LONDON, ENGLAND – The grains sector needs innovation and access to new technology to feed a growing population, delegates were told on June 11 at the International Grains Council (IGC) Grains Conference 2024 in London, England. Some are hoping that political changes in Europe will speed up approval of new products and varieties.  

Eric Dereudre, vice president of international government and industry affairs for Corteva, an agricultural chemical and seed company, said that “sustainable productivity growth is the most effective solution to address both increasing demand for food and environmental goals.”

“We must produce more with less,” he said, noting that farmers have increased productivity over the last 50 years to feed a doubling population while global maize (corn) production almost doubled in the last 30 years.

“Land use optimization is the very first component of the very complex equation between production and sustainability,” he said.  

There is already a “very large gap” between the productivity growth needed and what is being achieved, something which is “not due to lack of effort from the agriculture sector,” Dereudre said.

“All the innovation in the world can only be half the solution,” he said. “Fast technology adoption is needed.” 

He complained that “it takes almost 16 years for a biotech trait to reach the market. It can take over 13 years from the lab to the field for plant protection products to reach the market. Even biopesticides and biologicals which everybody wants can be over 10 years from lab to market.”

“Innovation is slowed down by regulatory uncertainties,” Dereudre said.

Even where regulations were in place, there was fragmentation and continued deglobalization, he said.

“Farmers who are not allowed to access technologies are at a competitive disadvantage (compared to) farmers from another part of the world and may become inadvertent proponents of protectionist policies,” he said. “There’s one thing that we should all acknowledge: It will be impossible for every single country to become self-sufficient in everything. International trade will remain a crucial component of global food security.”

Green Deal backlash

Iliana Axiotiades, secretary general of the European grain trade association COCERAL, focused on possible changes in European policy after the European Union Parliament elections in June. The previous election, in 2019, had been characterized by an increase in the number of Green (environmentalist) members. The number fell in 2024, with the biggest group in Parliament, the right-wing European People’s Party, remaining as the largest political force.

“(Commission) Vice President Frans Timmermans pushed the EU into adopting a lot of legislation…. very much driven by ideology,” she said, blaming the Dutch Labor party member, who left the Commission in 2023 to return to national politics in the Netherlands, for “the EU Green Deal which was not always realistic.”

There were “good intentions,” but she complained that the EU had adopted new rules, for example, on cuts in the use of agricultural chemicals or plant protection products without first adopting the legislation on NGTs (New Genomic Techniques) to make sure the farmers had alternatives.

She also pointed to the EU’s new regulation on deforestation, which will require traders in key products such as cattle, wood, cocoa, soy, palm oil, coffee, rubber, and derivatives including, leather, chocolate, tires, or furniture, to be able to show that their production is not linked to deforestation or forest degradation.

“The industry generally had been working on sustainability approaches and sources and sustainability manner for a very long time,” she said.

But she also argued that despite the good intentions, “the approach in legislating did not take into account the constraints of history, of business, of origination countries.” The new law requires traceability systems to be in place by the end of 2024, but “the Commission services in charge of implementing this legislation are not ready, the Member States’ authorities in charge of implementing this legislation are not ready and even the IT that the industry we need to feed in is not ready.”

The EU’s decarbonization rules create a further challenge for the sector on logistics and transportation. 

“Europe wants to be a net zero continent by 2050 with a 55% reduction in emissions in 2030, which is like the day after tomorrow,” she said.

“The problem is that they’re looking immediately at transportation and trucks,” she said, explaining that a high proportion of greenhouse gas emissions come from buildings. “Agriculture is not the number one emission sector. They’re going to look at reducing the number of cars and trucks.”

Axiotiades said after the invasion of Ukraine it became obvious that the rail infrastructure in Europe needed more uniformity. With 27 members in the European Union, track gauges vary and “the drivers do not necessarily speak the language of the next country; the social protection of the drivers is not the same.”

“You’d be amazed at the number of wagons that get lost,” she added, stressing that trucks will always be necessary for small volumes and short distances.

Deregulation benefits Australia

Pat O’Shannassy, chief executive officer, Grain Trade Australia, explained that the “restraining factor” for his country’s grain producers is rainfall.

“We’ve seen our farmers produce more grain per millimeter of rain, and that’s a function of the plant variety and also changes in the farming systems and adapting the farming systems to the local conditions,” O’Shannassy said.

The deregulation of Australia’s grains market has “generated competition which has driven investment, it’s driven innovation, it’s driven the minds of people to figure out how do we solve problems,” he said.

He stressed the importance of food security, suggesting that “I don’t think we valued that until the point of the Russian aggression in Ukraine and the destruction in the supply chains.”

“Political stability is built on food security,” he said. “We’ve got to make sure that trade becomes a critical component of food security.”

He urged delegates to “scratch a little bit deeper about nutritional security,” underlining as an example that “it staggers me that we don’t have 100% flour fortification.”

He lamented the “regulatory incoherence that we have around the world on these biotechnology traits that are coming through,” noting that “you can have all the science in the world, all the facts and figures, everything,” but there remains a need to “bring the hearts and the minds of the consumers and the governments around to doing it.”

“That’s something that as a global grain trade I think we didn’t do well 10 or 15 years ago,” he said. “We need to make sure that we communicate because that is going to be important.”

Gerald Masila, executive director of the Eastern African Grain Council (EAGC), explained the region imports a lot of grains even though it has over 60% of the world’s arable land that has yet to be cultivated. However, intra-African trade is limited.

“We don’t trade with each other,” he said. “If you look at the eastern African region, we produce enough food for that region, but we still have serious pockets of food shortage because food cannot move across these borders.”

Masila said there are many regulations and border controls, highlighting export bans, logistical problems, currency issues and conflicts.

Input price volatility

In a session on trade finance, Seth Meyer, chair of the Agricultural Market Information System (AMIS) of the US Department of Agriculture, noted that in 2023-24, while carryout stocks of wheat and soybeans were rising, wheat had stayed tight.

“We’d seen those implied volatility measures heading back to the 10-year average,” he said, noting that following a tremendous amount of input price volatility in 2022-23, US farm incomes were “very strong.”

“That’s not to say there was not a lot of anxiety among producers about input prices volatility,” Meyer said. “Those high input prices remain sticky.”

He added that “the ag markets are used to weather risk. The latest geopolitical shock over in Ukraine also added to the input price shock.”

“The market doesn’t care what it costs you to produce that crop,” he said. “The market doesn’t care if you’re losing money.”

Mélanie Raymond, director of investment and international development analysis, Global Affairs Canada, also highlighted volatility in grains and fertilizers.

“One will feed the other,” she said, pointing out that for nitrogen, the pandemic had increased prices by 300%. “We had another shock with the invasion, but prices have been going down.”

Raymond said 10 countries account for 73% of fertilizers, while 10 countries export 70%.

“Six countries are in both groups,” she said, highlighting the concerns over the effect of fertilizer costs on global food security.

COCERAL President Ted Swinkels, the managing director of Cefetra, said grain is one of the most political commodities.

“Recent geopolitical tensions have enormous impact on our markets,” he added, but insisted that the main driver for volatility is “managed money.”

Speculative funds were short 8 million tonnes of soybeans at the beginning of the year. Now they are long 6 million tonnes.

“The impact of this managed money is just massive,” he said.

Chris Lyddon is World Grain’s European correspondent. He may be contacted at: cajlyddon@gmail.com.