally perfer a weak pound for the reasons you explain, more pounds /tonne. I found imported goods did not rise too much especially if we had home produced goods to compete,tractors for example.Price monitoring by these companies meant they remained competetive with home produced models.
Un-fortunatly for me we now have a strong pound and price monitoring is working in reverse.
I can buy machinery much cheaper in the Euro zone but how will my local dealer survive then. Two have ceased trading this year!!!
Do you believe price monitoring has a place in our stratergies?

Melvil
I will look out for a site regarding how EU is supposed to work.
May be more theory than practice though.
Each country applies the rules in different ways.
Milk quota for example was introduced in the EU about 20yrs ago. We have had it since then, I'm not sure Italy have it yet!
Currency also has a huge impact the euro is supposed to help but we remain outside.
I suppose it is the same in Canada different provices have different laws and taxes so the same price will leave a different margin.

Regards Ian

[ianben]

Hi All

Attended a marketing metting Tues evening.
Guess what they are going to teach us to market like Tom.
So soon I too will be able to obtain a better than average low price just like him.
No ideas on how to get a higher price though.
There is a bit of EU politics you might be interested in.

The UK is not in the Euro so agriculture was given protection against large currency moves.

This amounts to £12/ha this year however our government has to claim this money before 31 Oct.

Money is funded 50%EU/50%UK but due to some earlier agreement UK government ends up paying 77%.

I am expected to lobby my MP. as they are reluctant to apply for this compensation this year. I wonder why??

I find BEGGING demeaning so they will have to manage without me.

I just want a fair price for my produce.
More pounds/tonne, more dollars/bu is this not the answer to all our problems.

Regards Ian