Spain purchased more than 1.5 million bushels of U.S. grain sorghum recently but the opportunity for even more sales to European countries is a focus for the United Sorghum Checkoff Program. Also, establishing a fair levy rate would put pricing at more equitable levels.
Spain was in the market for 44,000 metric tons (1.7 million bushels) of U.S. sorghum in the last week, but the United Sorghum Checkoff Program is working to create more opportunities in Europe for U.S. sorghum farmers.
“We are excited Spain bought 1.7 million bushels of quality U.S. sorghum, and certainly there are opportunities in Europe for additional sales considering the high prices of feed wheat and other feed grains within the trading block,” said Bill Kubecka, a sorghum producer from Palacios, Texas, and Sorghum Checkoff board director. “European feed and grain organizations have also asked for a sorghum levy reduction to help provide relief.”
At the same time, Kubecka said, the Sorghum Checkoff sponsored a study with the U.S. Grains Council to determine how the European Union Levy Board calculated the import levy and whether it reflected actual U.S. sorghum export values.
The report found that the levy rate was based off pricing data for U.S. barley shipped out of Duluth, Minn.
“Barley is not generally sold through Duluth, which makes it difficult for the Levy Board to obtain solid numbers there,” said Cary Sifferath, USGC senior director in the Mediterranean and Africa. “That being the case, the values are likely posted county prices used to determine U.S. commodity loan rates, but those prices are generally set below market values.”
Sifferath explained that barley and sorghum prices are generally not related. Regardless of where the barley value came from, U.S. sorghum was disadvantaged as the levy rate for barley was set considerably higher than sorghum market values would warrant.
Since corn and sorghum markets are tied closely together, it may make the levy more reliable based off a U.S. Gulf corn benchmark. The report, which outlines that and other options, will be presented to the EU Levy Board for consideration, Kubecka said.
“We hope this will help lead to a permanent change in how the levy is calculated,” he said. “If the EU needs sorghum two months from now, two years from now or whenever, it will be helpful for European grain importers and feed manufacturers if the levy calculated more effectively.”
The United Sorghum Checkoff Program is a producer-funded organization dedicated to improving the sorghum industry through research, promotion and education. For more information about USCP and other market development opportunities, please visit www.sorghumcheckoff.com.