As the Ukrainian war rages on, Europe and the world is facing food security challenges of crisis levels. Sustainability critics demand watered down policy to aid food security.
In March, incumbent French President, Emmanuel Macron changed his narrative for the agricultural sector refocusing on ‘agricultural independence’ - prioritising productivity over sustainable farming goals in the EU’s Green Deal to cope with a post-Ukraine war Europe. Macron challenged EU’s Farm to Fork strategy stating that ‘Europe cannot afford to produce less’. Macron’s view reflects the strong negative impact that increasing prices of soft commodities like soy, wheat and corn have had on affordability and food security. And these threaten to put a halt on the momentum that has been built over the last decade on Europe’s sustainability trajectory.
But is this necessary?
Do we have a food security issue?
Combined Ukraine and Russia are responsible for 30% of world’s wheat exports. According to the European Commission, the loss of grain exports from Ukraine means that up to 25 million tonnes of wheat must be substituted in the current and the next season. Given that most exports of wheat are heavily weighted towards the second half of the year, this supply crunch is going to just increase over the next several years, as Ukrainian agricultural fields and livestock continue to be ravaged by the Russian attacks.
Apart from cereals, Europe also imports oil seeds from Ukraine and fertilisers and natural gas (needed to make fertilisers) from Russia. The increasing deficit has led to a strong price increase in markets affecting food security around the world. Farmers feel the impact from the increase in input prices, livestock sector is affected by the increase in feedstock prices and the consumers are facing food becoming unaffordable, and sometimes unavailable, around the world. Food inflation in Europe reached 5.6%, compared to February 2021.
In practice, however, Europe and the West have a problem with price and not security. Although the material food inflation, compounded with an already prominent energy crisis, makes things difficult, developed countries still have enough food to feed the population. However, we still need to think about the lower income and vulnerable families which will be affected by the increasing prices.
What solutions do we have?
There are multiple alternatives to tackle food security and affordability for both the vulnerable populations in Europe and wider world. European Commission recommends using social policies like reduced rates of VAT and using the Fund for European Aid for the Most Deprived. It also plans to use exceptional support funds for vulnerable farmers and the livestock and fishing sector. But these measures are temporary, and do not ensure food security in the medium to longer term. That is why we see the political will in most states (like France) moving towards increasing self-sufficiency in terms of higher production and higher productivity through use of fertilisers.
Do sustainable and green practices have a place in ensuring food security?
Improving food security does not need to be done at the cost of sustainability. One of the biggest debates has been on whether the EU Farm to Fork targets of a 20% fertiliser and 50% pesticide cut by 2030 should be scrapped. But fertilisers are imported from Russia as is natural gas – so continuing this reduction plan can aid in increasing our independence. Investment in agricultural technology and biological fertilisers can fill the gap in increasing production without harmful affects on environment. Biologics – made from living or naturally occurring materials – have long been touted as an alternative to synthetic agrochemicals. Europe lags US in terms of agri-tech adoption and CAP funding can help bridge the financial gap. These along with a potential adoption of GMO crops can reduce need for agrochemicals significantly.
Food security in Europe and different countries/regions around the world can also be promoted by increasing the diversity on our plates. According to FAO, Of the 6,000 plant species cultivated for food, just 9 account for two-thirds of all crop production. A quarter of livestock breeds are at risk of extinction, and only a handful provide most of the meat, dairy, and eggs. More than half of fish stocks are at risk of extinction. Reorganising these industries and farmlands to promote production of alternative food crops, and livestock can reduce our dependence on a few crops and species. Plant-based diets can reduce our reliance on meat, thus decreasing our need for associated industries and feedstock like soy. Alternative proteins like lab-grown meat also provide reasonable solutions.
As consumers, our choices are no less important. It’s incredibly vital for us to have knowledge about the produce we consume and where it comes from. We can create the demand for variety, for organic produces, and shift away from meat. We should also consciously opt for bio-friendly and sustainable products and boycott those which are harmful to the environment. Now is the time for everyone to join the fight to both conserve nature and to ensure affordability for everyone. Security and sustainability can be two sides of the same coin.
This commentary is intended for non-professional investors within the meaning of MiFID II. It is provided for informational and educational purposes only and is not intended to serve as a forecast, research product or investment advice and should not be construed as such. It may not constitute investment advice or an offer, invitation or recommendation to invest in particular investments or to adopt any investment strategy. The opinions expressed by La Française Group are based on current market conditions. These opinions may differ from those of other professionals. Published by La Française AM Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française.
author : Deepshikha SINGH