Mr. Fabien Santini:

How long is, as always, the million-dollar question. Making projections is always difficult but we are trying. The Commission is trying and so are our counterparts in major countries. The United States Department of Agriculture, USDA, is trying to make estimates. Everybody is trying to project and plan about what will come. The difficulty is we are depending on another area, namely, the energy markets. There is a really tight link between both of them so we must also make projections about the energy markets. If one looks at the main estimates that are floating around private agencies and public agencies, they all consider the supply bottlenecks, the logistics difficulties due to Covid and the fact we are also paying the price of past events should result in more reasonable price trends this year. It is difficult to say when but during this year. If one looks at the curves one can find in some specialised editions, one can see the prices are going down. The fertiliser prices are not going down to the level they were at before this event but at a lower and more reasonable one. Of course, these are projections. Given other events that are occurring - we are living in an uncertain world with more risks in general - one never knows what will happen. However, overall, this is the expectation.

As I said, there are price transmission mechanisms in the food supply chain that when the costs increase, they are passed little by little to the next stage. This is not necessarily reassuring but it is reassuring for the farmers that not everything is on their shoulders and that processors, retailers and consumers will have to take part of these costs on board. This means there will be a tension due to the increase in food inflation for consumers. Of course, we are talking of an element, if we take it globally, of 6% to 7% of the cost of production for agricultural products which themselves come to perhaps 10% to 20% of the final costs of food. There are many others costs. There is the transport, the processing, the electricity in the supermarket and plenty of logistical costs. Thus, with the fertiliser costs specifically, we are not dealing with something that can create a doubling of the price of food but it has an impact and it will be passed on. There are other impacts because the energy price is not only affecting fertiliser. It is also affecting the electricity bill of supermarkets and the food industry.

This surge in energy price has a global impact on the economy and will result, and we have seen it in the press already, in some inflation including for food, hopefully with a limited time span, and that is the expectation. This is worldwide. It is not only in Europe that energy prices have increased and there is such an impact. If we look at the headlines in the US about food inflation, the prices of food for all regions, not only for energy but also for much more bottlenecks in the US supply chain than in the EU as they were probably less prepared than our food sector. More people were absent from the suppliers and companies and they had more disruption. There are other reasons that explain food inflation in the US and that is a whole problem in the US. Of course this means higher food prices have economic consequences for consumers especially for poorer ones. Food poverty is at risk of increasing and that is a political problem for sure. That is why it is something that is carefully looked at. The impact of energy prices on food prices and on the rest of the economy is a real challenge for EU economies right now and we have to look at that. Hopefully the people who are projecting that it will smoothen and relax in the coming year are right.