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The European Commission launched a plan to ensure food
security against the impact of the war in Ukraine
EU farmers will receive up to €1.5 billion in aid
through a crisis reserve and can produce food on land set aside for
biodiversity
Private storage aid will be introduced for pork, EU
state aid and trade rules will be relaxed
Farming representatives support the aid package, but
environmentalists are furious because the measures go against the
EU's sustainability ambitions of the Farm to Fork (F2F)
strategy
The European Commission has launched an EU plan with several aid
measures to safeguard food security against the impact of the war
in Ukraine.
On 23 March, the Commission announced a package of measures to
enhance food security and support EU farmers suffering from high
costs of inputs such as for energy and fertilizers.
The EU executive said it will provide €500 million in aid to the
bloc's most affected farming sectors by triggering a crisis reserve
under the Common Agricultural Policy (CAP) that has never been used
before. EU member states can top-up this funding to a potential
total of €1.5 billion and will be able to use these funds to help
their farmers cope with market disturbances, higher inputs costs
and trade restrictions caused by the war.
The package will also see the introduction of private storage
aid for pig meat to ease to European pork sector's economic
troubles. The Commission had ruled out this market intervention for
months despite repeated calls from EU farming ministers, but the
impact of the war in Ukraine made the EU executive change its mind
and the exceptional EU market aid for the industry will be launched
soon.
Flexibilities will also be introduced to existing import
requirements for animal feed to alleviate the pressure on livestock
producers, while the EU's state aid rules will be relaxed for the
agriculture and fertilizer sectors to allow up to €5,000 in aid to
be distributed to individual farmers.
Additionally, member states will be able to advance CAP direct
payments and rural development aid to their farmers from 16 October
2022 onwards - an aid measure that has been introduced several
times in recent years during crisis periods.
The Commission also confirmed that it will pause some of the
CAP's environmental rules for 2022 to boost the EU's food
production and offset trade losses from the war in Ukraine.
Specifically, crop production will be allowed on land currently
lying fallow as part of crop diversification requirements or
Ecological Focus Areas (EFAs), which requires 5% of arable farmland
to be set-aside for biodiversity under the current CAP's greening
conditions . National authorities can also allow farmers to use
pesticides in these areas to ensure the crops' growth while still
paying out the green CAP payments.
Agriculture Commissioner Janusz Wojciechowski explained that
this "exceptional and temporary derogation" could quickly free up
to 4 million hectares of land for the production of food and animal
feed - amounting to 5.7% of the EU's total agricultural land.
Reactions
EU farming representatives had been asking for these measures
for weeks and welcomed the emergency support package, with farming
association Copa-Cogeca saying it shows the Commission "recognises
the strategic role of European agriculture production in global
food security".
Agriculture ministers and members of the European Parliament
(MEPs) in the Agriculture Committee (AGRI) had also pushed for
these measures and further urged the EU executive to put the
implementation of the Farm to Fork (F2F) strategy's sustainability
ambitions on hold to avoid any negative impacts on food security.
These demands convinced the Commission to also postpone their
revision of the EU's pesticide rules that aims to make the F2F's
50% reduction target legally binding .
However, these emergency measures have sparked strong backlash
from MEPs in the Environment Committee (ENVI), who urged the EU
executive to keep pursuing their green ambitions despite the impact
of the war in Ukraine. Environmental groups are also furious and
called the measures "absurd" because they would lead to more
pesticide and fertilizer use on farmland and further threaten
ecosystem collapse instead of tackling these challenges.
The Commission has also been internally divided on whether the
F2F's ambitions should be temporarily suspended due to the Ukraine
crisis, but stressed in their new plan that sustainability is an
integral part of food security and they will continue to implement
their F2F objectives. Trade Commissioner Valdis Dombrovskis said:
"Short term emergency measures are important, but they do not
replace the importance of refocusing agricultural food sector
towards sustainability."
Aid for Ukraine
The Commission explained that food availability is currently not
at stake in the EU because the continent is largely self-sufficient
for many agricultural products, but it pointed to high input costs
and food prices as the main causes of concern. An expert group set
up as part of the EU's contingency plan for food security will now
assess the implications of the invasion of Ukraine and analyze the
risks and vulnerabilities of the bloc's food supply chain before
recommending further measures.
Meanwhile, the EU executive said food security is a great
concern in war-torn Ukraine, especially in besieged cities, because
"Russia appears to be deliberately targeting and destroying food
storage locations". This is expected to cause more food shortages
for Ukrainians as well as supply disruptions that will affect the
whole world, especially lower-income countries dependent on
imports.
The Commission therefore committed to taking measures to ensure
that the EU - a net food exporter and major agri-food producer -
can contribute to food security in Ukraine. "We will not let
Ukraine stand alone in the face of Russian aggression,"
Wojciechowski said, stressing that the EU's "first priority is to
make sure that Ukrainians have enough food, fuel and water".
Apart from food aid, the Commissioner promised to help the
country's planting and growing of cereals and oilseeds to ensure
their own food needs as well as to facilitate their exports. This
will be done through an EU Emergency Support Programme of €330
million that will secure access to basic goods and services in
Ukraine and protect the local population.
The EU also committed to helping food security in other parts of
the world, such as in North Africa and the Middle East, which
largely rely on imports of cereals, as well as in Asia and
sub-Saharan Africa, with humanitarian and development assistance.
The Commission added that it will keep advocating strongly against
any form of food export restrictions and trade bans within and
outside of its internal market.
Distribution of EU Crisis Aid between Member States
Country
Amount available (in EUR)
Belgium
6,268,410
Bulgaria
10,611,143
Czechia
11,249,937
Denmark
10,389,359
Germany
60,059,869
Estonia
2,571,111
Ireland
15,754,693
Greece
26,298,105
Spain
64,490,253
France
89,330,157
Croatia
5,354,710
Italy
48,116,688
Cyprus
632,153
Latvia
4,235,161
Lithuania
7,682,787
Luxembourg
443,570
Hungary
16,939,316
Malta
69,059
Netherlands
8,097,139
Austria
8,998,887
Poland
44,844,365
Portugal
9,105,131
Romania
25,490,649
Slovenia
1,746,390
Slovakia
5,239,169
Finland
6,872,674
Sweden
9,109,115
EU-27 total
500,000,000
Posted 01 April 2022 by Pieter Devuyst, News Analyst, S&P Global Commodity Insights
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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