Hungary's grain mountain is already the biggest in the EU, and now on top of it comes neighbour Romania, once known as the breadbasket of Central Europe. Hungary's joining the 25-nation bloc in 2004 caught Brussels unprepared for so much intervention grain, especially maize.
The eastern European country accounts for nearly half of the total EU grain offers, and has too few silos to store it.
The Hungarian Agriculture Ministry estimates the cost to EU taxpayers annually at about $700 million.
Romania, which hopes to enter the EU in 2007, has a higher wheat and maize output than Hungary, with farmers who are even poorer and who may gladly take the EU's set price for their grain.
"The intervention price is good," Romanian grain analyst Ion Scurteli said.
"In addition, sellers would be attracted by the EU's bonus for quality."
But officials say the Black Sea state could offer some of its 11 million tonnes of storage space to its landlocked neighbour.
"If Hungarian traders would ask for it I don't see why not," said Farm Ministry expert Daniel Velicu. "But it's also a matter of transport costs."
Romania so far has received offers from owners of silos totalling more than 2 million tonnes worth of intervention grain storage facilities, the ministry said.
"Around 5 million tonnes in EU-compliant silos can be used as intervention storage in Romania from January 1, 2007," Scurteli told Reuters.
Hungary may need help as it is heading for another good harvest following two record ones, with wheat seen falling by just 0.5 million tonnes to 4.5 million, and maize not far below last year's record 9 million tonnes, traders and farmers said.
"Intervention offers will be substantial again this year, 3-4 million tonnes will be offered again (in the next season starting November)," Agrokont trader Robert Vajo said.
Hungary's requests for EU assistance to help shift its mountain of unwanted grain have so far met little response.
Last month, speaking in Budapest, EU Agriculture Commissioner Mariann Fischer Boel said she was still examining the problem, which she admitted had the potential to get worse.
"We are aware of the situation and the Commissioner has said that we will act sooner rather than later," a Commission official said. "But it's better if farmers produce grain they can sell rather than weighing on the taxpayer," he told Reuters.
Romania expects its wheat crop to fall to 5.6 million tonnes this year from 7.6 million in 2005 due to extensive floods and freezing temperatures which damaged cereals on around 300,000 hectares.
Its maize crop also exceeded Hungary's last year, another season with severe floods in the Black Sea country. Unfortunately most of Romania's silos are located in eastern Romania, close to the Black Sea port of Constanta, and in southern regions bordering the Danube River.
"Transporting the grain hundreds of kilometres (miles) away from Hungary to other intervention stores makes it much more expensive, most people like to store within a 50-100 km (30-60 mile) range," Vajo said.
Hungary is trying to keep pace with the rise in its grain stocks by building ever more silos, with 800,000 tonnes of new capacity expected this year, including large storage centres on the river Danube. 1.5 million tonnes were built in 2005.
"There is continuous capacity expansion, a large part of it to be opened in the autumn, which will definitely relieve the pressure," Vajo said.
"There could be shortages in some regions, they may not be able to solve the problem everywhere."
Comments
Comments are closed.