Europe’s agri co-op sector warns of lasting impacts of Ukraine war

Copa and Cogeca say food systems need to be made more resilient, while co-ops Fonterra and Arla are among those halting their Russian business

Russia’s invasion of Ukraine has laid bare the fragility of global supply chains, putting food and energy systems under huge pressure.

Ukraine is a leading global supplier of grain, with disruption affecting the cost of animal feed, and the crisis has also led to a reduction in fertiliser supplies from Russia and its ally Belarus. Farmers are also hit by rising energy costs as other businesses as the conflict sends oil prices soaring.

“Ukraine has only compounded a catastrophe on top of a catastrophe,” David M. Beasley, the executive director of the UN’d World Food Program, told the New York Times. “There is no precedent even close to this since World War II.”

The New York Times reported that Ukrainian farms are about to miss critical planting and harvesting seasons., European fertiliser plants are significantly cutting production because of high energy prices, and farmers from Brazil to Texas are cutting back on fertiliser, threatening the size of the next harvests. Meanwhile China’s wheat crop has been reduced by flooding, and dry weather has hit harvests in South America and Indonesia, increasing pressure on supplies.

The crisis is urgent for food supplies in the world’s poorer countries which do not have grain storage facilities to fall back on, making their situation more precarious. Ukraine exported £2.2bn worth of agricultural products to Africa in 2020; in the same year, Russia £3bn of agricultural products to the continent – about 90% of which was wheat, and 6% was sunflower oil.

“There’s still a lot that’s not known about the geopolitical challenges that lie ahead. But for African countries there are reasons to be worried given their dependency on grains imports,” wrote Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa for The Conversation. “In the near term, countries are likely to see the impact through a surge in prices, rather than an actual shortage of the commodities.”

While rising commodity prices could help some farmers, he warned they “bad news for consumers who have already experienced food price rises over the past two years”.

Among organisations noting the impact is the Irish Co-operative Organisation Society, which last month warned in an update on the Irish dairy sector: “Increasing input costs, particularly feed and fertiliser are preventing primary producers from fully availing of the opportunity afforded by high milk prices.

“Inflation is a key concern and its impact on supply chains. The grave situation in Ukraine will impact on global agricultural markets as both Russia and Ukraine are key grain exporters and Russia is a key exporter of fertilisers and gas.”

The crisis comes as the world continues to face the impact of Covid-19 and the growing challenges of climate change and soil depletion.

In response, Copa and Cogeca, the apex bodies for Europe’s agri co-ops, has said the continent “must equip its agriculture with a food shield”.

The organisation held a coordination meeting with their members on the humanitarian situation arising from the war in Ukraine and on the first responses provided by the extraordinary meeting of the Agrifish Council organised by the French presidency.

“The impulse of solidarity of the farming community with the Ukrainian people is real and visible in all member countries,” said Copa and Cogeca in a press statement. “Farmers are starting to welcome refugees to their farms, the first convoys organised by farmers are on their way, along with food, supplies and financial donations.

“‘Copa-Cogeca will publish on its website more information for farmers, co-operatives and any citizen who wants to support the actions undertaken by the EU agricultural community.”

The Ukrainian agricultural organisation UNAF (Ukrainian National Agrarian Forum) is joining the European farming community by becoming a Copa and Cogeca partner, the statement added.

Cogeca president Ramon Armengol said: “Welcoming our Ukrainian colleagues to Copa and Cogeca is the natural extension of this expression of solidarity that is taking place on the ground by farmers and their co-operatives. The European farming community is mobilising at all levels to provide concrete support to the Ukrainian people and refugees arriving in all member states.”

Copa and Cogeca warn that the European agriculture faces reconstruction challenges, with global repercussions from the war set to last for several years.

“Most productions will be directly or indirectly impacted,” they say. “It is therefore essential to have a European
response that equals the humanitarian and economic disaster. In this regard, Copa and Cogeca are expecting comprehensive, robust, out-of-the-box measures by the European Commission. Some sectors already heavily affected by the price increases resulting from the Covid and energy crises must be supported without delay, while other farmers need clear policy guidance as they start sowing.”

Copa president Christiane Lambert said: “Since the Russian government is using food security as a weapon, we must counter it with a food shield. As with energy, in agriculture we strongly believe that it is possible to strengthen our strategic autonomy while continuing to make progress on sustainability.

“Pitting these two dimensions against each other, as we have heard in Brussels in recent days, is unproductive. We need to rearm our agriculture today to face these two major crises at the same time: the war in Ukraine and climate change.”

Copa and Cogeca argue that a “paradigm shift is needed in the way Brussels thinks about agriculture, starting with the objectives set out in the Farm to Fork”.

They add: “Everything must be done to prevent disruptions in supply chains, which will inevitably lead to shortages in certain parts of the world. This is an essential question of food sovereignty and democratic stability.”

Among individual agri co-op responses to the crisis, farmer-owned dairy Arla has donated 1m euros to the Red Cross and is working with humanitarian organisations to provide food aid to Ukraine and its refugees, in the form of dairy products for families with children and infants.

It is suspending all its operations in Russia – although these are only small scale – any profits that will come from that country this year will be redirected to the humanitarian support to Ukraine.

New Zealand dairy co-op Fonterra has confirmed it will exit its Russian businesses. “Our first step following Russia’s invasion of Ukraine was to establish the safety of the team in Russia,” said CEO Miles Hurrell, “and our priority through this process continues to be doing the right thing by our people.

“We then suspended shipment of product to Russia while we assessed the impact of economic sanctions and discussed our long-term plans with our customers and joint venture partner.

“Following careful consideration of the impact on our people and our long-term plans for the Russian market, we will now close our office in Moscow, re-deploying staff where possible, and withdraw from our joint venture Unifood.”

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