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16th Aug 2022

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Chorus of EU concern on low harvests plus rocketing prices

  • This year's grain harvest is forecasted to be lower in Poland and France (Photo: Pixabay)
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High prices of energy, fuels, fertilisers and feed are pushing up agricultural production costs and harming farm profitability in several European markets due to Russia's war on Ukraine, prompting some member states to seek further EU support.

But such a scenario has been further exacerbated by warmer temperatures and widespread droughts, due to a lack of rainfall at the beginning of summer.

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The prices of barley, wheat and other grains used for feed are already between 38 percent and 78 percent higher than normal in Latvia, triggering price increases in pork and beef meat, Riga warned its counterparts in the European Council ahead of a ministers meeting on Monday (18 July).

"The situation on agricultural markets continues to be markedly unfavourable with a dramatic increase at the beginning of the Russian Federation's military aggression against Ukraine," Riga said, according to an internal document dated Wednesday (13 July) and seen by EUobserver.

Ukraine is one of the world's largest suppliers of grain, but the country's export capacity has significantly decreased since the war began in late February due to the blockade of the BlackSea.

Global food prices have been increasing since the pandemic. But export disruptions in Ukraine have pushed prices even higher, raising fears over a looming hunger catastrophe in poor countries — and widespread concerns over food affordability in the EU.

"There are concerns regarding the provision of food products at affordable prices for Bulgarian consumers," Sofia said.

"It is not clear whether the increased costs of production will be fully compensated by an increase in the prices of the products," they also said.

Bulgaria imports very large quantities of grain, mostly sunflower, from Ukraine. But the government is worried about the negative impact that the trade liberalisation with Ukraine has had on local markets.

Local grain and oilseed markets are filled with Ukrainian grain which as result is "collapsing the Bulgarian grain market," both in terms of prices and volumes demanded, Sofia said.

Likewise, the prices of cereals are higher than last year in Poland by, on average, about 80 percent.

"Agricultural products prices now reach historically-high levels, but production costs are also historically high," said Warsaw.

"In the 2021/2022 season the impact of the war in Ukraine on the Polish grain market was limited and was manifested only in price increases and minor disruptions in foreign trade. In the 2022/2023 season, the scale of this impact will be greater," it adds.

This year's grain harvest is forecasted to be lower, by around an estimated 31-33 million tonnes.

Portugal, which is facing a large deficit in cereals, said that the EU aid made available is "very small in relation to the actual impact of this disruption" in agri-food markets.

Ahead of the meeting with EU agriculture ministers, Lisbon has been asking for more flexibility and the allocation of new EU resources.

Fertiliser crisis

Ireland, for its part, remains concerned over the price and availability of fertilisers, of which Russia is the world's second-largest exporter. This issue has also been raised by some African countries.

A nitrate-based fertiliser, known as CAN fertiliser, increased in price by €80-€100 per tonne last week, according to the Irish government, which has warned of further increases due to skyrocketing energy prices.

"While it was envisaged that the gas price pressure would ease for the summer months this is not the case," said Dublin.

France's grain production is expected to fall, mainly due to the effects of the spring drought. Wheat will drop by six to 10 percent compared to the previous campaign, and barley may drip by 4.5 percent.

Paris also warned that the European apple market is also suffering from the consequences of the decrease in exports to Belarus and Ukraine, and it requires monitoring.

Meanwhile, food inflation in east African countries has increased dramatically.

Food prices have jumped in Ethiopia by nearly 44 compared since last year, while the price of bread has doubled in South Sudan, according to a new report of Oxfam

The UN previously warned that the war in Ukraine could lead to between eight and 13 million more people being undernourished next year.

EU urged to grow more wheat to avert food crisis

European agriculture ministers have called for higher domestic farm output, amid food security worries, and a looming food crisis in Africa. Many African countries, eg Benin, Egypt, Sudan, Madagascar, and Burundi, are almost entirely, or exclusively, dependent on Ukrainian grain.

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