Is the EU ready to protect its food supply chains?

The EU’s internal market commissioner Thierry Breton conducted a tour of Japan and South Korea last week, in a bid to strike up partnerships for the development of a European microchips and semiconductor industry. The visits come in the wake of the announcement of the European Chips Act last month, as the bloc attempts to wean itself off dependence on Chinese products for its critical infrastructure. Breton’s move is long overdue, given that that the EU has neglected its supply chain security for years. Based on 2019 figures, the EU was “strategically dependent on China for 659 of the over 5,600 product categories defined by the United Nation’s Comtrade database”, ranging from items as mundane as mobile phones to high-tech products.

Current global bottlenecks and supply shortages for a multitude of products in the wake of the Covid-19 lockdowns are driving home how long-lasting the knock-on effects of disruptions in China can be – and expose how this over-reliance on Beijing could be exploited by the Chinese government for political purposes as well. Breton’s shopping tour for a semiconductor alliance testifies to the growing awareness in Brussels about this vulnerability and it is to be commended. At the same time, however, Brussels would do well to look beyond the issue of its over-reliance in technical sectors to adopt a more holistic approach that also keeps an eye on an issue that European policymakers consider obsolete: food security.

Corn – a microcosm of Chinese encroachment 

A look at the EU’s policies relating to food security is sobering: food security is treated as a question of food quality, designed to ensure that food consumed in the EU is safe to eat. What is not addressed is the much more fundamental task of ensuring the availability of food and feed crops required for agriculture and farming. This was exemplified by a 2020 statement from Environment Commissioner Virginijus Sinkeviciusthat that “Food security is no longer a major concern for the European Union”. 

With such policy myopia it is no surprise that Brussels routinely overlooks the fact the EU is highly vulnerable to Chinese incursion into its main supply of certain crops, through its monopolization of Ukrainian corn. Exports to China have ballooned in recent years and, alongside potential land grabs in Europe’s so-called “breadbasket”, threaten to cause a food crisis in the EU instigated by losing one of its most important sources of crops.

The Chinese stranglehold on Ukrainian corn is a stark example of how Europe is letting one of its biggest producers of staple grains slip from its grasp. Over the last nine years, Ukrainian corn exports to China have risen exponentially: from the first shipment in 2012, trading volumes rose sharply to make the Eastern European country Beijing’s biggest supplier by 2015, when 90% of its imports came from Kyiv.  The reasons for this change in circumstances are twofold. On the one hand, the Sino-American trade war has seen the US drastically fall away as a supplier to the People’s Republic of China. In 2011/12, it comprised almost 100% of Chinese corn imports, but that figure had plummeted to just 10% by 2017/18. 

Meanwhile, a 10% drop-off in Chinese yields has precipitated significant domestic shortfall. Though 10% may not sound like a huge amount, China is the second-largest producer of corn in the world (behind the US), which means that it must now fill a deficiency of 30 million metric tons (MMT). For context, it has not imported more than 7MMT annually in the last three decades. To solve the problem, it is currently importing so much corn that its ports can’t handle the influx of tankers, which in some cases are forced to wait weeks before docking.

China’s surfeit is Europe’s shortage

China’s all-out assault on Ukrainian corn comes at the EU’s expense – and it predates the trade war with America by some distance. As far back as 2013, there were reports that a Ukrainian firm had agreed to lease 5% of the country’s landmass (or 9% of its arable land) to a Chinese company in order to farm it for up to 30 years. As part of the deal, China would send seeds, machinery, a fertilizer plant and a crop protection plant to Ukraine to aid in the cultivation of the crops, then buy back the yields produced from the arrangement.

Although it should be noted that the Ukrainian company denied the reports at the time, the steep upturn in agricultural trading volumes between the two countries in the intervening years cannot be ignored. What’s more, the EU has far stricter directives and regulations in place surrounding the use of genetically-modified (GM) crops than Ukraine, which means that only one GM plant event (MON810) is authorized for use in the bloc – and even that is banned in many member states. However, with the requirements for ecologically sustainable agriculture or agricultural imports set to undergo a tightening in the near future, the attractiveness of the European market to Ukrainian exports will diminish even further.

Food crisis on the horizon?

All this adds to a potentially perfect storm for the EU’s supply of food for its 447 million people. There’s no denying that the newly announced European Chips Act and the attempts at forming global partnerships are a step in the right direction towards shoring up its access to the semiconductors, and the fact that some 20% of the bloc’s €750 billion Covid-19 recovery fund is being diverted towards digital projects is also positive.

However, those in Brussels must be careful not to take their eye off the agricultural ball while pursuing other avenues of research, development and manufacturing capability. Attempts to avoid a semiconductor supply crisis are certainly sensible, but they should not come at the cost of instigating a similar predicament with regards to the EU’s food supply. As such, the bloc must remain aware of Chinese interests making inroads along its periphery, as well as stay cognizant of Ukraine’s importance to Europe’s overall well-being.

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