FATER Academy of India

European agri-food value chains resilience: soya case

Thesis of the presentation during India, Ukraine and greater mekong sub-regional International Webinar-2021

“Challenges and Threats Post Pandemic Developments concerned with Agricultural Sector”

IUGMS-CTPDA-2021

12 September 2021

Volodymyr Pugachov, PhD. National Scientific Centre, Institute of Agrarian Economics, Kiev, Ukraine.

Keywords;

Soybeans, pork, poultry, self-sufficient ratio, deforestation, greenhouse gas emissions.

Abstract:

The issue of agri-food value chains resilience is the crucial point of achieving food security on the country and local level. One of the most important is the soya value chain, as soya footprint is almost in all European animal products.

Whilst looking at the development of the animal products produced in the world (e.g. chicken pork, eggs) for the last half-century, the overall production increased around 6 times. The world production of soya increased in parallel.

According to the information of the Wageningen Institute (Netherlands), the estimated soybean meal content in the animal feed in Europe varies from 9,4% for pork production to 26% for poultry production.

Development of the animal production resulted in a significant increase in soya cultivation and soybean meal is the crucial element for animal feed production.

European Union is the net importer of soya and soya meal. EU imported 15 million tonnes of soybeans and 19 million tonnes of soybean meal in 2019.

The main importers of soya into the EU are Brazil (39% of overall import), Argentina (28%), the USA (18%) and other countries (15%).

The global soya prices increased by around two times during 2020-2021, reached

$650 per tonne, which is the record level for the last several years. Such a dramatic increase in the price resulted in the vulnerability of European agri-food value chains and especially animal production.

The localisation of soya production in Europe is ongoing. The soya area increased from 2.2 mln. ha in 2021 to 4 mln. ha in 2020. There is the possibility to increase soya production in Europe by 66% in the mid-term potential.

An increase in soya production in Europe should not cause the shortage of internal production of other important crops, e.g. wheat. According to Wageningen University, the yield gap (yield potential) in wheat reaches nearly 60% in Eastern Europe.

Ukraine is the top producer of soya in Europe, with an area of around 1,3 mln ha in 2020. Ukraine is self-sufficient with soybeans. The Ukrainian soya industry is export-oriented. A large part of domestically processed soya is exported as a soya meal. Even after the decrease of harvest in the last season, the self-sufficient ratio is around 450%.

Soybean is a critical crop regarding the sustainability of production and environmental issues, like deforestation. According to European Soya Monitor (2019), near 20% of imports are deforestation-free (including credits). Soya accounts for 31% of EU imports from deforested areas.

Deforestation by itself is not only an environmental and ecological issue but accounts for increased levels of greenhouse gas emissions, up to 40% according to Agri-footprint 5.0 database.

Conclusions:

1. Soya is important for the agri-food value chains in Europe, as widely used for animal production.

2. European Union is the net importer of soya and soya meal.

3. The global soya prices increased by around two times during 2020-2021, causing vulnerability of European agri-food value chains and especially animal production.

4. Localisation of soya production in Europe is the ongoing response. Ukraine as the main soya producer in Europe has significant potential to contribute to European resilience in soya value chains.

5. Environmental issues need to be addressed whilst developing soya production, as soya accounts for 31% of EU imports from deforested areas resulting in increased greenhouse gas emissions.

Sources:

1. Food and Agriculture Organisation of the United Nations Statistical Data http://www.fao.org/faostat/en

2. U.S. Department of Agriculture data on soya market https://www.usda.gov/media/agency-reports

3. International trade Statistical Database https://comtrade.un.org/

4. Index Mundi soya prices data https://www.indexmundi.com/commodities/?commodity=soybeans

5. Donau Soja Organisation https://www.donausoja.org/en/home/

6. State Statistical Service of Ukraine http://www.ukrstat.gov.ua/

7. Schils, R. et al. 2018 in European Journal of Agronomy. Plant Production Systems Group, Wageningen University https://doi.org/10.1016/j.eja.2018.09.003

8. European Soya Monitor 2019 developed by IDH – the sustainable trade initiative https://www.idhsustainabletrade.com/uploaded/2021/06/2019-IDH- European-Soy-Monitor-report.pdf