Mr. Michael Scannell:

There was a lot in that. Regarding the extent to which the solidarity lanes can effectively compensate for the loss of the Black Sea ports, I acknowledged earlier that it is a huge challenge. The Black Sea ports accommodated an average of 5 million tonnes of grains a month. Currently, and notwithstanding huge efforts, we have managed to move 2 million to 2.5 million tonnes of grains in the month of June. That is less than half, but it is an extraordinary achievement in the circumstances. Obviously, however, if that is less than half, the system is not coping. Bear in mind that one simply cannot replace these Black Sea ports. One is not going to replace the volumes that are moved in these giant grain ships with road, rail and barges overnight, and not even in a matter of months. If we could get it to 2.5 million to 3 million tonnes, that would be very respectable and take a great deal of the pressure off. Bear in mind that the forthcoming Ukrainian harvest will be much reduced in any event because of the war with Russia. A lot of the more productive areas are either in the war zone or are occupied. It is important not to downplay or underestimate the contribution of the lanes, even at the current levels.

What is a bigger worry perhaps is not just the volumes that are being moved but the cost of that. Moving through these alternative transport modes is much more expensive than using sea transport. That in turn affects the competitiveness of Ukrainian grains, oil seeds and so forth. We have to be very attentive that if these costs become prohibitively expensive, there will not be a demand in practice for these grains. We are very attentive to that.

On the capacity of others to fill the gap, markets are resilient. I can give the example of Europe itself. We expect to have an exportable surplus of up to 38 million tonnes. That is significantly more than last year. Canada will have a very strong harvest, although it has to be accepted that this reflects an extremely poor harvest in the previous year. Russia, ironically in this context, stands to profit from the current international situation in grain markets. It is on schedule to have a very strong harvest. Overall, the global availability of grains will be more or less on the same level as in the previous year. However, what is perhaps more important is who has those grains and especially the position of the traditional big grain exporters, including the EU. Often the best gauges of that is price. I mentioned in that context that prices have eased not insignificantly in the past several weeks, basically because the northern hemisphere harvests are now coming on stream and there is availability and so forth. I stress, however, that in the future markets are likely to remain fragile because a great deal is dependent on what happens in Ukraine and the extent to which Ukrainian grains, especially wheat, are able to access the market itself. Even in the current projections we still anticipate that 10 million to 11 million tonnes of Ukrainian wheat will access world markets. If that proves not to be the case, that will create supply pressures in the market.

The climate change dimension is huge. Before Covid-19 our focus was on climate change for obvious and apparent reasons. This presents massive risks to the viability of our agrifood production systems and that explains why we had the Green Deal and Farm to Fork. The focus of the media, at least, has been somewhat distracted, understandably, by Covid-19, Ukraine and so forth, but we cannot afford to lose sight of climate change. That is why, even in the context of what is happening in Ukraine, we reminded member states that in the preparation of their so-called Common Agricultural Policy, CAP, strategic plans they need to have resilience and food security very much in focus, including how they respond, working with the Commission, to what is happening in Ukraine. That includes how they make their systems more resilient to climate change.

The Deputy gave the example of water availability. We expect member states to use the resources available from the CAP to work with their farmers to ensure that they can deal with these challenges, including water availability. Obviously that is a bigger issue in some member states than in others. If one is following the media, Italy is currently going through a major drought. The River Po is running dry and so forth. It really brings home to us that this a huge problem. These things are not happening once in a generation any more but happening every second or third year. It is extremely important that member states are very ambitious in their CAP strategic plans on making their systems more resilient on climate change.

If the Deputy has any follow-up questions, I am happy to take them.