by John McDougall
A new report shows how regulation on biotechnology and pesticides has left EU farmers at a competitive disadvantage, while the world’s major farm markets continue to thrive. The report’s main author John McDougall, from the market analysts Agbioinvestor, explains.
The challenges facing farmers in the EU to sustainably increase production are substantial. The political environment in the EU and related regulatory and policy decisions have led to reduced access to modern agricultural tools, such as plant biotechnology and crop protection products, contributing to stagnating agricultural productivity and economic development.
Meanwhile, global agricultural productivity has increased in many continents due to modern agricultural technology. The USA, Brazil and China have seen drastic increases in agricultural productivity due to the adoption of new technologies, such as plant biotechnology and modern crop protection products.
In the EU, the continued unpredictable political environment will likely lead to further reductions in the availability of crop protection products and biotech seeds in the region, further hampering farmers’ efforts to sustainably increase production. This is driven by a regulatory system which is increasingly based on perceived hazard rather than risk. As a result, businesses (both farmers and agrichemical companies) do not have confidence to invest and innovate.
There could be further pressure on farmers if discussions on the future of the Common Agricultural Policy (CAP) lead to a reduction in subsidies, which are under pressure with the imminent exit of the UK from the EU and push from trading partners for subsidy reductions. If the EU does opt to reduce the CAP budget, this could reduce farm income and profitability.
Another area of concern is the diversion of regulatory standards between the EU and its key trading partners which could have a significant impact on trade. Given the EU is reliant on agricultural imports, any regulatory obstacles could have negative implications for EU consumers and farmers.
The EU is dependent on imports, especially for feed. While the EU has a positive trade balance for meat, this would not be possible without imported protein rich feed, as shown by European Commission statistics. Moreover, the EU has a trade deficit for several crops and relies on imports from other continents for food. For example, the trade deficit for fruit and vegetables has become more significant over the past years.
However, the EU’s hazard-based setting of Import Tolerances is expected to create trade distortions as well as problems with production processes in countries exporting to the EU. This threatens the trade in arable produce that is required to be imported into the EU to meet food demand.
There is an answer to these challenges. The adoption of new technologies in the EU has the potential to sustainably improve productivity, safeguard farm businesses and potentially reduce dependence on imports. By applying a more consistent and predictable decision-making process and a risk-based regulatory system for crop protection products and biotechnology, the EU can meet its production potential for a sustainable future benefiting consumers and farmers in the EU and abroad.
The report was co-authored by John McDougall and Matthew Phillips from Agbioinvestor. Click here to download the report.