The crisis around Ukraine has increased the rise in prices in the EU for agricultural products

Farmers have been complaining for months about high production costs, and as the Russian-Ukrainian crisis escalates, the problem has become even more pressing. Agriculture ministers and European lawmakers are concerned about the situation. 

Euractiv writes that for several months the prices for related products in the agricultural sector have remained high and continue to grow, mainly due to the increase in the cost of energy. According to the European Commission, gas and electricity prices for consumers rose by 51% and 30%, respectively, compared to a year earlier. “Everything is against European farmers: geopolitical tensions, rising energy prices and the post-pandemic economic crisis. This has led to an increase in the cost of fertilizers, seeds, feed, transport and distribution,” says Vlad Gheorghe, a member of the European Parliament from Romania, a liberal from the Renew Europe party.

EU agriculture ministers discussed the issue at a meeting on Monday. The topic was already raised at the January meeting, “but the situation has not improved,” said French Minister of Agriculture, currently chairing the Council, Julien Denormandy. During a closed meeting, ministers from many countries voiced their concerns, the French politician stressed. 

Speaking to colleagues, EU Commissioner for Agriculture Janusz Wojciechowski said that the European Commission is making efforts to solve the problem. He added that on March 2 a message about rising energy prices would be published. It will offer tools to reduce prices and provide guidance to EU members on what measures that can be taken at the national level are acceptable to the Commission. While the message will focus on energy prices in general, Wojciechowski noted that the issue of the cost of fertilizers, “critical for farmers”, will also be highlighted.

Tensions around Ukraine

Production costs have been on the agenda for many months, but the intensification of the Russian-Ukrainian crisis, as well as the prospect of further sanctions against Russia, have made the problem even more obvious. In addition to importing significant amounts of grains from Ukraine and Russia, the EU is also highly dependent on Russia for related products in the agricultural sector. The representative of the European Commission drew attention to this during a meeting of the parliamentary agricultural committee.  

Particularly in terms of fertilizers, “we are vulnerable to geopolitical risks,” politicians explain. The thing is that the EU is forced to import most of the gas needed for the production of organics. During this week's talks, "we were discussing Ukraine, we were talking about energy costs in the EU," Denormandy said, adding that "the cost of material, related products, fertilizers and gas" was under consideration. By putting pressure on production costs, the crisis “increases tension,” the European official said.

Even if the issue is not on the agenda, it is foolish for ministers to ignore the implications of possible sanctions that could “further aggravate the situation on the market,” a source from the national delegation said after the meeting. “We remember the impact the sanctions had on the agricultural sector and on the European market,” the source added, referring to the restrictions imposed on Russia after the annexation of Crimea in 2014.

Rising inflation 

Members of the European Parliament also expressed concern that rising prices are driving up inflation. “The European Commission analyzes and monitors inflationary pressures very closely,” said European Commissioner for Equality Helena Dalli. According to her, most of the potential measures to solve problems, in particular in the field of taxation of both energy and other areas, are within the competence of the EU member states. 

At the meeting of the Agricultural Council, after discussing the generally tense situation, the ministers expressed their concern about the crisis in the pork production sector, where the prices of many producers fell below cost. Although member states of the European bloc have repeatedly called on the EU to take market-based measures, the European Commission still hesitates to take them.

Speaking to the ministers of agriculture, Wojciechowski stressed that the position of the Commission has not changed. “We are seeing the situation but at the same time we are seeing signs of improvement,” he said, referring to gradually rising piglet prices. He also recalled that during the discussion of the problem, not all states supported the EU plan for short-term assistance. The Commissioner emphasized the need to “create a long-term strategy for the recovery of the sector”. The commission will form an expert group to discuss the future of pig production.