Tag: EU agriculture

EU / Ukraine: analysis of the main agricultural crop sectors

Posted on - Posted by Farm Europe

As part of the process of enlarging the European Union to include Ukraine, Farm Europe has analysed both the weight and comparative competitiveness of Ukraine’s main crop sectors compared to those of the European Union. 

The difference in competitiveness ranges from 19% to 39% depending on the sector, with structural factors accounting for most of the difference. To this must be added the ‘carbon’ competitiveness conferred by the natural richness of Ukraine’s soils. 

At a time when the steps and conditions of accession are about to be drawn up and the pre-accession programmes defined and launched, we feel it is important that objective data can serve as a basis to define the European Union’s roadmap, without bias or avoidance.

Ukraine & European Union: key figures for the main agricultural crops 

In 2022, Ukraine’s utilised agricultural area covered 41.3 million hectares, including 32.7 million hectares of arable land (State Statistics Service of Ukraine (SSSU)). This agricultural area makes Ukraine the largest agricultural country on the European continent. 45% of the country’s surface area is made up of humus-rich, particularly fertile soils known as ‘rich’ chernozems.


Marked by its communist past, the Ukrainian agricultural sector is characterised by 110 huge vertically integrated agricultural companies, known as agro-holdings, which control all or part of the production chain (crop-livestock, processing, trade). These entities aim to maximize returns on invested capital, investing heavily in cutting-edge, large-scale equipment and the use of inputs. Twenty of these companies are estimated to control 14% of Ukraine’s Utilised Agricultural Area (UAA), and 57% of the UAA is farmed by enterprises of more than 1,000 ha. Agriculture plays a major economic role in the country, accounting for 10.9% of GDP in 2021 and almost 14.7% of employment.

Sugar

The organisation and competitiveness of the Ukrainian sugar sector is very different from that in Europe: agro-holdings, huge vertically integrated farms, cultivate 93% of the sugar beet area. The average cultivated area is 23,700 ha, 1,763 times more than in the European Union. 

Ukraine has much lower labour and investment costs. What’s more, the presence of fertile soils means that fewer inputs are used on crops: up to 1.5 times less fertiliser than in the European Union. 

The opening up of the European market to Ukraine has resulted in an influx of sugar, which has led to an increase in European stocks. Exports of sugar from Ukraine to Europe have increased by 230% between 2022 and 2023, with a forecast export capacity to the EU of 800,000 tonnes to 1 MT. The introduction of safeguard measures now limits exports for the time they are in force. 

Detailed analysis for the sugar sector

Cereals

Cereal production is not as dominated by large farming structures as the sugar sector: 51% of production is carried out by structures of less than 1,000 ha. It should be noted, however, that 22% of production is carried out by companies with more than 3,000 ha. 

If Ukraine were to join the European Union, the country would account for 20% of European cereals production, with 49% of maize production and 15% of wheat production. 

Ukrainian cereal production costs are on average 30% lower than those in Europe. 

For these reasons, grain imports from Ukraine have doubled between 2019/21 and 2023. The European Union has become a pillar of support for the Ukrainian economy, accounting for 51% of wheat exports in 2023, compared to 30% in 2021.

Detailed analysis for the cereal sector

Sunflower

While 58% of production is carried out by structures of less than 1,000 ha, companies with more than 3,000 ha account for 17% of production. In 2023, Ukrainian production alone was greater than the entire EU’s production. As such, if Ukraine were to join the European Union, the country would become Europe’s leading producer of sunflower seeds, as well as sunflower oil. 

Ukraine has been the EU’s leading supplier of sunflower oil for around ten years now. The opening up of the European market to Ukraine has had no significant impact on the flow of sunflower oil from the country.

Detailed analysis for the sunflower sector

Rapeseed

Farms of less than 1,000 ha account for 73% of rapeseed production, but oil production is dominated by 5 companies which accounted for 92% in 2021.

In 2020, the cost of rapeseed production in Ukraine was, on average, 1.5 times lower than in France.

Compared to the 2018-2021 average, Ukrainian production of rapeseed and rapeseed oil has risen by 57% and 174% respectively. Similarly, exports grew by 37% and 170% respectively. If Ukraine were to join the European Union, it would become the leading rapeseed producer in the EU, accounting for 24% of seed production and 4% of oil and meal production.

The EU was already the largest importer of Ukrainian rapeseed products before the war.

