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Ukraine

The consequences of war

The conflict between Russia and Ukraine will inevitably also have repercussions on our everyday life. We wanted to focus on people trying to contain the consequences of a crucial war on agribusiness.

War can be narrated in many ways. We tried to team up, making our own team, trying to reach out to prominent players that are called or that actively try to contain the consequences of a conflict that no one seems to have wanted to stir up.

Let’s start with an interview to Ettore Prandini, president of Coldiretti Nazionale since 2018, Vicepresident of Associazione Italiana Allevatori and President of Istituto Sperimentale Italiano “L. Spallanzani”.

We waited him to come back from the 115th edition of Fieragricola (International Agricultural Technologies Show), initially set for the end of January but rescheduled to March, as a consequence of the outbreak of che COVID-19 Omicron variant. Take into account that Agritechnica, German event in Hannover, was rescheduled to November 2023, from the moment that the conditions to host a world leader fair in agricultural machines are not met yet - and never a choice was this far-sighted.

With more than a million and a half associates you’re the main organization of agricultural entrepreneurs on a national and european level. How is the category doing, president?

The situation is complex: production costs skyrocketed, from forage to energy, from fertilizers to packaging. Farms work and resist to keep guaranteeing food supplies to Italian families.

Did the exporting stop from Ukraine and Hungary really affect the market?

With Hungary’s decision to hinder national exports of cereals, soy and sunflower, one farm out of four in Italy is at risk, because they depend on the feeding of the animals with imported corn. It’s an irresponsible behavior from a country that is part of European Union, such as Hungary, that also blocked the export of wheat and other cereals such as rye, barley, oats and soy and sunflower seeds until the 22nd of May. This decision was notified to Bruxelles and it heavily compromises the single european market, undermining the basic foundation of the European Union. An appropriate intervention by the European Commission is needed to stop  this absurd behavior and ensure the smooth functioning of the single market. Around 1.6 billion kilos of corn arrived in Italy in 2021 from Hungary, and another 0.65 billion kilos from Ukraine, for a total of 2.25 billion kilos - which represent about half of Italy’s total imports. This means that Italy is depending on abroad for more than half of its needs.

Which risks is our country going to take?

There’s a concrete risk to not be able to guarantee the animal feeding. We have to save 8.5 million pigs, 6.4 million cattles and more than 6 million sheeps. A situation that aggravates this emergency is that Italy is a deficit country, which means it imports up to 64% of its wheat needs for the production of bread and biscuits and 53% of corn it needs for the animal feeding. The raise in corn quotations, which have been at the highest level in 10 years, is putting many farmers on their knees, since they have to face critical increases against fixed remuneration based on unsustainable values. For example, the average production price of milk, considering energy and fixed expenses, got to 46 cents per liter based on the last ISMEA inquiry, which is way higher than 38 cents per liter - the standard cost paid to many farmers.

Given that Hungary is hindering national exports of cereals, soybeans and sunflowers, how can we ensure that our farms in Italy are not at risk?

Italy is bound to import raw materials because of the low wages paid to farmers, that were forced to reduce of a third the national production of corn in the last 10 years. In this period of time, one wheat field out of five was completely lost, losing half a million hectares of cultivated terrain. This was because many industries have myopically preferred to continue to buy speculatively on the world market for years, taking advantage of the low prices of recent decades, rather than guaranteeing supplies with national products through the supply chain contracts supported by Coldiretti. We must invest to strengthen national production in order to guarantee food self-sufficiency for the country.

Overall, production costs have risen by at least one third. How many entrepreneurial realities do we risk losing along the way, adding the conflict that has just broken out to the two years of the pandemic?

Because of the war outbreak and the energy costs rise, agriculture must pay an additional bill of at least 8 billion on annual basis, compared to the previous year, which puts crops, livestock and the national processing industry at risk, as well as supplies for the 5 millions of italian people who find themselves in a situation of economic poverty. Since the beginning of the conflict, there has been an average jump of at least ⅓ more in production costs of agriculture, due to the direct and indirect effects of energy prices. The food sector requires large quantities of energy, especially heat and electricity, for the processes of production, transformation, conservation of products of animal and vegetable origin.

We’re talking about unsustainable price increases.

Yes, exactly. Farmers are forced to face them, in every sector. Starting from the diesel fuel, necessary for tractor activities, which include grubbing up, rolling, sowing, fertilizing and irrigating, that push almost one entrepreneur out of 3 (so around the 30%) to reduce production. Without forgetting the costs for heating the greenhouses for the production of vegetables and flowers, the greenhouses with the need to contain costs that risk making some of the most typical productions disappear. Not to mention the explosion in packaging costs, from plastic for flower jars to steel for jars, from glass for jars to wood for transport pallets and paper for product labels affecting different supply chains, from milk packs, to bottles for wine, oil, juices and purées, to nets for citrus fruits to enameled jars for legumes.

Many are calling for a review of agricultural policies. But in what direction, if one would want to go into details and speak concretely?

The pandemic first and the war later have shown that the pushed globalization has failed, and immediate remedies and a relaunch of European and national instruments are needed to ensure food sovereignty as a strategic cornerstone for security. The same agricultural policy, the Municipality (CAP) and the NRP today already seem inadequate to meet the needs of the new time we are living in, and must be modified by eliminating, for example, the 10% objective of uncultivated land envisaged in the biodiversity strategy. For this reason, it is necessary to act immediately, doing everything possible not to close the surviving farms and breeding farms with the release of 1.2 billion for the supply chain contracts already allocated in the NRP, but also by encouraging restructuring and renegotiation of agricultural corporate debt at 25 years through ISME, reducing the VAT percentages to support food consumption, providing new urgent support for supply chains most in crisis due to the conflict and expensive energy and stopping speculation on the prices paid by farmers with an effective application of the decree on unfair practices. And then invest to increase production and yields of land with rainwater storage basins to combat drought, seriously counter the invasion of wildlife that is forcing land abandonment in many inland areas and support public research with the 'technological innovation and NBTs to support production, protect biodiversity and as a tool in response to climate change.

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