The effects of the Common Agricultural Policy on the European Community wheat-washing industry and grain trade.

Abstract

The wheat-washing industry in the European Community (EC) increased the separation of wheat flour into vital wheat gluten and wheat starch from 360,000 tons (wheat equivalent) in 1980 to over 1 million tons in 1985. This expansion was facilitated by trends in relative grain prices in the EC, which are insulated from movements in world prices by a variable levy system, and by the use of better fractionation techniques. The expansion of the wheat-washing industry was responsible for most of the 2-million-ton decline in EC hard wheat imports between 1980 and 1985, and reduced EC wheat exports and corn imports by about 3.3 and 0.5 million tons. EC hard wheat imports could be totally eliminated and EC wheat exports could be further reduced by as much as 4.9 million tons annually by the mid-1990's, if EC agricultural policies favor the further expansion of this industry. In the absence of a further expansion of the EC wheat-washing industry, however, these latter trade effects for wheat would not occur and EC corn imports would increase by an additional 2 million tons.