EU Proposes €1.5 Billion Package to Shore Up Food Security

(Bloomberg) -- The European Union is proposing a 1.5 billion-euro ($1.65 billion) funding package for farmers, plus freeing up fallow land for crops as it seeks to shore up food security after Russia’s invasion of Ukraine. 

Food prices have soared as the war cuts off most shipments from Ukraine, a major grain and chicken exporter. In the first ever release of agricultural crisis funds, the bloc plans to provide 500 million euros of funding for member states to distribute to farmers most impacted by high energy and fertilizer prices, officials said. EU nations could then top up those funds with their own resources to reach the 1.5 billion-euro total.

“While the EU itself does not face a food security risk, we should still address food affordability issues and take steps to make our agriculture and food supply chains more resilient and sustainable to cope with future crises,” European Commission Executive Vice-President Valdis Dombrovskis said. 

Other measures will free up almost 4 million hectares of fallow land for crops in 2022, officials said. While it won’t be the most productive land, it will give farmers more flexibility, they said.

Import restrictions on animal feed will also be temporarily relaxed to allow EU countries to plug the gap left by Ukraine shipments, for example by importing from South America, according to officials. Value added tax on food can also be reduced to zero to lower consumer costs, according to a statement from the commission.

Shifting Priorities

The bloc encouraged countries not to limit food exports. Hungary earlier this month announced restrictions to protect the domestic food market, before walking them back, while EU candidate Serbia has imposed ban on foreign sales of selected commodities.

While the measures mark a shift to prioritizing food security after years of focusing on sustainability, those goals should not be abandoned, officials said. Farmers that use resources efficiently and climate-friendly production methods should be among those prioritized for funding, they said. 

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With assistance from Bloomberg