Europe’s food protectionism risks food price inflation of 20 percent to 53 percent, the USDA estimated before war and COVID interfered with supply.
The war in Ukraine has affected Europe’s agricultural sector and slowed the ambitions of the European Union to enact sweeping new farming rules. Reforms in Brussels are modeled on the so-called Farm-to-Fork strategy, a roadmap through which the union wants to slash pesticide use, reduce farmland and push organic agriculture well beyond its current market share. In the wake of Ukraine’s inability to export food to its European counterparts, some countries, including France, have argued that the EU should take a step back on the planned legislative changes, which had already come under fire from farmers.
In the Netherlands, thousands of livestock farmers protested the government for weeks over its new rules to reduce nitrous oxide, a byproduct created when manure decomposes. The Dutch government’s approach was to minimize livestock farms, even if it meant buying out farmers.
Farming representatives cautioned the European Union that Farm-to-Fork will undermine the European food sector and that more data is needed on the effect of the strategy on the farming sector. When the U.S. Department of Agriculture studied the European plans, it found a food price inflation risk of 20 percent to 53 percent and even a high risk of a drop in gross domestic product as a direct result of the policy. According to Politico, the European Parliament’s agriculture committee asked the European Commission to revise its impact assessment, as it does not consider the effects of COVID-19, food price inflation or the war in Ukraine.
Despite the internal fights over agricultural reforms, the European Commission is going ahead with its policy of banning certain imports into Europe. It announced that imports of products containing residues of insecticides belonging to the neonicotinoid group will be banned from 2026. According to the EU, there is a risk of those compounds harming bees.
Whether that is the case warrants its own scientific discussion, but more important, this move marks a significant and worrying turn in Europe’s approach to agricultural regulation. More than just following a political goal of reducing crop protection chemicals in Europe, it now tries to impose those rules on its trade partners. It is most certainly one of the more transparent attempts at policy through trade, but it isn’t a very believable one.
In Europe, numerous countries are not respecting the EU’s ban on neonics: France has a three-year derogation on neonics because its sugar beet industry would have been wiped out without it. Belgium also uses neonics for its sugar beet production. Denmark produces neonics for the EU and the non-EU markets. Whenever EU rules don’t reflect what is needed in farming, individual EU member states can implement emergency provisions to re-authorize a chemical compound.
Even though the European Commission says that it consulted with our World Trade Organization members on the move, it is likely that its decision will be contested. The United States formed opposition earlier this year against a similar decision of the EU to ban the import of products treated with the insecticide sulfoxaflor, a neonic substitute.
The unfortunate reality is that EU leaders have promised more ambitious targets than they can keep. The Farm-to-Fork strategy was unveiled in May 2020, when the full scale of the COVID-19 pandemic was unknown, inflation was stable and there was no full-scale war in Ukraine.
The commission is facing the dilemma of having set a political, not scientific, pesticide-reduction target without a strategy of substitution, surrounded by crises it can hardly control. However, instead of walking back its ambitious targets, it now sets the stage for another needless trade war, the likes of which we have seen enough over the last few years.