It's often said that it's easy to be concerned about sustainability on a full stomach. As incomes grow and food expenditure becomes a smaller portion of household budgets, consumers tend to become increasingly concerned about the future and the wellbeing of the world around them. Purchasing decisions can then become driven by considerations about what a product offers above and beyond satisfying caloric and nutritional needs, particularly sustainability credentials.
But when prices rise, the capacity and resolve of consumers to purchase on this basis is tested. In the current global grains and oilseeds market, with prices prevailing at between 50 and 90 per cent above five-year averages, the resolve of countries to remain committed to buying in the way they have when stomachs are full and food plentiful is being tested.
In some of the most food-insecure nations of the world, this is translating to the need to buy Russian wheat. Many nations in North Africa and the Middle East just cannot afford to take a conscientious stand against Russia.
Meanwhile Egypt, the world's largest wheat importer, has approved the import of Indian wheat. This is despite previous concerns about quality and biosecurity risk.
Elsewhere this is translating to a testing of previous strongly-held commitments associated with sustainability. Within the European Union (EU) - a market dominated by non-genetically modified (GM) grains and oilseed production and imports - Spain has started receiving shipments of corn from the US, whose corn production is more than 90 per cent genetically modified and includes stacked GM traits not previously approved in the EU.
Typically, Ukrainian non-GM corn accounts for around half of the EU's annual corn imports, so this is about filling that gap in availability. But, with prices remaining so high, preferences for using non-GM corn in the animal feed supply chain are being relegated. Reportedly the US imports may also have trace pesticide residues that might exceed the EU maximum residue levels - another standard which in any other pricing environment, the EU would not consider broaching.
In Europe and in the US, high grain and oilseed pricing has also prompted calls for land set aside for conservation to be brought back into production. In the US, 'set-aside' land accounts for around 10 per cent of arable land, and in the EU, about six per cent.
Our expectation is policy changes will not occur to allow this to happen, partly because the change in production output would be negligible as 'set-aside' land is typically less productive. However, even calls for this change show the testing of commitments to sustainability as food and commodity pricing increases.
Additionally, in both the EU and US, high pricing has refocused attention on the use of food crops in producing more sustainable fuels that deliver a lower carbon footprint.
While current high prices do not mean the end of sustainability demands in the global grains and oilseeds market, they certainly do test the resolve of consumers, supply chains and countries to sustainability commitments. And high prices potentially slow the rate of new sustainability demands, including lower carbon requirements, for a couple of years.
In our view, this is not an argument to no longer worry about sustainability, but rather presents an opportunity to catch up for those not already on a path to more sustainable grains and oilseed production.
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