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Last week, the European Commission published a short-term outlook on the situation on the markets of the European Union. According to the Commission, the consequences of Russia's invasion of Ukraine continue to affect global commodity markets and pose a threat to global food security. After the COVID-19 pandemic, the reverberations of which are still visible, there was a destabilization of the market and an increase in food prices, the war brings further instability and uncertainty. For cereals, production in several EU regions will be affected by dry weather, which is why the forecast for European production in 2022 is below 2021 production by 2.5%. According to the Commission, the livestock sector must deal with the incidence of infectious diseases and high feed prices. According to the Commission, however, the availability of food in the EU is not threatened. Production prices are high, mainly due to the high prices of energy, transport, fertilizers and other inputs. According to the Commission, the prices of dairy products are at a record high in the EU, but despite this, the margins of agricultural enterprises remain low precisely because of the high costs of inputs. Milk supplies in the EU in 2022 should therefore decrease by 0.6%, while cheese production could increase by 0.5%. A drop in production is expected for beef as well, mainly due to the declining numbers of beef cattle in connection with the restructuring of the sector.
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According to the latest data from the EU statistical agency (Eurostat) published on 01/07/2022, the average price of energy and lubricants increased by 55.6% between the first quarter of 2021 and the first quarter of 2022, and inputs increased by almost a tenth since the end of 2021. The average price agricultural goods and services grew by 9.5% in the first quarter of 2022 compared to the fourth quarter of 2021, and on average, the price of fertilizers and soil amendments almost doubled, with prices increasing by 21.2%, energy and lubricants increasing by 17.4%, as well as feed by 9.2%. Over the same period, the average cost of production for oilseeds, cereals, cattle, poultry and milk increased by between 51.7% and 21.4%. Among all EU Member States, Lithuania recorded the highest rate of growth in the average price of agricultural outputs (+ 18.1%) and inputs (+ 24.5%) in the first quarter of 2022 compared to the last quarter of 2021.
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On 29/06/2022, the Environment Council adopted an opinion on several parts of the FitFor55 package, namely the EU Emissions Trading System (EU ETS), the Carbon Border Adjustment Mechanism (CBAM), effort sharing between Member States in the non-ETS sector (ESR), emissions and removals from land use, land use change and forestry (LULUCF), the creation of a social climate fund (SCF) and the new CO₂ emission standards for cars and vans. Regarding the EU ETS system, the Council supported maintaining the overall ambition of a 61% reduction in emissions by 2030 in the sectors covered by the EU. Regarding CBAM, the Council approved a proposal to phase out free allowances for sectors covered by CBAM over a ten-year period between 2026 and 2035. Regarding the Effort Sharing Regulation, the Council agreed on an EU-wide GHG reduction target of 40% compared to 2005 for sectors not covered by the EU ETS, including agriculture, waste management and small industry. Regarding LULUCF, the Council confirmed an overall target of 310 Mt CO₂ equivalent net removals in the sector in 2030 at EU level. Regarding the CO₂ performance standards for cars and vans, the Council agreed to increase the CO₂ reduction targets for new cars and new vans by 2030 to 55% for cars and 50% for vans. The Council also agreed to introduce a 100% CO₂ reduction target by 2035 for new cars and vans.
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On 28/06/2022, the Council of Environment Ministers agreed on new rules to reduce deforestation and forest degradation worldwide. The Council's opinion is a response to the Commission's proposal around limiting the consumption of products that contribute to deforestation or forest degradation. The Council's opinion concerns mandatory due diligence rules for all economic operators and traders who place, supply or export palm oil, beef, timber, coffee, cocoa and soy to the EU market. The rules also apply to derivative products including leather, chocolate and furniture.
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The European Commission is preparing a legal framework for the regulation of new genomic techniques, which should be presented during 2023. Genetically modified products intended for the EU market will have to meet conditions aimed at the sustainability of production, for example crops that will be modified for example should receive a positive evaluation for higher resistance to pests, or the need for less treatment with chemicals. However, pesticide resistance will not be classified as contributing to sustainability, as it would conflict with the Farm to Fork strategy's goals of reducing pesticide use. The framework will also include labelling criteria, the Commission will also address the issue of traceability.