Repercussions of the agri-food crisis at local and regional level

A study by CEPS and CASE entitled “Repercussions of the agri-food crisis at local and regional level”, requested by the European Committee of the Regions’ Commission for Natural Resources (CoR NAT), was published in October 2022.

Russia’s full-scale invasion of Ukraine has had a considerable impact on the EU food market, which had already been suffering from disrupted supply chains in the wake of the global COVID-19 pandemic. As most EU countries benefit from well-developed agricultural production, the availability of grains and food is not at stake in the European Union. However, certain EU countries show some trade dependencies on supplies from Ukraine and Russia, while others are also vulnerable to losing export destinations in Eastern Europe, including Ukraine, Russia and Belarus. Moreover, the ongoing war is continuing to have a considerable effect on prices.

The report aims to assess, in qualitative and quantitative terms, how the Russian invasion of Ukraine is affecting the EU countries and regions that are among the most impacted by the consequences of the war. It begins with an analysis of the crisis, reporting the causes, the figures of the shortages and the EU response. Subsequently, the study reviews Poland and Spain among the most negatively affected countries and regions, while Hungary and Germany are considered among the most resilient ones. In the last part of the study, the authors conclude with a list of lessons learned and some policy recommendations to address the challenges.

Overall, the analysis suggests that in terms of grain supplies Spain is the most exposed country to the devastating effects of the war, and Hungary the least, due to its self-sufficient grain production and export controls introduced since the outbreak of the war. However, export controls do not provide a long-term sustainable solution and maintaining resilience is proving to be difficult for all considered countries overall. Even Germany, which has strong production at local level and does not have a large trade dependence on Ukrainian supplies, still remains highly vulnerable to growing inflation, mainly stemming from the increased prices of energy and fertiliser supplies from Russia. Hungary, which is a self- sufficient grain producer, is also unable to avoid spikes in prices for the same reasons. The increase in prices, moreover, is hitting the affordability of basic consumer goods, particularly among those low-income households for whom affordability of proper meals was already an issue before the outbreak of the war.

As the study shows, having strong local production of grains and fertilisers is very helpful in providing sufficient local supplies of food and agricultural produce during such crises. In addition, diversifying both import and export markets by unlocking trade potential with like-minded countries, as well as moving towards smart specialisation, are very important for boosting resilience at the regional level. This, however, should not compromise environmental concerns.