EC report: War in Ukraine continues to impact EU farmers
The impact of Russia’s invasion of Ukraine, and the ensuing high input costs and food inflation, continue to weigh on agricultural markets and consumers’ purchasing decisions, according to the European Commission’s (EC) latest short-term outlook report for EU agricultural markets, published on March 30.
The report presents a general and sector-by-sector overview of the latest tendencies and further prospects for agri-food markets.
It said that in addition to the impact of Russia’s war on Ukraine, large parts of the EU experienced winter droughts, further worsening water availability in regions with already record low water reservoirs, as a result of hot and dry summer of last year.
The current EU macroeconomic forecast is relatively more positive than in autumn 2022, despite uncertainties about energy supply for next winter and recent financial market tensions.
High commodity prices last year helped counter high input costs and farm income increased on average, with significant sectorial and regional disparities.
Input price pressure on farmers is expected to ease in 2023.
Lower forecast cereal prices would stabilise feed demand, and the affordability and availability of fertilisers improve due to lower energy prices and dynamically increasing fertiliser imports.
“Food inflation remains significant, with EU average food prices 19.5 per cent higher in February 2023 than in February 2022,” the EC said.
In spite of declines observed in some input costs, food prices are expected to remain at high levels for a while before turning downwards.
Dry and mild winter weather could lower the quality and the availability of forage and may also increase pest pressure, with a possible effect on yields.
Concerning trade, EU exports could recover in 2023, in some cases supported by a recovery in China while some challenges could remain due to a weaker purchasing power and lower EU competitiveness in some markets, the EC said.
(Photo: Andreas Krappweis/freeimages.com)
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