The EU Commission has stated that the availability of food, feed and fertilisers is not a primary concern this year.
However, in its short-term outlook for EU agricultural markets published today (Tuesday, March 5), the commission has said that its main concern remains the level of commodity prices.
As a result of the Russian invasion of Ukraine, the report outlined how prices including energy; fertilisers; wheat and soybeans have skyrocketed.
“They are expected to remain high this year and will further weigh on pre-existing increasing inflation levels,” the document outlined.
The report stated that the global economic recovery was already facing challenges prior to the war.
The commission noted that the EU is largely self-sufficient for food due to a “massive agri-food trade surplus”.
However, it admitted that there are concerns about affordability due to high market costs and inflationary trends.
The European Central Bank (ECB) is now forecasting an inflation rate of 5.1% for the EU in 2022, with a return to 2.1% in 2023.
“This situation raises questions on the farmers’ capacity to purchase fertilisers, feed and to pay their energy bill, particularly for farmers with energy-intensive and feed-intensive farms.
“The situation also raises questions on food affordability for low-income households,” the commission said.
EU Commission report
In its report, the EU Commission stated that the ongoing war “raised fundamental food security concerns as well as systemic concerns regarding the EU dependency on feed and fertiliser imports, in particular from Ukraine, Russia and Belarus”.
If normal weather conditions prevail and proposed measures result in an increase in EU arable crop production, the report stated that the 2022 EU harvest “may be a very good one for cereals and for oilseeds”.
The report also pointed to a decrease in feed demand due to lower pigmeat production and a reduction in cereal use for biofuels this year.
This could enable EU grain exports to be 30% higher and EU grain imports 42% lower in the 2022/23 marketing year.
The commission explained that “this would contribute to cushion the impact on world markets of the expected lack of grain exports from Ukraine”.
Ukraine is a major player on the global grain and seed oil market. The report notes that reduced imports of maize, wheat, rapeseed and sunflower oil and meals from Ukraine will impact on feed prices and the EU food processing industry.
“Spring weather in the EU will play a key role in the availability of home-grown feed and roughage, which could partially compensate for reduced feed imports,” the commission said.
The report stated that the EU agri-food sector has “so far responded well to challenges of historical magnitude”.
The commission noted the need to adapt to the rapid changes stemming from the war and the consequent price surges will be challenging in the short term.
However, it said that there could be opportunities in the longer term with the EU becoming less dependent on input imports and diversifying its energy sources.