NATALIA SHAGAIDA: “IN CASE OF UNFAVORABLE OWN HARVEST THE EU WILL INCREASE IMPORTS”
In her interview with MK.RU, Natalia Shagaida, Head of the Agrarian Policy Department of the Gaidar Institute was asked whether extreme heat in the EU may affect Russia’s economy and the life of its people.
Extreme heat and extensive fires caused a severe climate situation in the EU. However, amid a lack of energy resources, implications of the pandemic, cuts in food supplies and geopolitical cataclysms temperature anomalies may be followed by a growing economic crisis in the EU.
According to analysts’ forecasts, the current situation in the EU entails risks to the yield of various crops, for example, maize, sunflower, wheat and soya. Secondly, heavy cargo – coal, chemicals and petrochemicals – are mainly transported by river, while a shallowing of rivers makes navigation of large vessels infeasible with transportation costs becoming too high and additional inflation risks emerging. For information, a replacement of one mid-sized barge requires over 100 trucks, while motor and railway transport facilities for sorting out logistics issues are rather limited. According to the available data, a shortage of truck drivers is estimated at 80,000 persons in Germany. Further, the energy crisis is likely to intensify. In Germany, they transport coal on the Rhine to thermal power plants which currently have to make up for a decrease in consumption of Russian natural gas. Fourthly, electricity consumption picks up during the heat on the back of an intensive use of air conditioners and drinking water has to be transported by road to individual regions because water consumption is limited there.
However, Natalia Shagaida believes that all abovementioned factors are not too critical because the EU is a very rich region. “European countries are open economies. The EU is one of the world’s largest exporters. In case of unfavorable harvest in the EU, they will simply increase imports,” Natalia Shagaida says.
Projections regarding global yields of crops, sunflower oil and sugar are favorable so far, though the FAO (UN Food and Agriculture Organization) draws attention to droughts in the US and the EU. This reduces, for example, projections of gross collection of maize, but not considerably. Projections of global yields of wheat, vegetable oil and sugar are higher than last year, Natalia Shagaida notes. In Natalia Shagaida’s opinion, drought in Europe means that Russia’s share in global exports may grow. As regards the FAO Food Price Index, it kept decreasing for a fourth month running in July, so the situation is not that critical, Natalia Shagaida says.
According to analysts’ forecasts, the current situation in the EU entails risks to the yield of various crops, for example, maize, sunflower, wheat and soya. Secondly, heavy cargo – coal, chemicals and petrochemicals – are mainly transported by river, while a shallowing of rivers makes navigation of large vessels infeasible with transportation costs becoming too high and additional inflation risks emerging. For information, a replacement of one mid-sized barge requires over 100 trucks, while motor and railway transport facilities for sorting out logistics issues are rather limited. According to the available data, a shortage of truck drivers is estimated at 80,000 persons in Germany. Further, the energy crisis is likely to intensify. In Germany, they transport coal on the Rhine to thermal power plants which currently have to make up for a decrease in consumption of Russian natural gas. Fourthly, electricity consumption picks up during the heat on the back of an intensive use of air conditioners and drinking water has to be transported by road to individual regions because water consumption is limited there.
However, Natalia Shagaida believes that all abovementioned factors are not too critical because the EU is a very rich region. “European countries are open economies. The EU is one of the world’s largest exporters. In case of unfavorable harvest in the EU, they will simply increase imports,” Natalia Shagaida says.
Projections regarding global yields of crops, sunflower oil and sugar are favorable so far, though the FAO (UN Food and Agriculture Organization) draws attention to droughts in the US and the EU. This reduces, for example, projections of gross collection of maize, but not considerably. Projections of global yields of wheat, vegetable oil and sugar are higher than last year, Natalia Shagaida notes. In Natalia Shagaida’s opinion, drought in Europe means that Russia’s share in global exports may grow. As regards the FAO Food Price Index, it kept decreasing for a fourth month running in July, so the situation is not that critical, Natalia Shagaida says.