Grain mountain growing

There is a common assumption that intervention mountains are a thing of the past. This is not necessarily the case. The EU's grain mountain is growing fast and looks like getting bigger.

It is now at a highest level for nearly a decade. At the start of the 2004/5 there were just 5mt in store. By the start of the 2005/6 marketing year this had trebled to 15.48mt. By mid-January, assuming that all grain submitted into intervention, the potential total was 18.6mt. And with nearly five months of the buying in season left, the stockpile could rise to 20mt or more by the end of May.

The problem is concentrated primarily in five countries in the middle of Europe - Germany, Poland, Hungary, the Czech Republic and Slovakia. These five countries accounted for 93 per cent of the nearly 7mt offered in intervention between November and mid-January.

These countries have experienced two strong successive grain harvests? One might think that they could have sold the grain to drought hit Spain, but transport costs by road were roo high. The rationalisation of the region's pig and poultry markets prior to EU accession has limited the size of the feed market. And to the east, competition from the main Black Sea producers is fiercer than ever before.

So those, like the Austrian presidency, who are calling for a period of stability in CAP reform should remember that many of the old problems are still with us.