War in Ukraine – Consequences for the food industry – News

If France and the European Union are protected from food shortages, the conflict will affect the price of wheat, energy, and the availability of seeds or fertilizer.

The International Agricultural Exhibition (SIA), which took place from February 26 to March 6, 2022 in Paris, focused on cows and wheat, general agricultural competition and the agro-ecological transition. But there was also talk of a war in Ukraine and food shortages. it’s 58as well as edition should be placed under the sign “reunion” after the 2021 session was canceled due to the Covid pandemic. But the announced party was overshadowed by the war in Ukraine, which began two days before the opening. And if the Olympiads and conferences went according to plan, then the concern was felt among professionals, especially representatives of traditional farming and agri-food, since French agriculture is interconnected with Russia and Ukraine.

France should not be afraid of food shortages, they assure. “In the short term, there will be no serious direct consequences, wants to reassure Dominique Charger, President of the French Agricultural Cooperation (which brings together national agricultural and agri-food cooperatives). But there will be serious consequences for the cost of food due to the sharp rise in the prices of energy and raw materials. » It’s inevitable: in an era of globalized trade, any disruption in the work of a major player sets off storms in other parts of the globe. World prices for cereals, corn, rapeseed and even soybeans have already experienced an unprecedented jump in one week. As for gas and fertilizer prices, they skyrocketed as soon as the invasion took place. These increases will sooner or later be reflected on our plate.

The two main cereal producers on which many countries depend

Russia and Ukraine, due to their very fertile chernozems (chernozems), are the leading producers of wheat, barley, corn, rapeseed and sunflower.uh world grain exporter; Ukraine, 4as well as world exporter of corn, 5as well as wheat and 3as well as barley and 1uh sunflower oil (the country accounts for half of the world’s sunflower oil trade), according to FranceAgriMer, the National Agricultural and Seafood Institution.

Together, these two countries account for 30% of global wheat and barley sales, most of which are destined for the Maghreb and the Middle East. Thus, Egypt buys 84% ​​of its wheat demand from them, Turkey three-quarters, and Lebanon half. Dependence on imports, which gives rise to the specter of hunger and new food riots in these countries. Unfortunately, their vulnerability is exacerbated this year by a severe drought, and grain stocks in some countries are less than three months old.

The problem arises this year, but not only. If Ukraine cannot export its stocks, and, above all, cannot sow and harvest the following crops, the global grain supply looks very limited not only in 2022, but also in 2023.

Transport from the Black Sea at a dead end

Sea traffic from the ports of the Black Sea, the center of the grain trade, is stopped or almost stopped, and the cost of freight and ship insurance is skyrocketing … It is impossible to count on a quick return to normal life. Just as it is impossible to know whether sowing and then harvesting is possible in Ukraine, in this case a significant share of grain will be missing.

Ukraine will not be able to produce its own seeds

Several French seed companies (the cooperatives Euralis, Maïsadour and Limagrain) are based in Ukraine, where they produce seeds for the Russian and Ukrainian markets. In addition to the risks of destruction of structures (personnel evacuated), sowing this spring cannot be carried out. “De facto there will be a problem with the supply of seeds in 2023 for these two countries, emphasizes Dominique Chargé. Moreover, this is a game of communicating vessels: if there is a shortage of seeds, there will be a redistribution of demand to other sources of supply, and the seed market will be in tension. »

Very Russian fertilizers

Another cause for concern is fertilizer, which has more than doubled in price since tensions began. Nitrogen fertilizers are produced from natural gas, two sectors in which “Russia is a key player”, reminiscent of FranceAgriMer. Last year, France bought almost 150 million euros worth of fertilizers from Russia, but what will happen this year? Thus, in the coming months, French farmers will face an increase in the price of fertilizers (with gas price indexation), as well as a supply that should be reduced. Two options: apply less fertilizer with the risk of lower yields; or spend more and then try to pass the increase on to their buyers, but farmers will also benefit from skyrocketing grain prices!

Rise in grain prices

Because quotes have been panicking since the invasion and prices have already hit high levels in 2021 due to disruptions related to the Covid pandemic. Thus, prices for ordinary wheat and corn on March 3 were close to 380 euros per ton, that is, they increased by 40-50% in two weeks. “Unprecedented in over 20 years”say industry professionals. The same development, although on a smaller scale, for rapeseed and sunflower, the supply of which is compromised by the paralysis of navigation in the Black Sea.

Farmers suffer from increase in livestock feed

A situation that worries livestock farmers, because the increase in the production of wheat, corn and flour will inevitably affect livestock feed after 2021 already under the sign of inflation. On the other hand, the risk of shortage is excluded, according to food producers. France buys corn and sunflower meal from Ukraine, but 80% of the raw materials used come from France. Moreover, he still has stocks, and other suppliers (Brazil, USA, etc.) can fill it up. However, Ukraine has an advantage in the supply of non-GMO crops; if you can find suppliers of non-GMO products in America, the cost will be much higher.

Uncertainties for multiple commodities

Agribusiness that trades with Russia and Ukraine will be affected to varying degrees depending on the sector. In 2021, almost 900 million euros worth of food products (champagne and spirits, as well as seeds, cereals, eggs, milk proteins and baby powders, chocolate, tobacco, pet food, etc.) were sold to Russia ( M€). This country is also one of our main suppliers of fish (pollock, cod), dog and cat food, sunflower and soybean meal (for cattle)… for a total value of 165 million euros.

The amounts at stake with Ukraine are also significant: 250 million euros of exports to this country (alcohol, seeds and cereals, various food products, etc.) and 460 million euros of imports (corn, rapeseed, sunflower oil and cake, honey …). In addition, French processors have processing facilities for local consumption, like dairy producers Lactalis and Savencia: while some factories continue to operate in the west of the country, others are under threat or even stopped.

Attacks on environmental measures

Russia’s war in Ukraine will inevitably have implications for food availability and prices. In France and Europe, the main difficulty is related to prices; further south, food security is at stake. It was enough for representatives of the traditional agricultural sectors to launch an offensive … against the environmental policy of the European Union (EU). Calls for cancellation European green deal and its variant for agriculture, the farm-to-table strategy, are multiplying because they believe it is leading to a decline in European agricultural production.

The National Federation of Farmers’ Unions (FNSEA) calls return food sovereignty as an absolute priority.” ; like her, the agro-food unions (Aniya and Agricultural Cooperation) want “to bring into production all the agricultural land available in France and in Europe.” including fallows and areas where agro-environmental activities are carried out to compensate for the decline in production in Ukraine. Pierre Paget, vice president of Semae (seed interprofessional organization) considers it necessary “Produce more, but better” through genetic engineering. The return of GMOs to the saddle: this is good, as the EU is preparing to fundamentally revise the rules on this issue.

Leave a Comment