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Ailing grain commission to be nationalised (updated)

The government is looking to nationalise the loss-making grain commission and transfer its staff to other departments, the House agriculture committee heard on Tuesday.

“It is another organisation that we allowed to become loss-making with no prospect of denationalisation,” Finance Minister Harris Georgiades said.

“The direction is full nationalisation, it’s not a positive development but it seems inevitable.”

The grain commission was established in 1960 as a state-controlled monopoly to ensure the lowest possible prices for grain imports, which it delivered to local businesses, and maintain the country’s strategic reserves.

With the accession to the European Union in 2004, however, the grain market was liberalised and the semi-state importer was forced to operate under free-market conditions.

Georgiades said the cabinet had decided that the commission’s work should be taken over by the central government and a significant section of its staff transferred.

Before transferring any staff to other departments, the government planned to propose a voluntary exit scheme in a bid to shed workers.

The commission currently employs 60 workers but the government says the job can be done with about 10.

“The suggestion of the farming organisations is to transfer everything to the state in return for covering the €16m deficit in the pension fund,” the minister said. “We do not think this should be the first and last choice, the state itself has a lot of unused real estate.”

The cabinet’s guidelines provide for the commission selling or leasing the properties to cover the deficit, he said. Any left unused will be taken over by the state.

Georgiades said they planned to look into the possibility of leasing the commission’s silo in Limassol but was not too sure anyone would show interest.

“It is clear that we are not passively watching the grain commission slip into an unsustainable situation, but not many options are available,” he said. “It cannot go on as is, nor is there any interest from an investor to take over. Consequently, it will come under state control in a more compact form.”

Agriculture Minister Nicos Kouyialis told MPs that for years the commission profited on farmers’ backs and today it was helping others do the same.

The commission has around €3m in operating costs per year and to stay afloat and keep some of its business it charges €15 to €20 per tonne. This benefits private traders who charge a bit less and make huge profits, the minister said.

He said the commission has reached the verge of bankruptcy in recent years, having lost 50 per cent of its business and revenues. In 2017, it is expected to record a loss of around €4.8m.

Farming unions disagree with the government’s decision to shutter the commission – the main problem being that they want it to maintain its role in the grain trade.

“We decided that a service must be created under the ministry of agriculture, which will handle the strategic reserves that do not exist today,” Kouyialis said.

Having the strategic reserves would enable the commission to play its regulatory role in the trade.

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