Corn imports from the US to the UK will no longer be subject to a 25% import tax from June 1st.
The lifting of tariffs aims to help reduce rising feed costs on the farm and replace a reduced supply from Ukraine. However, with global corn supply tight, no major price cuts are likely.
Typically, 27% of UK maize imports come from Ukraine, according to the Agricultural Industries Confederation (AIC). Corn is an important feed ingredient for dairy products and is also used in pig and poultry feed.
See also: How the “chemical” approach supports corn production
The 25% retaliatory tariff was introduced in response to US tariffs imposed on British steel exports in 2018. No corn has been imported into the UK from the US since the tariffs were applied.
James McCulloch, head of feed sector at AIC, said the UK is looking for alternative maize sources to replace imports from Ukraine and the US is one of the viable markets.
Mr McCulloch said: “Normally we would buy 700,000t of corn from Ukraine so we need to find alternative sources for that. U.S. Department of Agriculture figures show the U.S. has inventories of about 50 million tons of corn so should be able to ship.”
The Netherlands, Portugal and Italy have already reportedly agreed supplies of US corn after the EU’s 25% tariff on US corn was lifted on January 1 after the EU and US reached an agreement.
However, talks with the UK only started in January. The deal means Britain’s retaliatory tariffs on US bourbon whiskey, agricultural and other goods will be lifted from June 1.
corn markets
On March 24, Chicago corn futures for May 2022 closed at $294.59/t (£223.50/t).
Millie Askew, a senior analyst at AHDB, said corn has fallen out of favor with animal feed manufacturers this season because of its price relative to wheat. Corn imports this season are forecast at 2 million tons, down 31% from 2020-21 levels.
Ms Askew said: “Domestic consumption is also expected to fall later in the year due to higher prices. Without Ukraine, the global supply of corn is very tight. However, if tensions in Ukraine ease and the US corn tariff is suspended on June 1, we could see more corn available.”
Industry Views
Kristian Dunham, head of livestock supplies at farm buying cooperative AF Group, suggests that while the elimination of the tariff is good news, the real impact on UK prices will be relatively small.
Simply importing it from the US rather than Ukraine won’t change global demand, Dunham said, as production is limited. However, he believes prices could fall if the situation in Ukraine eases and exports pick up again.
“Unfortunately, an escalation seems more likely at the moment. Of course, any relaxation in current farm markets will be welcomed and this news will ease markets, but I personally can’t see prices falling more than 5%,” he said.
Ed Barker, head of policy at AIC, welcomed the move and suggested that the government must be ready to take swift action to ensure the continued supply of inputs such as animal feed to UK agriculture.
Mr Barker said: “The decision to repeal it will help mitigate now limited maize exports from Ukraine and Russia and improve the ability of the agricultural supply chain to maintain a steady supply of animal feed to UK farmers. This is welcomed by AIC members and UK ranchers.
“However, the war in Ukraine will continue to present challenges that will negatively impact the broader agricultural supply chain. The government must work closely with the agricultural supply industry to find appropriate solutions. No political or legislative response should be considered off the table.”
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