Governance on grain for all - Supply balance sheet for cereals

Module: Supply balance sheet for cereals and the necessary knowledge about the cereal market in the country embedded in the national administration system.

Governance on grain for all

In the following the preparation of a reliable supply balance sheet for cereals will be performed. The supply balance sheet gives us fundamental information about the production and demand of cereals during a year. It is obviously that the supply balance sheet is the basis for the knowledge if for the population of a country enough quantity of cereals is supplied. Furthermore the supply balance sheet will be the basis for the performance of prognosis of supply and demand of cereals in the next periods.

The cereal supply balance sheet is embedded within the reliable market knowledge, which is necessary for the administrative measures for the market interventions set by the authorities.

Legislative background is of highest importance for the intervention mechanisms of the cereal markets:

Detailed overview of the legal basis for

  • - cereals, intervention and market information
  • - crisis prevention and management

Detailed overview of the legal implementation in Austria

  • Explanation of examples for crisis management in the field of cereals (e.g. flooding)
  • Examination of the possibility to grant State Aid – legal basis and examples
  • Overview of the Austrian Food Management Law and the respective share of competence

Policy Making: 

  • Using the Management Committees as source of information
  • Representation and Lobbying in Third Countries
  • Exchange for Agricultural Products – Quotation/Information,
  • Promotional politics in the area of the control of the export for Member States and third countries,
  • International activities of the Exchange –example: International Danube Exchange
  • National considerations in respect to crisis management
  • Crop insurance system in Austria
  • Share of bio energy in connection with food security

Organisation Structure, Administration structure within the Authorities: 

  • Current status of the existing organisation structure within the institution, functions, activities of the staff, organisation chart, written procedures, division of the responsibilities and authorisations for the staff,
  • Analyse of the current status together with the colleagues of the grain authority belonging to the efficiency,
  • Investigation and evaluation of positive and non positive details within the institution, function and activities of the authority and documentation of these,
  • Constitution of needs of improvement potentials belonging to budget necessity, technical equipment, staff in regards quality and quantity, Information Technology (hardware and software), Information Technology security, individual job description with allocation of the responsibilities of the staff,
  • Demonstration of the Internal Audit Service as implemented at Agrarmarkt Austria and discussion about the parallels to the national authority,
  • Demonstration of the Quality Management (ISO 900X international standard), introduction in the system of the ISO 9000 Quality Management System as implemented at Agrarmarkt Austria as well as the way to the certification procedure for the national authority, systematic quality management,
  • Securing effective and efficient process, that creates value for users,
  • Securing of a proper Intra - Institutional and Inter - Institutional (other relevant institutions) cooperation, partnerships,
  • Strategic and technical conditions and requirements with the stores and other partners,
  • Proper Information procedure amongst the departments,
  • Information Technology security,
  • Organisational structure of administrative and on-the-spot control,
  • Function of the internal control system

Information about the national grain market: 

  • Correct estimation of the production of the grain harvest at the producers in the country,
  • Collecting of quality information from the quality laboratory,
  • Definition of the reporting obligations of the grain purchasers, stores, traders, milling industry, feed industry belonging to the quantity,
  • Reporting obligations regarding to export and import; looking for the possibility for inter – institutional cooperation with the State Statistic Office, Customs’ office,
  • Registration of the market participants through modern internet technology solution,
  • Definition of the frequency of reporting (monthly, quarterly, yearly),
  • Demonstration of the correct processing of the received data as is implemented at Agrarmarkt Austria in a web – based IT system (an easy solution for the partners for direct communication with the authority),
  • At the registration and approval of the grain stores we have to develop a proper manual with predefined quality criteria,
  • Contract procedure with the grain stores including the obligations of the grain stores,
  • Overview of the control procedure, preparation of the correct manuals for the controllers, control plan (control of the grain stores for the fulfilling of the term of the contract, control of the buying – in, control of the storage during the storage period, yearly inventory belonging to the relevant parameters, control of the sale),
  • Obligations of the storehouses: reports and/or receipts
  • Wheat quality after harvest (protein, hectolitre weight, moisture content),
  • Quarterly balances as elaborated in the former section,
  • Intervention quantities monthly reporting,
  • Average costs of the grain storing in the country,
  • Preparation of a supply and demand balance:
  • - Sources of statistical information,
  • - Information about the national grain market
  • - Network of correspondents,
  • - Possibility for elaboration of a consolidated balance of supply and demand with the neighbour countries,
  • - Exchange of documents and traceability information.

The most important precondition for receiving proper data from the reporting partners is a solid legal background about the reporting requirements in the national legislation in the grain sector.

