Europe's Surging Food Prices EU Agriculture Commissioner Says no Threat of Bread Disappearing

In a SPIEGEL interview, EU Agriculture and Rural Development Commissioner Mariann Fischer Boel discusses the dramatic rise of food prices in Europe and seeks to quell fears that cultivation of crops for fuel is going to pose a major problem on the continent.

EU Agriculture Commissioner Mariann Fischer Boel on food price hikes: "We are starting from a very low level, and we should always bear that in mind."

EU Agriculture Commissioner Mariann Fischer Boel on food price hikes: "We are starting from a very low level, and we should always bear that in mind."

SPIEGEL: Ms. Fischer Boel, hardly a day goes by without bad tidings about drastic rises in food prices. Do European consumers need to get used to the fact that everything is getting more expensive?

Fischer Boel: Yes, but we are starting from a very low level, and we should always bear that in mind. For the past 20 years, people have been accustomed to food prices that have almost always fallen. Even when the price of wheat doubles, as has now happened, there is still no reason for it to cause across-the-board lamentations: The raw material accounts for a maximum of 4 percent of the price of a bread loaf.

SPIEGEL: But the prices of agricultural raw materials like wheat or rapeseed are reaching new record levels almost daily. Will this trend continue?

Fischer Boel: I do believe that wheat prices will reach a significantly higher level than we have been accustomed to so far. The meat market will also feel the squeeze -- with some delay -- due to the higher prices of feed. There, especially, we must certainly still expect additional price increases.

SPIEGEL: But wheat reserves are currently shrinking at a dramatic rate. Shouldn't an emergency stock be built up?

Fischer Boel: I am no friend of the idea of building up such stocks. We should be glad that we have finally gotten rid of the packed storehouses and put overproduction behind us.

SPIEGEL: Could there be supply shortages in Europe?

Fischer Boel: We are not in danger of there being no more bread at the bakery tomorrow, even if the demand for food is doubtlessly increasing. We have already lifted the ban on cultivating 10 percent of the available agricultural crop land, thereby obtaining additional area (for cultivation). And we can tap great potential in the new EU member states. There is still plenty of fallow land in the east …

SPIEGEL: … which farmers there are using to cultivate rapeseed or corn, which are increasingly being used to produce biofuels. Doesn't increased cultivation of such energy plants come at the expense of foodstuffs?

Graphic: Surging Wheat Prices

Graphic: Surging Wheat Prices

Fischer Boel: At least in Europe, fuel obtained from renewable raw materials is not a significant factor. Nor will it become one. In the future, Europe will cover part of its requirements through imports. Brazil, for example, disposes of a gigantic potential for fuel made from sugar cane.

SPIEGEL: The price to be paid for that is, among other things, the clearing of rainforests.

Fischer Boel: Of course it must be ensured that the products are produced in an ecologically sustainable way.

SPIEGEL: Recent studies reach the conclusion, anyway, that biofuels do more to harm the environment than to benefit it.

Fischer Boel: I can list as many studies that give the fuels the highest praise. In the EU, we have set ourselves the goal of a 20 percent reduction in CO2 emissions by 2020. The transportation sector plays a decisive role in that. If we want to achieve that goal, there is no way around biodiesel and ethanol.

SPIEGEL: If the demand for agricultural raw materials is rising so strongly, then why is the EU not using the opportunity to drastically cut subsidies to farmers?

Fischer Boel: We already began to reduce direct payments in 2002. We are currently working on a so-called "health check," which entails further changes. I am truly fortunate to be European Commissioner for Agriculture at a time when the agricultural markets have begun to function. No one would have thought this change possible 12 months ago.

SPIEGEL: Currently about 40 percent of the entire EU budget -- about €130 billion ($183 billion) -- goes to farmers. Will it be 20 percent in the future? Or is it more likely to be 39 percent?

Fischer Boel: I cannot give you a specific figure. Only this is certain: The amount will decrease. Farmers would be happy to get their money from the market instead of Brussels, after all. I am convinced: Thanks to our current reforms, the time of the grain mountains or wine lakes is over once and for all.

Interview conducted by Alexander Jung and Hans-Jürgen Schlamp.


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