Global exporters and importers have warned they will face significant adjustments if the proposed policies are implemented
Two agricultural reforms proposed by the European Union will disrupt world grain markets, according to a European grain trade association.
Iliana Axiotiades, Secretary General of Coceral, said the EU biodiversity strategy and the farm to fork strategy are two disasters waiting to happen.
“These are going to have a huge impact on European production,” she told a webinar hosted by the International Grains Council.
The biodiversity strategy aims to transform 10% of EU agricultural land into high-diversity landscapes.
“It goes beyond set-aside and 10% is a lot,” Axiotiades said.
The farm to fork strategy includes 27 actions designed to make the EU food system more environmentally friendly by 2030. They include increasing organic land from 8% to 25%, decreasing the use of fertilizers by 20% and the reduction of the use of pesticides by 50%.
Coceral estimates this will lead to a 19 million tonne drop in EU annual wheat production by 2030.
It will also result in a nine million tonne drop in corn production, a 12 million tonne reduction in barley and other grains, and a 4.7 million tonne reduction in oilseed production.
Axiotiades said studies by the US Department of Agriculture, the European Commission’s Joint Research Center and several European universities have come to similar conclusions.
This loss of production will have a profound impact on world trade in major world crops.
The EU exports 42.9 million tonnes of cereals per year, including 27.4 million tonnes of wheat and 10.6 million tonnes of barley. It imports 21 million tons of cereals, including 14.5 million tons of corn.
If the proposals are implemented, Coceral estimates that the EU will move from a baseline scenario of a net exporter of 17.6 million tonnes of cereals by 2030 to a net importer of 35.6 million tonnes .
It would be a seismic shift in EU grain trade that would have far-reaching effects on world markets, she said.
The impact on the oilseed market should be more moderate, although still significant.
The EU is now a net importer of 21.6 million tonnes of oilseeds. By 2030, it is expected to import about the same volume in the reference scenario. If the proposals are implemented, this will increase to 26.9 million tonnes.
Axiotiades said the proposals are well-intentioned but the approach is wrong.
“We need to do things more carefully with a longer transition period,” she said.
Gord Kurbis, vice-president of trade policy and crop protection at the Canada Grains Council, asked him how much unintended consequences of policies are recognized by politicians in Brussels.
Axiotiades said they seemed to be listening to what farmer groups like Coceral were saying.
When the farm-to-fork policy was first announced, it was touted as a done deal, but lately politicians are suggesting it was just a vision.
She noted that the policies are at the beginning of a long process that can take two to three years before implementation. However, she warned that they will have ripple effects around the world due to what is known as the Carbon Border Adjustment Mechanism contained in the EU Green Deal.
“Exporting countries are also going to have to adjust their production methods if they want to sell in the EU,” Axiotiades said. “They need to align if they want to continue to access this market.”
This will have a significant impact on the availability of cereals in the EU, which is why Axiotiades encourages exporting and importing countries to make presentations to the European Parliament through their embassies in Brussels.
“We need to have a global conversation about these things,” she said.
She noted that a shift to more sustainable production is inevitable in the EU, but there is still time to influence what this shift looks like and how fast it happens.