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Maize imports to the UK from the US will now not face a 25% import tax from 1 June.
The removing of tariffs ought to assist to scale back rising on-farm feed prices and exchange a decreased provide from Ukraine. Nonetheless, with a good world maize provide, no huge value reductions seem possible.
Usually, 27% of the UK’s maize imports come from Ukraine, in response to the Agricultural Industries Confederation (AIC). Maize is a key feed ingredient for dairy and can be utilized in pig and poultry feed.
See additionally: How ‘chemichanical’ strategy is aiding maize manufacturing
The 25% retaliatory tariff was put in place in response to US tariffs being imposed on UK metal exports in 2018. No maize has been imported from the US to the UK because the tariffs have been utilized.
James McCulloch, head of feed sector at AIC, stated the UK was on the lookout for various sources of maize to exchange imports from Ukraine, and the US was one of many viable markets.
Mr McCulloch stated: “We might usually be shopping for 700,000t of maize from Ukraine, so we have to discover various sources for that. US Division of Agriculture figures present that the US is holding inventory of about 50m tonnes of maize, so ought to be able to provide.”
The Netherlands, Portugal, and Italy have reportedly already agreed shipments of US maize following the removing of the 25% EU tariff on US maize on 1 January, after the EU and the US reached settlement.
Nonetheless, talks with the UK started solely in January. The deal means UK retaliatory tariffs on US bourbon whisky, agricultural and different items shall be lifted from June 1.
Maize markets
On March 24 Chicago maize futures for Could 2022 closed at $294.59/t (£223.50/t).
Millie Askew, a senior analyst at AHDB, stated maize has fallen out of favour this season with animal feed producers due to its value in contrast with wheat. Maize imports this season are forecast at 2m tonnes, down 31% from 2020-21 ranges.
Ms Askew stated: “Home consumption can be anticipated to fall on the 12 months, pushed by greater costs. With Ukraine taken out of the equation, the worldwide provide of maize may be very tight. Nonetheless, if tensions subside in Ukraine, in addition to a suspension of the US maize tariff as of 1 June, we may see extra maize accessible.”
Trade views
Kristian Dunham, head of livestock inputs at agricultural buying co-op AF Group, means that whereas scrapping the tariff is nice information, the precise impact on UK costs shall be comparatively small.
Merely importing from the US as an alternative of Ukraine is not going to change world demand, in response to Mr Dunham, as manufacturing is finite. Nonetheless, he believes if the scenario in Ukraine does ease, and we begin to see exports resume, then costs may fall.
“Sadly, escalation appears extra possible in the intervening time. In fact, any easing in present markets shall be welcomed on farm, and this information will ease markets, however personally I can’t see costs falling by greater than 5%,” he stated.
Ed Barker, head of coverage at AIC, welcomed the transfer and prompt the federal government should be ready to take fast motion to make sure the continued provide of inputs to UK agriculture, similar to animal feed.
Mr Barker stated: “The choice to elevate it should assist to mitigate the now restricted maize exports coming from Ukraine and Russia and can enhance the flexibility of the agri-supply chain to take care of a continued provide of animal feed to UK farmers. This shall be welcomed by AIC members and UK livestock farmers.
“Nonetheless, there’ll proceed to be challenges arising from the battle in Ukraine that may have unfavourable impacts on the broader agri-supply chain. Authorities should work carefully with the agri-supply trade to seek out acceptable resolutions. No coverage or legislative responses ought to be thought of off the desk.”
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