Fearing wine lakes and rotten potato heaps, Europe’s farmers demand a coronavirus rescue package
Anyone feeling peckish for potatoes? Say, three-quarters of a million tons, or thereabouts?
Earlier this week, the Belgian potato industry association, Belgapom, grabbed global headlines by begging the country’s citizens to do their patriotic duty and double their consumption of frozen pommes frites to twice a week to reduce overflowing stockpiles.
Belgium might have a famously hearty appetite for the dish, but calls to consume 750,000 tons of potatoes is a tall order for a country of 11.5 million. And so, on Wednesday, the industry’s plea was extended to the entire world.
Good luck with that.
Unwanted stockpiling—with the looming prospect of a crude-oil-style price collapse—isn’t just a problem for the world’s potato growers, either.
It can be found in the dairy industry, where the grazing season is about to boost production just as consumption falls. “We have worked to reduce milk production, and we ask the European Union to take its responsibilities,” said French Agriculture Minister Didier Guillaume on Wednesday. “Today it is absolutely necessary to store milk, store powder, see how things can be done to ensure that this sector lives as well as it can.”
American dairy farmers are facing a similar demand shock.
First a trade war, now a pandemic
As with the potato and dairy situations, the coronavirus pandemic is largely to blame—hotels, bars, and restaurants are shuttered. But, as the European Federation of Origin Wines (EFOW) has warned, the industry has already been battered by the economic slowdown in Asia, a vital market, as well as by 25% tariffs imposed on European wines by the U.S. in retaliation for illegal subsidies granted to the European plane-making consortium Airbus.
“No amount of planning could have helped wine operators face these three consecutive crises,” EFOW president Bernard Farges wrote this week in a letter asking for help from the agricultural committee of the European Parliament.
“The problem is bad at the moment, and it’s really putting a lot of enterprises at risk of going bankrupt,” says Matin Qaim, a professor in the department of agricultural economics at the University of Göttingen in Germany.
Trying to help
The European Commission, the Union’s executive body, says it is trying to help farmers and growers.
Last week, it unveiled an emergency 76 million euro ($82.6 million) package to pay for private dairy and meat storage, to ease producers’ loads. The commission also said it would allow national governments to bypass their usual competition rules and fund schemes for the wine industry—through private storage schemes, but also the mass distillation of unwanted wine into industrial ethanol. Europe’s winemakers are desperate to avoid what happened roughly 15 years ago when a glut of wine forced many to destroy their stocks in so-called wine lakes.
On Thursday, Agriculture Commissioner Janusz Wojciechowski faced a grilling by members of the European Parliament’s agriculture committee—who, unlike European commissioners, are directly elected and therefore answerable to increasingly angry constituents.
“There are certain sectors, such as wine, where the measures simply don’t go far enough,” complained Herbert Dorfmann, an Italian member of the center-right European People’s Party (EPP)—the Parliament’s largest grouping. “The member states don’t have any more money.”
Next up was Italy’s Paolo De Castro of the center-left Socialists and Democrats (S&D), the second-largest grouping. “We really appreciate the work that the European Commission is doing, and there’s no doubt that the package…is going on the right track,” he said. “But to be clear, 76 million euros is what you’re offering. Do you really think that’s enough? That’s a little bit more than seven euros per farmer…Given these difficulties, I don’t understand why we aren’t looking for resources like we’re doing in other sectors.”
Wojciechowski responded that the commission had “done what is possible at the moment in order to guarantee that we can tackle the problems faced in the agricultural sector.” He added that the pandemic has “shown us just how important it is to guarantee food security.”
However, the commissioner added: “We know that all sectors of the economy are going through this crisis and there are enormous needs. Other sectors are facing problems as well…You can see there’s a lot of pressure on the budget.”
Teun de Jong, chairman of the Dutch Arable Farming Union (NAV), is not impressed with the commission’s financial commitments.
In the Netherlands, as in Belgium, potatoes are piling up—1.5 million tons have to be stored, and only a third of that is likely to be sold. Not good news for the world’s biggest potato exporter.
“In the Netherlands there is a program made in a coalition between farmer unions, trading companies, and the processing industries to get rid of the surplus,” de Jong says. “We don’t want the heap of potatoes back on the fields or behind the barns, because then there could be a spread of diseases in the new growing season. We want to use [these] potatoes for cattle feed, pet food, ethanol, and alcohol for disinfection.”
The Dutch government has only been able to commit a maximum of 50 million euros to support the scheme, which breaks down to 5 euro cents per kilogram—about a third of the potatoes’ cost price, a meager incentive for cash-strapped farmers. “Now we are waiting for a commitment from the EU” to help farmers out, de Jong says.
As the University of Göttingen’s Qaim notes, the financial risk to farmers is substantial in the short and medium term. But beyond that, he argues, it is hard to predict what will happen because we don’t know when the swing back to normality will happen—nor do we know “what the new normal will look like.”
Overall, Qaim says, the food industry is probably less affected by the coronavirus lockdown than other sectors, because supermarkets remain open, and people continue to eat. “But when you zoom in, you find subsectors of the industry that particularly rely on out-of-home consumption—they may be more affected,” he says.
“In the medium and long run, it might lead to a situation where all those french fries are processed in a different way, so they come in a different form that people eat at home,” Qaim says. “Such things can be changed within a year, but they cannot be changed in a few weeks.”
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