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How Europe is facing the global food crisis

Monitoring, relaxing regulations and keeping up grain imports: In the midst of a global food crisis with prices at an all-time high, the EU tries to prevent food shortages, reads the article published by the European Newsroom (ENR), project run by a consortium of 16 news agencies, including MIA.

European Newsroom

Brussels, 14 August 2022

Monitoring, relaxing regulations and keeping up grain imports: In the midst of a global food crisis with prices at an all-time high, the EU tries to prevent food shortages, reads the article published by the European Newsroom (ENR), project run by a consortium of 16 news agencies, including MIA.

While the EU is trying to counteract this, many countries in Europe are struggling with rising prices.

The EU’s response to the global food crisis is to monitor crop storage levels in member states, to ease environmental regulations in order to boost food production, and to find alternative shipping routes for Ukrainian grain exports. However, an unprecedented drought has raised fears that Europe’s crop yields will decline. This would further drive up food prices, which have already increased substantially, partly due to the war in Ukraine.

Despite the resumption of grain exports from Ukraine’s Black Sea ports under a deal between Russia and Ukraine, brokered by the UN and Turkey, concerns over grain exports remain. According to EU figures, it is considered highly unlikely that pre-war levels of up to 5 million tons of grain passing through the ports each month will be reached again in the near future. The first ship that left the port of Odessa under the UN deal carried just 26,000 tons of maize. Finding alternative export routes is still crucial, an EU Commission official said.

EU Commission relaxes farming regulations to boost food production

In the face of impending food shortages, the European Commission is now relaxing environmental regulations previously imposed on farms in order to facilitate a larger food production. The commission proposed granting one-year exemptions from crop rotation rules and the stipulation to convert arable areas into fallow land. The reform of the EU’s agricultural policy, which is to take effect from 2023, has resulted in tougher environmental standards for agriculture. These include requirements that farmers should protect the soil by not cultivating the same crops on it for several years in succession.

However, demands had been growing to relax these environmental protection standards to allow for more grain to be produced, since less can be shipped from Ukrainian ports affected by the war. Every ton of cereals produced in the EU will help to increase global food security, the Commission said.

Germany and Austria take advantage of the Commission‘s relaxations

Austria has agreed to the EU Commission’s proposal to extend the use of fallow land for agricultural production until the end of 2023.

At the same time, German Minister of Agriculture Cem Özdemir made a proposal to allow farmers to use a greater portion of their land to grow cereal crops, given the shortages on the global market. Berlin is to suspend the new EU regulations concerning crop rotation for a year.

While lawmakers and farming associations welcomed the proposal, environmental activist group Greenpeace harshly criticized the minister for buckling under pressure from the agricultural lobby.

France: Disaster for farmers, ecosystems and biodiversity

Faced by a “historic” drought, exacerbated by a third extreme heatwave, the French government has activated a crisis task force on August 5 to coordinate efforts to alleviate the impacts. “This drought is the worst ever recorded in our country,” the office of Prime Minister Elisabeth Borne said in a statement. The dry conditions are a “disaster” for farmers across the country as well as for “our ecosystems and biodiversity”, she added.

Restrictions on water consumption have already been introduced in nearly all of France’s 96 mainland departments, with 73 at the highest alert level. However, the government statement did not address growing criticism over exemptions that have been granted to golf courses. They are allowed to continue watering their greens, even in departments now on drought crisis alert.

Several European countries have also issued severe drought warnings, with the EU urging members to re-use treated urban wastewater on the continent’s parched farms.

Inflation continues to surge in Spain

In Spain, consumers continue to be heavily affected by increasing food prices.

These were triggered first by the pandemic, then by the increase in electricity and fuel prices – which led to protests and strikes in the agricultural sector – and finally by the war in Ukraine.

Back in July, the Spanish Organisation of Consumers and Users (OCU) had already warned about a 15.2 percent year on year increase in the cost of living basket. A sharp surge that especially affects lower-income households. In June, the record price for a honeydew melon amounted to 13 euros.

