31.03.2022 / Communication of the European Commission regarding food security and the resilience of food systems
While the EU is self-sufficient to a large extent, the food prices in the Union have increased 5.6% compared to last February. However, it should be noted that the EU is dependent on imports like energy, animal feed, and fertilisers.
The war in Ukraine has substantial impact on the global food market as the prices of wheat futures have increased by 70% since the start of the conflict and it is expected that a gap of about 25 million tons of wheat will form and persists in 2022 and 2023. The EU should contribute to filling the gap as it is a net exporter of wheat and it also has the highest yield globally (an average of 5.3 tones/hectare in comparison to a global average of 3t/ha). Additionally, the EU advocates against export restrictions and bans on food as the 2007/8 crisis showed the disastrous consequences of such policies.
The EU is a net importer of certain goods such as feed protein, sunflower oil, and seafood. Considering the uncertainties in the past years, the Commission has established a European Food Security Crisis preparedness and response mechanism (EFSCM) with the aim to map out the risks and vulnerabilities of the supply chains.
While the EU is not at risk of food scarcity, the uncertainty and the gap created by the war in Ukraine will further fuel the surge in food prices. As a result, low-income families and people may become vulnerable. To alleviate the pressure from the consumers the Member States may implement temporal reduced VAT rates and encourage economic operators to reduce their prices. The VAT rate on certain goods may be lowered to 0% if the Member States find it appropriate.
The stabilization of the European and global agricultural markets is important for the EU. For this reason, the Commission has proposed a support package of 500 million euros for the most affected producers. Additionally, the Member States will be allowed to pay increased levels of advances of direct payments as well as to deviate from particular greening obligations.
Furthermore, the Commission encourages the Member States to reduce the blending proportion of biofuels, and thus the land used for the production of biofuels feedstocks may be used for food and food commodities. Overall, the Commission will allow for temporary exceptional state interventions that are aimed at stabilising the European and global agricultural market and supply chains.
The EU plans to enhance the resilience of the food systems by reducing the dependence on fossil fuels and imported inputs. For example, the Commission supports the substitution of nitrogen fertilisers with green ammonia. The EU will invest in the research and development of substitutes for synthetic fertilisers – 268,5 million euros will be allocated to circular and bio-economy sectors in 2022-2023. The EU needs to diversify its imports of potash and phosphates, which are largely imported from Belarus and Russia. EU plans to reduce the dependence on feed imports and boost plant protein production.
The full text can be found here.