SASKATOON (Staff) – It’s impossible to justify the continued use of the Export Enhancement Program to subsidize U.S. grain exports, says the Canadian Wheat Board.
The U.S. department of agriculture recently announced it would subsidize the export of seven million tonnes of wheat in the first three months of the new crop year.
“We are facing one of the tightest world wheat situations on record,” wheat board commissioner Richard Klassen said in a press release. “For the U.S. government to continue to use export subsidies – which are difficult to justify even when supplies are abundant – simply defies logic.”
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This year the ratio of world wheat stocks to use is expected to fall to its lowest level ever. The International Wheat Council says by the end of the 1995-96 marketing year, stocks will dip to 97 million tonnes, which represents the amount consumed by the world in about 65 days.
In the U.S., stocks are projected to be 11.6 million tonnes, the lowest since 1973-74. By contrast, in 1985-86, the year EEP was introduced, U.S. stocks were 51.8 million tonnes.
Klassen said the U.S. clearly does not have a wheat surplus problem any more.
But a U.S. wheat industry official has rejected the board’s advice and urged his government to “stay the course” in offering EEP subsidies on wheat.
Ross Hansen, president of the U.S. National Association of Wheat Growers, said while it’s encouraging to see prices rising because of tighter stocks, that doesn’t mean there will be any less competition among wheat exporters.