However,  imports of rapeseed have increased, and the EU now receives 93% of Ukraine’s rapeseed exports, compared to 83% in 2020/21.

Detailed analysis for the rapeseed sector

(Click on the image to enlarge it)

Regulation on imported deforestation (EUDR): reducing red tape on EU farmers while keeping the overall ambition is possible!

Posted on - Posted by Farm Europe

The regulation on deforestation (2023/1115) is a cornerstone for trade reciprocity, sustainability, and fair value chains for agriculture and food products. A postponement of one year is now unavoidable considering the late presentation of the implementing rules, but any further delay should be avoided.

In order to comply with WTO requirements and guarantee a fair treatment for all operators worldwide, the regulation on deforestation has been designed to cover the entire planet, regardless of the level of deforestation risk in the countries covered. 

A simplified due diligence procedure has been set up to avoid placing a disproportionate burden on operators producing and marketing raw materials from countries with a low risk of deforestation. 

However, as highlighted in previous analysis by Farm Europe, this simplified due diligence procedure only allows a partial derogation from the administrative requirements and data collection, placing unreasonable burdens on operators for low or zero deforestation risks. 

Simplification yes, dismantling no.

Therefore, the amendments proposals seeking to create a “no risk” category goes in the right direction. But any further modifications would change the nature and be a blow to the level of ambition of the regulation. In particular, to secure a robust regulation, the responsibility of important global operators should not be diluted. 

Corrections should be limited to the parts of the text that threaten its own credibility, namely the ultimate risk of having a new standard that would weigh more heavily on EU farmers and food producers, faced with a fussy and disproportionate implementation of the regulation, than on global actors. 

These changes should be made quickly, taking into account the need to limit as much as possible the delay in the implementation of this important regulation, to avoid destabilizing European value chains and threatening their fragile economic equilibrium.  

A full implementation from the European Commission needed. 

In the meantime, the implementation of Recital 31 of the regulation which calls upon the European Commission to build a platform providing an “early warning system” to assist the competent authorities, operators, traders and other relevant stakeholders must be fully put into practice, which is not the case until now. 

This plateform has been added by the co-legislator to the Commission’s initial proposal to provide “continuous monitoring and early notification of possible deforestation or forest degradation activities”, and to be operational as soon as possible. It is be a building block for an easy, uniformed and simplified implementation of the regulation by third countries, and in particular for developing countries that should be set up. 

EU/Mercosur: the agriculture section, incompatible with EU political coherence

Posted on - Posted by Farm Europe

While the pressure on EU negotiators to close the Mercosur deal is increasing due to the perfect storm affecting EU carmakers flooded by Chinese producers, this agreement remains antagonistic to EU agriculture interests and would offset most — if not all — EU producers’ efforts on the difficult path of climate transition.
It would not only undermine major EU agricultural value chains, but also, as it stands, the policy coherence and the alignment of EU policies, as requested in different recent reports. A dedicated fund would be far from enough to compensate for its economic impacts considering the firepower of the Mercosur agribusiness sector, not mentioning the detrimental effects on the Amazon, the planet’s lungs.
Therefore, Farm Europe regrets yesterday’s renewed commitment of Commissioner Šefčovič to move forward in the talks with Mercosur and considers that the conditions are not met for including agriculture in this deal. Free trade agreements can offer important opportunities for the EU economy, but only if and when the principles of reciprocity are duly taken into account, in particular for EU agriculture. Those conditions are not meet and far from being achieved in the Mercosur negotiations.

Deforestation

  • The European Union has seen a reduction of more than 10 million hectares in its agricultural area over the last three decades (equivalent to two-thirds of Poland’s agricultural area). Forests in the EU have increased by 12 million hectares.
  • Meanwhile, Brazil lost 90Mha of forests. And the EU has become the second-largest importer of tropical deforestation and associated emissions (16% of tropical deforestation linked to international trade). Over the last 30 years, EU imports are estimated to have caused more than 11 million hectares of deforestation.

Pesticides

  • The use of hazardous pesticides has declined by more than 25% in the EU in less than 10 years.
  • In the Mercosur area, the increase in areas cultivated with soy, maize, and cane has led to a significant increase in the use of pesticides. In Brazil alone, the volume of pesticides sold quadrupled from 2000 to 2020. But it is not just about quantity: 27% of the products used in Brazil in 2020 were banned in the EU. Chlorothalonil, a fungicide, was banned in the EU since 2019, and an insecticide like Novaluron was banned in 2012. These are just some examples.

