Luis Planas: "The Turkish pact does not remove the risk of a food crisis"

Luis Planas Puchades (Valencia, 1952) is one of the most experienced politicians in the current Government.

NewsEditor
NewsEditor
25 July 2022 Monday 00:52
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Luis Planas: "The Turkish pact does not remove the risk of a food crisis"

Luis Planas Puchades (Valencia, 1952) is one of the most experienced politicians in the current Government. He was one of the three youngest deputies of the legislature of 1982, deputy in the European Parliament between 1986 and 1993, Minister of Agriculture and of the Presidency of the Junta de Andalucía (1993-1996), chief of staff of the European commissioners Manuel Marín and Pedro Solbes in Brussels, Spanish ambassador to Morocco for seven years (2004-2010), ambassador to the European Union for a few months; new councilor in Andalusia, and Minister of Agriculture of the Government of Spain since 2018. Valencian with Catalan origins, politically trained in Andalusia and trained in the labyrinths of Brussels and Rabat. A man for this time. He is one of the ministers who knows the most and who is best silent. He has agreed to speak with La Vanguardia about the food crisis that is causing the war in Ukraine.

After the pact signed last Friday in Turkey by Ukraine and Russia to unblock grain exports, is the risk of famine in Africa averted?

The deal is good news. It will undoubtedly have a positive impact on the markets, but it is still early to assess its scope. The implementation will be very difficult and vulnerable [on Saturday, a day after the signing of the pact, Russia bombed the port of Odessa]. From there to being able to say that we avoided famine in Africa there is a distance. The volatility in the markets is not going to go away overnight. All the focus is on the Ukrainian grain and, indeed, it is the most peremptory. But it will be equally important to see if Russia restores its supply to the markets, especially in the field of fertilizers.

Are all fronts still open?

There are three fronts in this war: military, energy, and food, which we should talk more about. I don't think this front is closed today. From the beginning, one of Vladimir Putin's objectives has been to prevent the export of grain through the Black Sea and the Sea of ​​Azov. Absolutely unjustified shelling of Ukrainian agricultural facilities began immediately. This had an immediate effect on the commodity markets, with a sudden increase in prices, especially in the grain and oilseed markets. We have had year-on-year increases of between 40% and 60%. The markets are in the grip of great volatility. No one knows what will happen in the medium term.

Is the scarcity of fertilizers the most hidden fact of this war?

The price of fertilizers has increased throughout the world as a result of the rise in the price of gas, the fuel necessary for nitrogenous fertilizers. Rise in prices in European factories and decrease in Russian exports, with special emphasis on potash. The consequences reach all countries, including Latin American countries. There are very worrying reports about the impact on Brazilian agriculture.

How does the Ukrainian grain blockade affect Spain?

Spain has replaced the purchase of Ukrainian grain, especially corn for animal feed, with American grain that we are buying in the United States, Canada and Brazil.

Which countries are the most exposed?

The problem is concentrated in 47 countries, especially dependent on imports from Russia and Ukraine. I would cite an extreme example: Eritrea, 100% dependent on cereal from both countries. We have the problem of Egypt, where the price of bread is an important political factor. We have to keep an eye on Tunisia, Lebanon and Senegal. There have already been social outbreaks in Zimbabwe and Kenya.

Morocco and Algeria?

They are two relatively stabilized countries. Morocco buys cereals from France and Algeria has also just announced new contracts with France.

There is something difficult to understand. Before the war, Ukraine was the world's fifth largest producer of barley, sixth of corn and seventh of wheat. Why is the collapse of the Ukrainian cereal causing so much damage?

Ukraine is a very fertile country thanks to the so-called black lands of its great plain. More than 70% of its production is destined for export, I say this in the present tense because the battle should not be given up as lost. Ukraine occupies a very important place in the international grain market. When a part fails, the entire international chain suffers, prices go up, markets become very volatile and everything falls apart.

In addition to blocking Ukraine, has Russia stopped exporting?

Russia currently applies a restriction rule on the export of grain and fertilizers. It only supplies countries it considers friends.

Is there grain smuggling?

Western intelligence services have detected in recent weeks loading operations of Ukrainian grain on Russian and Syrian ships anchored in Black Sea ports, with the location system turned off. There have been attempts to illegally land Ukrainian wheat in Egypt, which the Egyptian authorities have refused to accept, despite Egypt's need for cheap grain.

Impact in Spain? Be realistic.

We have a very clear impact on energy costs. We have a national production of fertilizers that covers 50% of the demand. Let us think that France must import 76% of the fertilizers. Livestock needs feed and as I told you, we have replaced Ukrainian grain with American imports. In one way or another, all sectors are affected. My impression is that prices will remain at current levels until the end of the year. If we were in the Spain of the 60s and 70s, even in the 80s, we would be facing a very serious problem, given the great weight that food had in the shopping basket. In the seventies, food accounted for 40% of spending by Spanish families. Today we are at 15%. I do not want to minimize anything, because the highest price growth occurs in the most consumed foods. The markets are very nervous, but Spain will resist and the distribution of burdens in the production chain will be fairer than in the last economic crisis, thanks to the Food Chain Law. All sectors know it.

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