Prepare for an increase in grain prices

Agriculture Minister Costas Kadis told 'K' that there is no concern about grain sufficiency in the Cypriot market at this time, explaining that strategic stocks of grains received in the summer remain in importers' silos. These are 37 thousand tonnes of barley and maize that can meet the market's needs in the coming period, with barley stocks covering a 35-day period and maize stocks covering twice that period.

Another 25 thousand tonnes of grains are expected to arrive at Limassol's port in the coming weeks. Cyprus will receive 12 thousand tonnes of barley and 23 thousand tonnes of maize by November 21. These stocks are expected to strengthen the market's adequacy in the absence of a grain shortage.

The Agriculture Minister's assurances came in the aftermath of Russia's withdrawal from the agreement to export agricultural products from Ukrainian ports, as well as the concern this has caused in the global supply chain. The Black Sea Grains Agreement, which was signed on July 22 in Turkey, has resulted in the export of millions of tonnes of grain from Ukraine and is thought to have slowed the risk of a food crisis. The agreement was signed on July 22nd and will expire on November 19th.

Prices

Aside from the adequacy issue, developments in grain exports from Ukrainian ports are fueling scenarios for grain price increases in the near future. The Minister of Agriculture, Costas Kadis, expressed this assessment as an unavoidable scenario due to the reduction in grain supply and the maintenance of demand at the same level. Maize and barley prices have already begun to rise in global markets. However, feed importers say they have no evidence of upcoming increases in shipments and believe it is too early to assess the consequences of Russia's moves.

According to Stelios Katodritis of the feed importers' association, grain prices were down €50-70/tonne at the last order compared to their April 2022 selling prices. They fell from 420 euros to 360-370 euros in particular (maize and barley). Meanwhile, discussions have already begun at the European level about the establishment of alternative corridors for grain marketing by land, which will allow quantities to remain on the market. However, these solutions are clearly more time-consuming than port handling.

Support for livestock farmers

Given the impending increases in grain prices and market supply, it is expected that the next meeting of EU agriculture ministers, which will take place on November 21 and 22, will address two issues strongly supported by the Cypriot side. The first issue is that all countries must have equal access to the available grain quantities.  "A producing country like Eastern Europe cannot have months of stocks, and other buyer countries cannot have them," he explained. It will also be necessary to assist all Member States' primary sector - livestock farmers - in absorbing the shock of the feed price increase. Similar discussions are not expected in relation to grains for human consumption, as the costs can be directly passed on to the final products.

Government plans

Three weeks ago, an internal memo circulated in the Ministry of Agriculture, raising concerns about how long the 37 thousand tonnes of grain stocks would be kept and whether they should be made available for consumption. Of course, it was decided that as long as the war and uncertainty lasted, the stocks would have to be kept. As a result, the government has no plans to use the existing strategic grain stocks, which will remain in reserve in the event of an emergency.  These are kept in private silos, with the government paying rent as well as a maintenance and renewal fee. The data is assessed weekly at the Ministry, and if corrective action is required, it will be taken, according to Costas Kadis.

[This article was translated from its Greek original]