For the proper elaboration and calculation procedures of the supply and demand balances for grain the following working modules have to be taken into consideration: 

  • Production area,
  • Calculation of the yield of cereals,
  • Calculation of the produced gross quantity,
  • Calculation of the produced net quantity,
  • Beginning stocks of the marketing year,
  • Usable cereal quantity at the beginning of the marketing year (beginning stocks and the produced net quantity),
  • Cereal quantity used on the farm (fodder, seeds, human consumption),
  • Delivery to the national market to the different purchasers, consumers (public silos, private silos, milling industry, fodder industry, seed companies, bio fuel industry),
  • Imports,
  • Disposable market quantity from domestic production and import and beginning stocks,
  • Cereal quantity used at the market (milling industry, fodder industry, seeds, bio fuel),
  • Exports,
  • Stocks at the end of the cereal marketing year,
  • Demand prognosis in dependence of the inhabitants, feeding demand as well as the processing industry up to three months period.

Additional statistical data from the Cereal Intervention carried out by the national authority to be used for the balances: 

  • Legal setting for the cereal intervention,
  • Administrative mechanisms (Development of the necessary forms for the intervention, Contracts for the storing of the cereals, tendering, acceptance of the tenders, payment mechanism, caution, release of the payment, book keeping, bank contact)
  • Procedures for the taking over of cereals by intervention agencies,
  • determination of the intervention centres,
  • transport costs,
  • entering of the cereals into the intervention centres,
  • procedures and conditions for the storage of cereals held by intervention agencies,
  • Storage, inspection measures to be undertaken and procedures used to establish volume, such as measuring methods, calculations, interim and final results, and the conclusions drawn
  • procedure and conditions for the sale of cereals held by intervention agencies,
  • Network of correspondents:
  • We need the correspondents for the harvest period in the summer and autumn for wheat, barley, sunflower, maize to mention the most important grains,
  • To construct the system of the reporting from the different correspondents to the authority,
  • Preparation of manual and guidelines for the correspondents by the authority,
  • The construction of the internal strategy and the administration procedures within the authority for the mooth functioning of the network of correspondents,
  • We have to train the correspondents with the prepared manual regarding to the methodology, to construct an Information Technology background (web site application).

Possibility for elaboration of a consolidated balance of supply and demand with the neighbour countries (can be interesting in the case of export and import to and from the neighbouring countries): 

  • Principally an accumulated balance with the involvement of the neighbouring countries is very reasonable,
  • In crisis situations it is easier to coordinate the necessary measures in a region which is going beyond the individual country,
  • The precondition for a coordinated approach would be a harmonised system of the supply and demand balances,
  • A further precondition would be the coordination between the institutions in the countries which would be involved in the regional crisis management system,
  • We will note that in the first phases we have to construct the smooth fundament for the county involved in the project approach and in a further phases we can work on the regional balances and regional crisis management .

Control function is necessary regarding the state intervention; it means that it has to be controlled the way of the cereal from the harvest to the storages: 

  • Organisation of the control activities:
  • - Selection of the sample of the grain producing farmers,
  • - Selection of the sample of the storages,
  • - Selection of the sample of the milling and of feedstuff industry,
  • - Selection of the sample of the supermarkets,
  • -The control frequency is normally 5 % of the controls on the field, regarding to the storage the controls has to be done in yearly rhythm in all storages,
  • - The documentation of the control procedure has to be written by the controller himself, the controller is only responsible for the documentation of the found facts and is not responsible for further measures. These measures will be done in further steps by the operational department,
  • Application of good agricultural practices, which lay down the main principles of the food safety,
  • Principally the control of the good agricultural praxis is identical with the Cross Compliance (some examples: protection of the ground water, fertilisation, pesticides, seeds, the conditions at the treatment of the soil),
  • Traceability of the grain, systems and procedures, information turnover,
  • - The traceability is a complex procedures which involves the steps from the seed standards, certifications.
  • Control and traceability of the grain on all levels - from the field to the market:
  • - Traceability of the grain movement from the storage to the market,
  • - Control of the stored grain and the grain products,
  • The first control at the silos is a quantitative administrative control at the book keeping, buy-in, stored volume, sale (balance of the quantities) from the last control till the date of the recent control. The physical control encompasses the concrete wage of the stored cereals calculated in an indirect way with parameters as hectolitre weight, cubature of the silo. The temperature records of the silo have to be recorded in a weekly frequency. The quality control as moisture and hectolitre weight, unwanted ingredients or components will be controlled at the silo, for the laboratory control a sample will be taken with a telescopic steel instrument and will be sent to the certified laboratories.
  • - Control of the information on central level
  • The evaluation and interpretation of the control reports will be carried out in different stages, in the first stage the evaluation of the reports of the controllers will be done and in a second stage an in deepen analysis the possible injuries will be examined. Depending of the severity of the found injuries the following necessary steps will be determined.
  • Traceability of the export into Member States as well as into third countries,
  • To determine of the export of grain which is going into other Member States or into a third country quantitative (transport documents) and qualitative (moisture, hectolitre weight, unwanted ingredients or components) analysis are requested.

Download the cereal supply balance sheet of the Statistic Office (EUROSTAT) of the European Union. This supply balance sheet for cereals is compulsory to fill out by the Member States on a yearly basis. Additional to this manual we show here on a concrete example the detailed way for the correct algorithm as it is implemented in Austria.