Mr. Michael Scannell:

On the impact of what is happening on food security in Europe and at global level, one must look at the commodities on which the world was largely dependent coming from Ukraine. I mentioned them earlier - wheat, maize and sunflower. The EU imports virtually no wheat from Ukraine. We did import relatively significant quantities of maize for our animal feed industry but there are alternatives to that on global markets and already, we see a drop in overall demand for animal feed largely for price purposes etc. We are heavily dependent on Ukraine for sunflower oil but again there are alternatives to that such as rapeseed oil, soya oil and in some cases, even olive oils, although for different sectors sunflower oil is especially important. I spoke earlier about the complexity of food chains so, for example, the fish processing industry is heavily reliant on sunflower oil for canned fish such as tuna and sardines. It has certain qualities that are difficult to replace. I mention that as an example of the complexity of these issues. Therefore Europe is not immediately exposed in terms of its own supply chain on these commodities other than sunflower oil but the impact at global level is very significant because Ukraine accounted for a very large share of world trade in wheat. The question is to what extent global markets will adapt to the loss of these Ukrainian grains. First, we are trying through the solidarity lanes to ensure that that loss is kept to a minimum so that Ukraine can actually export. However, as I mentioned, that is a big challenge due to the closure of the Black Sea ports.

On production levels in Europe itself, the wheat harvest will come on stream shortly. We expect a European harvest of about 125 million tonnes. To put that in perspective because these figures are so huge, that will allow us an exportable surplus of about 38 million tonnes which is really huge. Europe is one of the biggest players on world markets for wheat. That is about 30% of tradeable wheat. Ironically in the circumstances, Russia will also have a very big harvest. At global level, overall wheat production will be relatively stable. It will be about 775 million tonnes which is little changed on the previous year. However, that hides important sectoral differences. What really matters in this context is the situation in the traditional exporting countries which includes Europe, Ukraine, Russia, the USA, Australia, Canada, and Argentina.

Markets will remain relatively fragile especially with the war ongoing. Even in recent weeks we have seen some softening in prices. Certainly, in Europe there is no need to panic. I would be concerned about the global situation.

To give a bit of context, probably a bigger threat is the energy situation should Russia, for example, cut off the gas or reduce flows. In that context, next week the Commission will adopt a communication on how we anticipate potential shortages in key energy inputs, notably gas, as the winter approaches. Already a significant number of member states have introduced national provisions to reduce and prioritise who gets access to these key energy inputs. That, in turn, leads to the Deputy's question about the inflationary impact.

We need to be very mindful that inflation in general has risen very sharply and increases in food prices have been a major contributory factor. Traditionally energy and food are excluded from the main indices for inflation because they tend to be so volatile. There had been an expectation that the increases we saw during the Covid pandemic would be transitory. This was the assumption of the European Central Bank, the Federal Reserve etc. However, in large part as a result of the war in Ukraine it is not proving so transitory. That has basically led to longer and more worrying levels of inflation. Obviously, we all have a shared interest in doing more to bring inflation back significantly. It has not been an issue for three decades or so, but those of us who are around long enough recall how painful it is to reduce inflation. It is a painful and difficult exercise.

The UN is leading the efforts to reopen the Black Sea ports. Apart from the UN itself, the key players are Ukraine, Russia and Turkey. It would be a major bonus if they succeed. There is already talk of a pilot shipment from the port of Odesa. We have high expectations and hopes that these will prove successful. However, we need to be prudent and anticipate a scenario where either it does not prove possible to reopen the ports or even if they do reopen that it will take some time for the normal logistics to pick up to their former levels. That explains our solidarity lanes and the communications I mentioned earlier. We cannot to reduce our efforts to provide alternatives to the Black Sea ports. It would be wonderful if those efforts proved to be unnecessary because the Black Sea ports reopened, but it would be worthless to make such assumption. I will stop at that. I hope I have answered the Deputy's questions.