Hungary will accumulate 14-15 million tonnes of surplus grain stocks by 2010 unless the European Union overhauls its subsidy system, agriculture research institute AKI said on Wednesday.
Hungary started the 2005/06 season with 8 million tonnes in silos, equal to annual domestic consumption, after two record crops, and at the end of June around seven million tonnes remained in the landlocked country's EU intervention stores.
"By 2010, assuming the transport capacity is available and 3.5 million tonnes of produce leaves the country a year 14-15 million tonnes of grain surplus could accumulate," AKI grains analyst Norbert Potori told Reuters.
"Our model assumes average weather and crops around 13-14 million tonnes, not over 16 million tonnes as in 2004 (and 2005)," Potori added. On Thursday the EU will restart export tenders from intervention stores, including 500,000 tonnes of Hungarian wheat.
But Potori said that promised only partial relief for the eastern European country whose farmers accounted for almost half of the recent season's intervention offers in the 25-nation bloc. "It will not bring salvation, it will only ease the pressure," he said. Potori said the reform of the intervention system, which the EU will review around 2008, could be a solution, especially if it led to a decoupling of subsidies from production.
Most of Hungary's grain surplus is maize, whose quality deteriorates if stored for years. "A loss of around 10-15 percent accumulates gradually," Potori said.