The war in Ukraine has destabilized agricultural markets in a month and is forcing political changes to save food supplies and cushion prices. After a month of the Russian invasion, the alarms about its consequences on agriculture, fishing and food equal, or even exceed, the alerts triggered during the pandemic in developed countries.
The reduction of raw materials from Ukraine and Russia may cause economic losses for the industry and will make food more expensive. The European Union (EU) and its governments, including the Spanish one, are forced to step on the accelerator to provide solutions.
Economic importance of Russia and Ukraine
Ukraine and Russia stand out among the main exporters of raw materials.
Russia provides 16% of wheat exports and Ukraine 10%, according to data from the United States Department of Agriculture (USDA) from 2021-2022, processed by the Bertelsmann Foundation.
Ukraine leads the world production and export of sunflower, with 30% and 50% of the total, respectively; in corn it is the sixth producer and the fourth exporter (with 17%) and in wheat its fifth position as exporter stands out (12%).
In second position is Russia in the production of sunflower (25% of the world total), barley and in the exports of wheat (17% of the total), sunflower (25%), although in wheat production it occupies the second place.
Spain, a country with a cereal deficit, buys 27% of its corn imports and 62% of its sunflower imports from Ukraine.
Perspectives in Spain
The secretary general of the cereal traders' association (Accoe), José Manuel Álvarez, declares that in Spain the supply is guaranteed until May or June, but the stocks are lower than the usual ones for these dates.
However, Spain has made the requirements to import cereals from Argentina or Brazil more flexible.
On the other hand, the increase in the price of diesel reduces the income of companies in agriculture and fishing.
The mobilizations and stoppages in Spain in this last week, including the moorings of the fleet, are proof of the difficulties in the food chain.
However, Spain has made the requirements to import cereals from Argentina or Brazil more flexible.
On the other hand, the increase in the price of diesel reduces the income of companies in agriculture and fishing.
The mobilizations and stoppages in Spain in this last week, including the moorings of the fleet, are proof of the difficulties in the food chain.
The EU is rethinking its policies
The EU has agreed on actions to facilitate agricultural supply and alleviate the effects of the war. Exceptions to the regulations of the Common Agricultural Policy (CAP) to be able to sow fallow land or aid for the withdrawal of pork from the market are among the measures.
In addition, the European Commission (EC) has activated the CAP "crisis reserve" worth 500 million euros, 64 for Spain.
And from both the meetings of the Council of Agriculture and the summits of community leaders emerges a message: the EU must strengthen its food autonomy.
On the other hand, the EU is moving towards the application of the CAP reform in 2023 and more and more voices recognize that it will be necessary to frequently resort to adjustments to ensure that internal production is maintained.
Faced with this panorama, the objectives of the European Green Pact are "under pressure", according to a study by the Bertelsmann Foundation
Agricultural organizations and cooperatives insist on reviewing Brussels' environmental ambitions, including the "From Farm to Table" strategy, which sets targets for reducing fertilizers, pesticides and even meat consumption.
"The EU is not a bubble in the world and the first thing we have to do is guarantee supplies", according to the head of Accoe, a business association in favor of reviewing community restrictions on the entry of transgenics.
Risks in accessing food
The fact that the drop in supply from two countries has altered all world trade, due to the war or sanctions, leads to thinking about the need to "rethink the rules of the game", according to sources in the sector. The current uncertainty is even compared to the pandemic, which caused food shortages in many parts of the world but did not interrupt the EU supply chain.
Community consumers are also going to suffer the increase in the price of the shopping basket, a situation that in 2008 led many families to eat cheaper foods, high in calories and less nutritious.
The EC has reminded the Member States of the possibility of applying reduced VAT rates and encouraging economic operators to contain prices and invites them to use the European Aid Fund for the Most Disadvantaged (FEAD), to provide food and material assistance to the most vulnerable.
Brussels has also proposed a set of actions to provide Ukrainian fields with supplies and to facilitate food for its citizens.