Hormones

  • Since the 1980s, the European Union established a ban on using growth-hormones in cattle ; this ban has been reinforced several times in the ‘90s and in 2006 with the exclusion of antibiotics used a growth promoters. 
  • In a recently published audit report on controls on residues of active substances, pesticides and contaminants in animal and animal products, the European Commission recognized the need to suspend imports of bovines from Brazil due to the lack of guarantees on hormone use. Keeping in mind that even if the imports from the Mercosur area of meat where production involves growth hormones for cattle are forbidden, this constraint is partly overcome through the use of certain antibiotics as growth promoters.

Therefore, rather than opening wide the doors of the European Union to the agricultural giants of Latin America, at a time of difficult challenges for EU producers, it is a matter of urgency:

  • To be credible in the fight against deforestation with a simple and solid implementation of the EU regulation on deforestation for standards and high-risk countries, while avoiding administrative burdens for low or zero-risk countries, particularly for EU producers ;
  • To protect our agriculture against unfair competition, not only when it comes to consumer safety, but also in terms of EU environmental standards, with full reciprocity on production norms ;
  • And, of course, to shape a new vision for EU agriculture and food, matching a real ambition for the “Made in Europe”. 

Christophe Hansen’s hearing: beyond the strategic dialogue ?

Posted on - Posted by Farm Europe

November 4th will be a defining moment for the future of the European agricultural policy, during the European Parliament’s hearing of the designated Commissioner Christophe Hansen. Will he be able to chart his own political course or will he strictly follow in the footsteps of the strategic dialogue? This is the main question that MEPs will ask themselves at the end of the hearing to determine if a strong commissioner is taking the helm of European agriculture in this period of turmoil.

The commissioner candidate knows the intricacies of the European Parliament and its political dynamics perfectly. He has had the opportunity to work in Parliament as a parliamentary assistant at the beginning of his career, and then as a Member of the European Parliament. He has been heavily involved in trade issues – Brexit in particular – and deforestation, for which he was the rapporteur.

Members of the European Parliament’s Committee on Agriculture will be tasked with assessing the candidate’s competence for the assigned portfolio, as well as his adherence to Union values and his communication skills. The Commissioner has already had the opportunity to provide initial policy orientations in his responses to the written questions sent to him by the MEPs.

The hearing will begin with a 15-minute opening statement, followed by questions from all political groups, with the candidate having twice as much time for his or her reply as the time given for the question.

During the hearing, undoubtedly, many topics will be addressed — the future of the CAP, and direct payments in particular ; the challenge of Ukraine’s accession for European agriculture ; the candidate’s approach to reforming the food value chain, combating unfair trading practices and improving farmers’ income ; as well as his stance on trade, particularly when it comes to the on going talks with Mercosur.

Beyond these important topics, it is clear that the question of the strategic dialogue and the follow-up to this exercise, in which Parliament was not involved, will capture the MEPs’ attention. The Commissioner-designate will have the difficult task of following in the footsteps of the European Commission President, Ursula von der Leyen, who has placed the implementation of the strategic dialogue at the heart of her mission letter, while at the same time distancing himself from the specific recommendations of this report to assert his autonomy and his own political identity, essential for acquiring his stature as a European commissioner.

It is primarily in this exercise of balance and subtle dosage that his performance will be evaluated and will allow him to gather the political support he needs, not only to win the approval of the rapporteurs representing 2/3 of the committee’s votes, but also to begin his mandate and build his own strategic vision for the next five years in agriculture.

This political capacity will be all the more important and necessary as the majority that supported Ursula von der Leyen for a second term at the head of the European Commission will not be sufficient to obtain confirmation at the first hearing. If he intends to be confirmed without going through a second hearing and a majority vote, the Commissioner-designate will need to convince beyond the EPP, S&D, Renew, and Greens groups, as these only provide him with 31 votes out of the 33 necessary. He will therefore also need the support of the ECR group.

BUDGET 2028-34: EC INITIAL IDEAS RAISE QUESTIONS

Posted on - Posted by Farm Europe

In preparing the financial perspectives for the period 2028-2034, the European Commission is indulging in its favourite exercise: on the one hand, creating margins without any new financial margin, and on the other, trying to force the hand of the Member States on the financing of the European budget while retaining its role as principal.

Traditionally, the Commission primarily sounded out the capitals on acceptable cuts to the budgets of the main European policies and the acceptability of a slightly increased total European budget. In this first-round exercise, the CAP was put forward as a target (proposed to be cut by up to 30% in 2018 for instance).

