By Polish MEP Ryszard Czarnecki (ECR – PiS)
In this opinion piece for Brussels Report, MEP Czarnecki urges the EU to ask its partners to increase exports of grains, palm oil and other foods
The war in Ukraine has led to a shortage of grains, sunflower oils, and other food staples. This has hurt food producers, restaurants and retailers across Europe. It has also driven up prices for consumers, due to reduced supply, less reliable supply chains, and the resulting inflationary pressures.
Across the EU and the wider European continent, the impact of this is being felt by our constituents, our neighbours, and our allies. Millions will struggle to afford the rising costs of energy and food; Brussels needs to do more.
The WHO appealed for urgent funding to help millions of people facing hunger in the Horn of Africa because of an “unprecedented food crisis” https://t.co/0Zsdz7TDWj
— Bloomberg (@business) August 4, 2022
Protectionism is not the solution
Most importantly, first of all, we need to correctly diagnose the problem. The siren voices of the populists, especially on the Left, are already declaring the food crisis to be a market failure, as they are calling for less reliance on imports. This ignores all the data, evidence and historical case studies that demonstrate that closed-off economies fare worse during recessions.
The problem, in fact, is not too much market capitalism. The problem is too little of it. The preference of the EU, and some Member States, for protectionist restrictions and bureaucratic regulation, makes it harder to substitute products and draw on the full range of replacement products needed.
The Green agenda, pursued in particular by EU Commissioner Timmermans and others, has involved tax hikes, extra subsidies, increased costs, decreased investment choices and flexibility. It has ultimately pushed up consumer prices. This is as true for energy as it is for food. The obsession with arbitrary percentage targets, and the illiberal approach to restricting lower-cost food and fuel imports, is making Europeans measurably poorer.
The role of the invasion of Ukraine
The invasion of Ukraine has contributed a lot to the current food crisis. More than 50 per cent of the global sunflower oil supply comes from Ukraine and Russia. This now needs to be replaced.
Fortunately, there are ready-made substitutes. Rapeseed oil from European farmers is one, though it is expensive and not plentiful enough to backfill all the new demand. The substitution of sunflower oil for palm oil from Asia would be beneficial to European consumers, because palm oil is significantly cheaper and so can bring consumer prices down. The primary reason for this price difference is that palm oil is the world’s most land-efficient vegetable oil, producing over 4 tonnes of oil per hectare (sunflower produces less than 1 tonne per hectare).
Russia’s war on Ukraine has created an enormous food crisis & a band of instability along the equator & in the Southern Hemisphere that can only get worse. Lifting Russia’s embargo of grains, if 🇷🇺 can be held to the agreement, is an enormous success for the US, UN, EU, & Turkey. https://t.co/PDJWtRovGs
— Alexander S. Vindman (@AVindman) August 1, 2022
This also illustrates perfectly the folly of Green Deal-style politics. Palm oil has been demonised in an attempt to prop up French and German farmers. Now we need it, because a crisis is upon us. Even ardently anti-palm oil voices, like the Iceland supermarket chain in the U.K., are now moving back to buying palm oil. So what’s the problem?
The primary producers of palm oil are Malaysia and Indonesia. Both have been targeted by European protectionism, higher taxes, aggressive bureaucracy and regulation, and constant media attacks.
This presents three serious problems: first, why would those countries now be willing to help us in our hour of need, when we have spent years lecturing them and hounding their exports? Second, consumers in Europe now are – unjustifiably – reluctant to purchase palm oil, thus further pushing up prices of other oils. Third, no-one appears willing to ask those countries to increase supply and so push down prices.
This is dereliction of duty. Malaysia has a supply of certified sustainable palm oil (CSPO) that is ready and waiting to be purchased by European buyers. Other countries have grains, and other essentials, too. What is needed is a public commitment from the European Commission to call on Malaysia and other countries to increase supply and trade – and in return, the Commission must commit to that trade being open, and not blocked by non-tariff barriers.
A time for choosing
Essentially, the choice is between an EU Green regulatory model, which increases costs for business and therefore raises consumer prices and lowers investment, or a conservative regulatory model which encourages investment through low taxes and light-touch regulation that keeps prices low and stable.
Forget the holier-than-thou hand-wringing: this food price crisis needs a solution and it’s time for the European Commission and MEPs to accept that the big green regulatory model is the wrong approach. It will alienate partner countries, including in Asia, when we need them most. The better answer is to welcome exports from overseas – and to say so publicly. Many will not like it – palm oil’s image is not good in some quarters – but there’s no sense in denying reality. We need it, so we must ask for it. It really is that simple.
