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Supply Chain

Italy Urges Overhaul Of EU Farm Rules As Ukraine War Hits Supplies

Italy's agriculture minister said on Thursday the European Union should delay implementing policies that curb agricultural production given a supply crisis caused by the war in Ukraine, and suspend state aid rules for the agrifood industry.

The war has caused shortages of numerous agricultural commodities, which have been compounded by export bans by several countries including EU member Hungary.

The European Union is a net exporter of grains, with a substantial surplus of wheat, but imports corn (maize) for the livestock sector and Ukraine is one of its main suppliers.

Countries in southern Europe, such as Italy and Spain, rely particularly heavily on imports.

Stefano Patuanelli said in a report to the cabinet that talks at the EU level were urgently needed, aimed at "reorganising the Common Agricultural Policy and waiving state aid rules for the agricultural and food sectors."

There were ways to diversify supply markets, he added, noting Italy could look to France and Germany for increased supplies of wheat.

Common Agricultural Policy

The Common Agricultural Policy originally provided strong incentives for increasing production and led to oversupply of many commodities but in recent years there has been a growing focus on policies that reduce farming's environmental footprint.

The shift towards such policies is set to accelerate when the next CAP comes into force on January 1, 2023.

Patuanelli listed a series of changes Italy wanted to the CAP, among them postponing the implementation of CAP measures introduced aimed at limiting production.

The others included: "allowing the productive use of fallow areas and all grazing areas, even if partially occupied by uncultivated vegetation" and "removing the rule on not increasing areas for irrigation, in order to increase the productivity of the agri-food sector".

Food Protectionism

Italian agriculture lobby Confagricoltura called on the European Commission on Monday to halt attempts at 'food protectionism' triggered by the war in Ukraine and the association of livestock farmers warned on Tuesday that reduced corn supplies have caused a shortage of fodder that will have 'devastating effects'.

Confagricoltura was referring to a decision by Hungary to halt wheat exports to ensure domestic supplies and contain costs, and a move by Bulgaria to increase its cereal stocks, with a consequent reduction in exports from that country too.

Confagricoltura also said in its statement that a decision by Russia to suspend exports of fertilisers was 'very worrying ... in terms of prices and supplies' and could hit Italy's harvests.

Read More: Investors Warn EU Against Badging Intensive Farming As Sustainable

Russia, which has been hit by a wave of Western sanctions since the invasion, produces 15% of the world's fertilisers and the EU and Brazil are its main markets, the agriculture lobby said.

The livestock farmers body Assalzoo said stocks of raw materials used to produce fodder would last between 20 days and a month, after which it would be necessary to slaughter animals that farmers are unable to feed.

This will trigger 'the collapse of animal food production such as beef, pork, poultry, milk, butter and cheese, eggs and fish', it said.

News by Reuters, edited by ESM – your source for the latest Supply Chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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