World meat industry news

Last month, Russia, the world's largest wheat exporter, suspended global grain exports – precisely the type of action the World Health Organization, the UN Food and Agriculture Organization (FAO), and the World Trade Organization have warned would endanger global food supply chains.

This is bad news for the EU, a major importer of essential foods from Russia - not least because Russia's ban also extends to other essential foods like rye, barley, corn, soybeans, and sunflower oil.

To make matters worse, the ban was announced when Russia seemed to have weathered the worst of the pandemic.

But given that Russia has, in past weeks, become an epicentre of the pandemic (now having the third-highest confirmed Covid-19 cases globally), it's likely the ban won't just persist beyond July, but that even more essential foods will have export bans slapped on them.

Russia's actions are undoubtedly partly motivated by the same inclination to stockpile that we have seen elsewhere. But that doesn't mean the politics behind the ban should be ignored.

Saudia Arabia and South Sudan

The Kremlin chose not to extend the ban to two of Russia's closest geopolitical allies, Saudi Arabia, and South Sudan.

In addition, Russian authorities made public proposals late last year for a so-called 'Grain OPEC', a brazen attempt to control global food markets.

It would effectively mean the EU, not just depending on Russian energy, but increasingly also on Russian food supply. And considering Russia's track record of weaponising energy as a political tool against the EU, it's a prospect that bodes badly for long-term EU food security.

Furthermore, the current bans support the direction president Vladimir Putin took by signing Russia's largely-unnoticed Food Security Doctrine two months ago.

The doctrine revealed ambitious targets for domestic food production as part of a larger Russia "exit strategy" from the global trade system.

Thus, Russia is creating new food production targets that far exceed domestic demand.

Vegetable oil is a notable example, whose domestic target increased from 80 percent to 90 percent.

This demonstrates the strategic importance of the commodity: Russia is now the world's second-largest producer and exporter of sunflower oil.

And the EU has most to lose from Russia's control of this new 'strategic oil', with the seven largest global sunflower oil importers being European nations.

Reduced European harvest

This means the consequences of Russia's export bans will inevitably impact EU markets and consumers - especially when you consider that a recent US department of agriculture report concluded the EU is expected to produce a much smaller crop this year (EU production is forecast down by nearly 12 million tonnes).

The consequent need for the EU to compensate with imports of essential foods as well as the increased impact that Russia's export bans will have in the absence of surplus EU produce being exported – will only compounds the threat to EU and global food security.

To address this predicament, the EU must diversify its global food supply chains sooner rather then later.

But equally, it must also confront the temptation to veer towards protectionism during a global crisis – particularly over its agricultural sector. Doing so has already led to potential trade deals with the United States in the West, and ASEAN in the East falling through – drastically limiting the EU's scope of potential suppliers and endangering long-term EU food security in the process.

The US, after all, could potentially supply alternative sources of wheat, whereas ASEAN, (and Malaysia in particular) is a supplier of sustainable palm oil as a substitute for sunflower oil, which Russia has attempted to monopolise.

Agriculture has remained the key sticking-point in US-EU trade negotiations.

For ASEAN, the EU's ban on palm oil for biodiesel has been the major obstacle.

Russia's food export bans also open up an opportunity for the EU to take advantage of US keenness to access EU markets.

As such, Europe may wish to consider a more constructive approach to palm oil to avoid alienating ASEAN as the Covid-19 economic crisis escalates.

This does not mean blindly committing to lower meat standards, which has often been brought up in the US-UK trade negotiations, nor allowing environmentally unsustainable commodities to enter the market, a defence commonly used against palm oil products.

Palm oil, after all, is proven to have be less land-, water-, and energy-intensive than almost all other edible oils, including sunflower oil, soy, and rapeseed, and Malaysia has made significant steps towards sustainable palm oil cultivation – a key EU demand.

In September 2018, the Malaysian government declared a moratorium on palm oil expansion to protect forest cover at 50 percent and enforced mandatory sustainability standards for 100 percent of Malaysia's palm oil production.

Sustainable palm oil certification is now obligatory for Malaysian producers, as the government also embarks on reforestation programmes like the one million forest tree planting initiative in the Ulu Segama-Malua Forest Reserve.

Now, at a time when most global economic powers are keen on shoring up stronger trade relations (with the notable exception of Russia it seems), there also exists a unique window of opportunity for the EU to use constructive trade talks as a way of influencing economic powers to prioritise sustainability and environmental standards.

On the other hand, protectionism puts Europe's food security at risk and opens a door to another crisis.

Covid-19, after all, transformed health security in Europe in ways no one could have predicted. It will likely transform food security as well, only this time we can choose to be better prepared. Russia's dominance over Europe's energy market must not pave way for its control over the food market.