According to the National Statistics Institute (INE), the Consumer Price Index (CPI) rose by 1.9 percent in June and the year-on-year inflation rate rose by 1.5 points to 10.2 percent, the highest level since April of 1985.

The Spanish Minister of Agriculture, Fisheries and Food, Luis Planas, wants world food markets to be more transparent in order to achieve a stabilization of prices. “More transparency can and must be given to the markets,” the minister emphasized, citing as an example the recent decision by EU countries to notify the Commission of their monthly data on storage levels of cereals, rice and oilseeds. He also referred to the G20 platform Agricultural Market Information System (AMIS) as a useful instrument to enhance food market transparency. Planas also called for support to the most vulnerable countries in need of purchasing cereals.

Croatia: Hardly any price reductions in stores despite VAT-reductions

Following the trend of other EU countries, Croatia reduced VAT on energy, sanitary and food products in an attempt to alleviate the impact of the current high prices. VAT rate, in effect since April 1, is cut down from 25 percent and 13 percent respectively to 5 percent.

The Croatian Consumer Protection Association (HUZP) called on the State Inspectorate several times to carry out checks of food prices, because, contrary to expectations, there have been no price decreases.

However, as in other EU member states, a huge amount of food is wasted in the country. Croatians throw away about 71 kg of food per capita every year, totaling at over 280,000 tons, and 76 percent of that comes from households, while the EU average is 53 percent, said Branka Ilakovac, the president of the Food Waste Prevention Center (CEPOH).

Prevention and the education of citizens have not been recognized in Croatia as key factors in counteracting the wasting of food, she added.

According to estimates, the citizens of EU countries throw away 88 million tons of food per year, with a total value of 143 billion euros, Ilakovac said.

She added that Croatia, as an EU member state, has set itself the target of reducing the waste of food by 50 percent by 2030.

Food prices increase by over 23 percent in Bosnia

Bosnia and Herzegovina (BiH) faces an inflation rate of 15.8 percent, and the prices for food and soft drinks rose by 23.4 percent. The country relies mainly on food imports and has insufficient reserves to significantly intervene in the market.

Traders often use their monopolistic position to keep prices artificially high. Owing to a large number of tourists and the fact that the country’s diaspora population returns to the homeland during the summer months, the present demand for goods is quite high.

Economic analysts expect that the beginning of autumn will bring a drop in demand and that this will force retailers to reduce their prices for many food products.

Comparative data shows that despite the increases for many basic food products in Bosnia and Herzegovina, prices are still lower than in the neighbouring countries.

Inflation rate reaches the 16-percent-mark in North Macedonia

According to the Federation of Trade Unions of Macedonia (SSM), the current inflation significantly reduces the purchasing power of wages. Purchasing power of the minimum monthly wage has declined from 290 euros to 244 euros, while the purchasing power of an average wage now amounts to 428 euros instead of 510 euros.

North Macedonia is import-dependent for certain basic food products, such as wheat, cooking oil, meat and milk. According to calculations by SSM, minimum expenses for a family amounted to about 760 euros in July.

The income amount is not sufficient for families with two earners if one earns an average and the other a minimum wage.

Romania will not limit wheat exports

As of August 3, Romania has harvested more than 94 percent of its wheat. Minister of Agriculture Petre Daea assured that this year’s production will cover the country’s needs and leave room for exports.

Although Romania says it will not limit wheat exports, Daea stressed that the country will serve the domestic market first and only the remainder will be exported.

284,376 hectares of the country’s surface area were affected by drought as of August 10. In total, in Romania, 154,500 hectares are cultivated with wheat and triticale, 22,598 hectares with barley, oats and rye, 25,000 hectares with rapeseed, 49,910 hectares with maize, 3,141 hectares with soya, 702 hectares with peas, 20,054 hectares with sunflowers, 3,952 hectares with fodder crops and 4,427 hectares with other crops.

However, the country is not spared from food price increases. Since July 2021, cooking oil saw the highest price increase at 49.71 percent, potato prices increased by 42.18 percent and flour prices by 33.16 percent.

Bucharest has taken several measures to protect those affected by price increases with meal vouchers and other forms of government aid.

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