Consequences of rising prices of raw materials for European farmers

Subject: Consequences of rising prices of raw materials for European farmers

At the plenary part-session of July 2021 we debated the increase in prices of raw materials in the construction sector. This crisis has now extended to other sectors such as farming. This effect is also being felt throughout the arable and livestock industry due to the rising price of materials such as fuel, seeds, fertiliser and plastic. Many agricultural products are in short supply, as production costs cannot be covered.

The rise in the prices of basic consumer goods has an effect on production costs and on the final price of the product, but not on the operating accounts of the farmers themselves.

In light of this:

1. What impact is the lack of raw materials in the EU having on arable and livestock farming?

2. What is the Commission’s assessment of how the arable and livestock sector is being affected by the shortage of raw materials and the rise in prices?

3. What action will the Commission take in this regard?

Answer given by Mr Wojciechowski on behalf of the European Commission (17 January 2022)

The arable and livestock farming sectors are facing similar problems as all other economic activities when it comes to lack of raw materials, both for products used in their current activity like wood, steel or aluminium and for raw materials specifically used in new technologies necessary for the green and digital transition of the EU farming sector.

When it comes to agricultural inputs, several have seen their prices increasing in the last months, following the trend of energy prices. This is the case for nitrogen fertilisers prices which are connected to the ones of natural gas.

Livestock farmers are also facing high feed costs. However, in general agricultural prices are relatively high, allowing most farmers to, at least partly, absorb the increased costs of production and continue to supply the EU with food.

The Commission will continue to closely monitor the evolution of the agricultural inputs markets. The negative impact of the rising energy prices, including on the fertiliser sector, was addressed in the communication on tackling rising energy prices: a toolbox for action and support (1), which identifies various measures which can be used to alleviate the impact of energy bills for the affected businesses, also farmers (2) and to increase the EU’s resilience for future price shocks.

Within the EU industry strategy (3), the Commission announces the way forward to deal with strategic dependencies that affect our supply chains.

This general exercise will be complemented by a sectoral one in the context of the Contingency plan to ensure food supply and food security in times of crisis recently adopted (4), which will identify specifically for which products and under which conditions dependence on imports may represent a vulnerability for food security.

⋅1∙ https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021DC0660&from=EN

⋅2∙ Point 3.1 of the communication.

⋅3∙ https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52021DC0350

⋅4∙ https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021DC0689