The EU remains dependent on imported inputs for the food production system, particularly for animals products and cereals, according to a new study.
The study, which was prepared for the European Parliament’s agriculture committee, said that the dependency on inputs across a number of food producing sectors – including agriculture, fisheries and beverages – can vary significantly, depending on metrics.
When the food sector’s dependency is expressed as a ratio of the value of imported inputs to sectoral output, the EU is 10% dependent on imported inputs for food production, with this figure falling to 7.7% for agri-food specifically.
However, when imported inputs are expressed as a total share of all inputs used in the the EU food system, the dependency ratio increases significantly, and can reach as high as 66% for some inputs in agriculture.
Furthermore, the geographical source of inputs is highly concentrated for some products. For example, only two suppliers provide up to 85% of the EU’s soya imports (which is used in animal feed).
The study said that the soya beans and meal are feed materials of critical importance to this subsector and to poultry and pig farming in particular, and their imports are characterized by the strongest polarisation towards fewest non-EU suppliers for imported inputs.
The cereal sector, meanwhile, is considerably dependent on imported inputs in the areas of raw materials and energy sources needed to produce fertilisers.
The study also noted that recent international events “reflect the degree of integration of the EU food supply chain into the global supply chain”, and that there are risks associated with that.
These events include the Covid-19 pandemic, the Russian invasion of Ukraine, policy and regulation constraints, disruption in logistics (notably in maritime transportation), and the related higher price volatility. These amplify the negative implications of high import dependency for key inputs.
On fertiliser specifically, the EU depends on imported inputs for 45%, 46%, and 58% respectively for its consumption of inorganic nitrogen, phosphates and potash nutrients.
EU imports of nitrate-based fertiliser originate mainly from Russia, Egypt and Algeria. Phosphate-based products are mainly sourced from Morocco and Russia, while potassium chloride imports are mainly coming from Russia and Belarus (which is an ally of Russia in the conflict in Ukraine).
At the peaks of gas prices during the summer of 2022, gas had come to account for up to 90% of the variable production cost of nitrogen fertilisers. This resulted in a 149% increase in the price of these products for EU farmers between September 2021 and September 2022.
Fertiliser prices are decreasing since October 2022, but remain higher in comparison to previous years.
According to Eurostat data, total nitrogen imports into the EU were up 34% in the 2022-2023 fertilisers marketing campaign (July and June) compared to the previous period, with Russia accounting for around a third of the total.
In terms of reducing the EU’s dependence on imported inputs and diversifying sources, the study notes that there are a number of “tools” that can be used, including trade and strategic partnerships, a renewed agenda for EU enlargement, and “strategic stockpiling”.
The study also said that the EU should look to increasing domestic production of key inputs through research, technological development, and innovation in EU agriculture; to achieving a more efficient use of natural resources, raw materials and farming inputs; improving crop productivity without using input-intensive techniques; and fully exploiting the potential offered by bio-based, fully circular production processes.