Mr. Fabien Santini:

I will start with the forward contracts, because both the Chairman and the Senator have raised this. I referred to these forward contracts in my opening statement as a possibility to hedge the risk of the volatility of the price of fertilisers. Of course, if one is only hedging for the output of the milk price but not for the costs, one might end up in a very difficult situation. I understand that I cannot intervene in that particular case. I do not know if there is a possibility in Ireland to go beyond the 60 days or 80 days mentioned by the Senator. There are possibilities to hedge, and maybe not just for one contract. It could also be around access to future markets. Tools such as this at least allow for protection against the volatility of the price of fertiliser, as it would allow for protection against the volatility of the price of milk. In the particular case that was referred to, the forward contracts for the selling of milk is not protecting the farmers. It is protection for a possibility in the decrease of the price but, unfortunately, as has been said, the prices have increased in milk. In Ireland in particular there has been a very steep increase in the spot markets in milk recently.

We are really insisting on the risk management strategy by the farmers. There are tools available to the member states, there are tools available for the farmers, and there are tools available for the producer organisations and co-operatives. Of course, what needs to be elaborated is the strategy of managing risk that is prudent but which does not put the farmers in a trap of losses, as seems to be the situation with the case just referred to. I do not know all of the details of the particular co-operative mentioned. I would be interested to understand how this can be. It is not satisfactory, and this is not reflective of a well-functioning food supply chain. As I have said, we are insisting that when adding a well-functioning food supply chain where the volatility of both input prices and output prices are smoothened, farmers are not excluded from any profitability. On the contrary, it is slow continuity, a good flow, and good working of farming activity.

With regard to the tariffs, the EU has relatively high self-sufficiency rates of fertilisers. The main problem is the cost of the raw material of the gas that is imported - it is not the fertiliser. Depending on the year, 70% to 90% of nitrogen fertilisers are produced in the EU. While it is not overwhelming, we have relatively satisfactory self-sufficiency rates of fertiliser production. In the EU we have provisions on anti-dumping, which are derived from World Trade Organization roots. Dumping is something we need to fight. As DG AGRI officials, we are asked to take anti-dumping measures to avoid precisely unfair competition from third country providers. This is a very lengthy process where one must demonstrate that damage is due to a dumping practice in another country. In the case of nitrogen fertilisers, in 2019 the investigation reached a conclusion that for certain nitrogen fertilisers coming from certain origins - the US, Trinidad and Tobago, and Russia - there are anti-dumping practices that deserve to be compensated by an anti-dumping duty. If my memory is correct, they are expressed in euro per tonne and not as a percentage. It is between €30 and €40 per tonne depending on the case. When prices increase, the duty relevance decreases because they are expressed as euro per tonne and not percentages. They are not ad valorem. The initial request was for ad valorembut the Commission considered that to protect the farmers in precisely these kinds of situations it was important not to have an ad valoremissue.

These measures protect against anti-dumping practices, whatever the price calculation. If one can demonstrate that there is damage through anti-dumping practices, normally they stay. There is a provision in the regulation dealing with anti-dumping duties that where one can demonstrate that this damage is not demonstrable anymore because of the evolution of the situation of the markets, one can ask for a suspension of these anti-dumping duties. That is the case currently. There are several organisations that consider that the situation is such that these anti-dumping practices are not deserving of an anti-dumping duty in place any longer, and that they should be suspended given the situation. To my knowledge, several requests have been presented by Copa-Cogeca, which is the overall professional organisation of farmers at EU level, and some professional organisations of cereal growers on the Continent. Right now they are being assessed as to their severity to see if there is a sufficient level to demonstrate that the damage still is or is not material. This is not a procedure that one can run through very quickly because it is very thorough and evidence-based. One needs the evidence and the figures, and the floor must be given to all of the parties at stake. This means farmers and also the fertiliser producers. This is currently in process and the Commission is doing its work and assessing. While the requests are being examined currently, there is no conclusion yet as to the context.

The committee also asked about the supply of fertilisers. Like us, the members have probably read press clips about production facilities of nitrogen fertilisers closing down for various reasons in September, October or November. Our latest appreciation is that most of the plants have relaunched their works and, if I understand it well, they have taken the opportunity to do their normal annual updates. They are back in process. There is no real concern around production capacity at present. That the prices of fertilisers have increased is bad news for farmers but it is good news for producers in that they are incentivised to put the product on the market. The availability of fertiliser does not seem to be a real concern. Precisely for the reasons mentioned by Senator Lombard, which I also mentioned in my opening statement, there is evidence that because the prices have increased the use will decrease. The Senator mentioned 20%. We estimate a decrease of between 10% and 15% in total quantity. This depends on the crops and crop mix of each member state, so it is very difficult to have a clear assessment. It is logical because the economic optimum of a farmer if the fertiliser prices are higher, and even if the crop is more expensive, is to use a bit less. There are very nice curves prepared by an advisory service and by fertiliser companies, and I am aware that Teagasc in Ireland is also excellently talented in delivering the correct advice to farmers in Ireland. These curves show where is the optimum, given the prices. They all show that with such an increase in fertiliser price there will be a decrease in their use. Given that the price of agricultural goods is also good, not to the cost of a very big decrease of production, that is the estimate.

Of course, things can change but that is what we have for the moment. That is a reason to go to the next point - fodder security.

Fodder security is part of food security. With fodder and feed in general, you have some possibility to compensate a bit less fodder by more concentrated, and the contrary, for the grazing livestock. Fodder security in general and feed security in general is part of food security in our understanding. We take this as a clear view.

I remember well the time the Senator mentioned, in 2018-19, when Mr. Hogan was Commissioner for Agriculture and Rural Development. The then commissioner was very concerned that we would have animals not being served with the right quantity of fodder. At the time, it was for different reasons. It was for the reasons of drought. At the time, we took the exceptional measures when the issues were at stake. I remember, for example, that we accepted that any ecological focused area at that moment could be grazed because of the lack of normal fodder because of drought.

At this stage, we do not know what will be the fodder production, which does not depend only on fertiliser. It also depends on precipitation, which for the moment is quite good. We cannot complain, or not farmers at least. Maybe tourists can complain, but not farmers. I come from the south of France and I have never seen so much water, so much green grass. It is cool. It is not completely down. We have, for the moment, all elements. We are in mid-January. How can we know yet what will be the fodder situation when it will be at stake in April-May when it will start to be an issue? We will monitor it.

We are monitoring every month. We have a specialist from the joint research centre in Italy in the Commission that is publishing online an evolution of the stages of pastures. By the way, that was a very useful tool for us to decide on exceptional measures in 2018-19 so that we would have some exceptional measures for the authorisation to use ecological focused areas to feed the animals that needed fodder. I think I have answered most of Senator Lombard's questions. If I did not, the Senator should not hesitate to repeat them.