EU Sorghum Levy Changed

EU Sorghum Levy Changed

Year-long effort yields EU success.

The U.S. Grains Council and the United Sorghum Checkoff Program have succeeded in a year-long effort to resolve an obsolete provision in European Union tariff regulations that has hindered U.S. sorghum sales to Europe.

"The Council has been very active and really pushed the envelope to make this happen," said Florentino Lopez, executive director of the United Sorghum Checkoff Program. "We are very happy about what has been accomplished and the strong stand the Council has taken to move things forward."

The issue was the EU levy system was becoming increasingly archaic when it came to establishing a reference price for sorghum. As a result, the levy on U.S. sorghum inched up, pushing sorghum prices in Europe higher than the price of corn on occasion.

"The EU needed a different reference," said Cary Sifferath, USGC regional director for the Mediterranean and Africa. "We began investigating this in July 2010, and then put together a white paper to show how sorghum correlates better with #2 corn than with barley."

Ultimately, the Council petitioned the EU for a rule change to use either U.S. sorghum prices or, as a second choice, U.S. corn prices as its reference.

A further Council effort rallied European groups, including feed millers, the Grain Traders Association and the Irish Grain & Feed Association, to support the petition. The Council also worked with USDA's Foreign Agricultural Service staff in Brussels to present an official request.

These efforts led to an E.U. proposal which was voted on in June and became effective July 1. The Chicago Board of Trade price of corn will now be the reference point for determining the sorghum levy.

"This means that when Europe is short of grain, the sorghum levy will be calculated on a realistic basis that reflects real-world prices," said Sifferath. "Whatever the market dictates, the sorghum levy will reflect it, and European buyers should be able to import sorghum readily, without weeks of dispute over the levy."

The breakthrough reflected "a significant effort to educate the EU's governing body," said Lopez, who specifically cited Council staff members, including Sifferath and Alvaro Cordero, as "very instrumental" in this success.

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