In the current context of budgetary frugality, the Commission is trying a different route, ultimately drawing on the proposal for (administrative) reform of the CAP that it made in 2018.

It proposes grouping the 530 European programmes (representing a total budget of more than 12 trillion euros) into a single large European fund, called Pillar I. Alongside this pillar, two others would exist: one aimed at the financing of the services (thus allowing negotiations on the Commission’s operating budget to be decoupled a little more from discussions on the funding of European policies) and a third relating to enlargement and major investments of collective European interest, including defence (a pillar for which money has yet to be found).

Pillar I would therefore bring together all the major European policies. The Member States would be asked to draw up national strategic plans, setting out their priorities and their wishes as regards the mobilisation of the money allocated to them under the various policies.

The creation of such a fund undoubtedly implies a certain degree of fungibility of budgets previously allocated to one policy or another. We can assume that both the CAP and cohesion policy – whose budgets are always a source of envy in the absence of other truly common policies – would no longer see their funding protected over the programming period. Funding would be set at the beginning of the period according to national priorities and would no doubt be adjusted along the way, particularly if disbursements turned out to be lower than expected.

Under this scheme, transfers of funding to the Member States for the various policies would be conditional on respect for the rule of law and the implementation of priority measures defined at European level. The Member States would then be able to activate the measures provided for in the various policies, which would act as toolboxes that the Member States could activate or not.

In the case of the CAP, the Commission illustrates its point with two examples that raise questions about the detailed knowledge of agricultural issues on the part of a side of the European Commission. As a condition of Member States’ access to CAP money, it imagines “promoting organic farming”. An original example, when it is clear that the objective put forward by the Farm to Fork of 25% of land in organic farming corresponds neither to the expectations of the markets, nor to the imperatives of food sovereignty, nor to those of sustainability in Europe. As for the CAP’s ‘investment’ chapter, the Commission takes the example of direct payments. While these payments are certainly vital for farmers’ incomes at the moment, is this the most relevant example when we are aiming for investments to resolutely win the dual performance challenge: getting European agriculture back on the road to profitability while pursuing the path of greater sustainability? Not to mention the arrival of Ukraine.

This suggestion to overhaul the European budget and the way it operates raises a number of questions that the European Parliament raised when it considered the Commission’s 2018 CAP proposal, before reformatting it to give it a minimum common meaning.

This scheme would leave it up to the Member States to implement the bulk of European policies in accordance with their national priorities at the time, with the exception of a few ‘gateway’ measures to funding, a condition which the European Council (which must act unanimously on financial matters) would no doubt seriously water down.

As with the 2018 CAP proposal, we are now in a situation where all European policies under Pillar I are to be renationalised across the board. At the end of the day, Europe will only remain common to Pillar III (enlargement, major European investment plans).

So what of the single market?

What would be the economic efficiency of such a renationalised system, with the temptation for some to concentrate funding on a few sectors in order to subsidise them more so that they can gain an advantage over their European competitors? The money used in this way would not lead to European growth, but to more fractures and, in the end, a waste of the taxes paid by Europeans.

This idea of a large common pot is no doubt also related to the Commission President’s leitmotiv over the last few weeks (at least with regard to the CAP) of having a more targeted budget and more targeted measures. If the aim is to have more effective measures, everyone can agree. But if it’s a rhetorical device to get people to accept a lower budget by explaining that, despite everything, everything will be fine with more targeting, then doubts are permitted. At this stage, doubts exist about the European executive’s intentions with regard to agriculture and its funding.

Just one figure: if the CAP budget for the period 2028-2034 were to be maintained in current euros, this would mean that Europe is opting for a CAP whose economic value in 2034 (if inflation becomes low again) will be only 46% of the 2020 figure. Faced with the challenges of sovereignty, the loss of competitiveness over the last 2 decades, and enlargement to include Ukraine…

NGTs: GERMANY TO ALLOCATE FUNDS FOR R&D

Posted on - Posted by Farm Europe

The German Research Ministry has decided to invest 50 millions in NGTs R&D while some organic association continue to oppose the proposal of the commission.

Convinced by the potential of NGTs, the EP rapporteurs and the Council’s presidency aim at reaching negotiating positions as soon as possible to begin trilogues’ negotiations in early 2024.

Outside the EU, the UK, China and the US progress in CRISPR technologies and modify pigs and chickens against different viruses.