Claude Haagen, Luxembourg's Minister of Agriculture, Viticulture & Rural Development; Credit: SIP / Yves Kortum

On Friday 23 September 2022, Luxembourg's Minister of Agriculture, Viticulture and Rural Development, Claude Haagen, met representatives of the cereal and seed sector to dicuss various aspects of the volatility of the agricultural markets.

Since the last meeting of the "Kärendësch" at the end of May 2022, two factors have changed the situation somewhat. On the one hand, a slight drop in prices on the world markets was observed due to the resumption of Ukrainian grain exports at the beginning of August, and on the other hand, the national grain harvest was quite satisfactory despite the persistent drought during this summer.

Despite these positive recent trends, Minister Haagen nevertheless underlined that it was necessary to remain very vigilant given the rebound in tensions between Ukraine and Russia and given the mixed results concerning the maize harvest, intended mainly to feed the cattle.

This third consultation meeting since the start of the war in Ukraine therefore essentially focused on an in-depth analysis of the market situation.

In summary, the ministry concludes that in parallel with the improvement in the turnover of producers, the costs of fertilisers and energy continue to increase, so much so that the profitability of crops currently remains very difficult to assess.

Moreover, the availability of fertilisers is questioned. In particular, certain nitrogen fertiliser production sites have reduced their activity in a context of soaring gas prices.

Given the volatility of agricultural markets, the sector finds itself in an uncertain situation: everything depends on the date of purchase of inputs and the market situation during the sale of cereals, which is unpredictable at this stage.

Minister Haagen also informed his interlocutors that the Agriculture and Fisheries Council, next Monday in Brussels, would also look into this situation. Minister Haagen specified in this context that he would continue to support the European Commission's action plan to strengthen the "solidarity corridors" to help Ukraine export its agricultural products and import the goods the country has need.

Minister Hagen also stressed that the financial aid to producers intended to mitigate the economic consequences following the invasion of Ukraine by Russia will be paid to the producers concerned in the coming days. This aid for a total amount of more than €1.3 million, coming partly from the crisis reserve of the common agricultural policy, was two-thirds co-financed by the Luxembourg State.

As the situation on the agricultural markets remained extremely volatile in the face of the rebound in tensions, Minister Haagen specified that he intended to maintain a permanent exchange with the agricultural sector and with that of agri-food processing and to redo the point next January, in order to take stock of the year 2022 to be able to react quickly if necessary.