Economy

How The Pandemic Is Helping Reinvent Food Production

Globalized supply chains may be good for businesses, but they're not always ideal for consumers, especially when they're suddenly disrupted.

Asparagus harvest begins in Northern Germany
Asparagus harvest begins in Northern Germany
Michael Gassmann

BERLIN — "One bag of flour per customer" or "Pasta, sugar and yeast only sold in small quantities." For Germans old enough to remember, the signs on supermarket shelves in the early weeks of the coronavirus pandemic were reminiscent of the days of rationing, and sparked real anxiety about food supplies.

Ultimately the worries proved to be unfounded. European supply chains held strong, despite stockpiling and difficulties with production. "There were a few wobbles, but the gaps were quickly filled," a report by agricultural economists at the University of Göttingen notes.

Nevertheless, a debate over what conclusions should be drawn from this unusual period is just beginning, and according to a survey carried out by the University of Göttingen, most Germans believe their country should step up domestic agricultural production so as to be more self-sufficient moving forward.

"Overall, we are seeing skepticism about globalization of the food chain in our data," the researchers write in their blog Agricultural Debates.

Roughly 86% of those surveyed agreed with the statement that it is important "for Germany to be able to meet its own needs for basic foodstuffs through domestic agriculture." In contrast, only 28% agreed with the statement that "in a global economy it's not a problem if a substantial proportion of our basic foodstuffs comes from abroad."

Relying more on domestic food production could make the country more resilient in a crisis.

The researchers say this call for more food independence may be explained by the fear that, in a crisis, other countries will put their own national interests first, and that border closures and interruptions to delivery could threaten supply. It's an argument, they explain, that cannot be dismissed out of hand "as long as there are no international agreements over how to respond to this kind of crisis and countries even within the EU bring in partial border closures."

Relying more on domestic food production could make the country more resilient in a crisis, says Göttingen researcher Achim Spiller. But it's not a guarantee of success when dealing with future crises, the agricultural economist acknowledges. Cross-border trade will continue to play an important role, especially for dealing with problems prompted, for example, by climate change, he says.

Germany's agriculture and food production industries also profit significantly from international trade. Last year, Germany exported foodstuffs to the tune of 71.6 billion euros, making it the third biggest exporter worldwide. But it imported even more: 11 billion euros worth of agricultural products.

In recent years, food production has become far more international and is spread across the whole planet. "Globalization has brought a lot of advantages," says Rudolf Trettenbrein, managing director of the consultancy firm Inverto Austria. Indeed, supply chains have become so smooth and cost-effective that companies will move production to far-off countries to make a saving of a tenth of a cent on costs.

What's not clear is what all of this means for consumers, especially given how convoluted things can be with regards to food labels. A box of muesli, for example, might contain walnuts from China, dried raspberries from Argentina and honey from Mexico and yet still be marketed as "Made in Germany."

Legally speaking, the label declaring its country of origin is correct if the final stage of production — in this case, combining the ingredients — takes place in Germany. Experts say it's not uncommon for cereals to be shipped to China for baking and sugaring, then transported back to Germany for the final stage.

A grocery store in Rostock, Germany. — Photo: Bernd Wüstneck/DPA via ZUMA

Honey is another example. In Germany, Austria and Switzerland, 80% of the honey bought doesn't come from the EU, but from China, Mexico or Argentina. Honey pots are labeled with the unhelpful explanation "produced from a mixture of honeys from EU and non-EU countries." It would be more useful simply to write: "Provenance: Planet Earth."

Frozen pizzas (of the ham and mushroom variety) are an interesting case as well. The pizza might be cooked in Germany, but with ingredients from many different countries: ham produced in Italy (made from Dutch pigs), mushrooms from the Netherlands, flour from multiple countries including Poland and Germany, Dutch cheese (produced using milk from multiple countries, including Denmark) and tomatoes from Italy.

EU regulations only require the country of origin of a few ingredients to be declared. Consumers are easily misled as a result. The German website Lebensmittelklarheit, a public information platform run by a government consumer rights group, uses the example of Chinese raspberries used in a "Bavarian raspberry yogurt." A label saying "non-EU" or "not grown in Germany" would be enough to make this clear to consumers.

"Many ingredients that could be produced in Germany actually come from China. That's often the case, for example, with dried fruits such as apricots, peaches and plums," says Trettenbrein.

The hundreds of suppliers listed on the German-language site of the Chinese business platform Alibaba give a sense of the scale. And it's not just fruit. Products such as shampoo also contain essential ingredients, including enzymes or scents, from the Far East.

Trettenbrein says that Western interest in these links is only beginning to rise as the coronavirus pandemic has revealed how dependent we are on other countries, even when it comes to the active ingredients in medicines. Companies are starting to rethink their practices, as the crisis has shown that the slightly higher costs of moving production to the EU might be worth it to avoid the risks of globalized supply chains.

"If there's ever been an opportunity to return production to Europe, now is the time," says Trettenbrein. "The interruptions to the supply chain have forced many companies to rethink."

The Inverto Austria executive cautions, nevertheless, that it will take years to make the change — perhaps as many years as it took to build the international network in the first place.

For many food products, Germany may already be more self-sufficient than people assume.

As the Göttingen study shows, many consumers would be in favor of reducing this hidden globalization in food production. There's also a real movement underway toward buying local produce. Agricultural economist Spiller says that supermarkets are finally starting to take note. "Chains such as Rewe and Edeka have started to work together with local farmers," he says.

For many food products, furthermore, Germany may already be more self-sufficient than people assume. According to a consumer study carried out by Göttingen agricultural economist Gesa Busch and colleagues, many Germans underestimate how much food is produced domestically. This is especially true when it comes to meat and milk, as they assume that only two thirds come from German farms. In reality, German farms supply between 114% and 124% of domestic demand for these products, meaning they have significant export rates.

Scientists also warn of the dangers of taking self-sufficiency too far. The consequences could be dramatic. A study led by Pekka Kinnunen from the University of Aalto in Finland suggest that only half the global population could fulfill their demand for specific crops by growing them within a 900-km radius.

For a quarter of people, the minimum distance between where food is produced and where it is consumed would be more than 5,200 km. Certain foodstuffs would always need to be transported long distances. Closing borders, whether as a result of a pandemic, a trade war or other reasons, would lead to rising costs and, in the worst-case scenario, widespread hunger.

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Geopolitics

Erdogan And Boris Johnson: A New Global Power Duo?

As Turkey fears the EU closing ranks over defense, Turkish President Erdogan is looking to Boris Johnson as a post-Brexit ally, especially as Angela Merkel steps aside. This could undermine the deal where Ankara limits refugee entry into Europe, and other dossiers too.

Johnson and Erdogan in NYC on Sept. 20

Carolina Drüten and Gregor Schwung

-Analysis-

BERLIN — According to the Elysée Palace, the French presidency "can't understand" why Turkey would overreact, since the defense pact that France recently signed in Paris with Greece is not aimed at Ankara. The agreement covers billions of euros' worth of military equipment, and the two countries have committed to come to each other's aid if they are attacked.

Although Paris denies this, it is difficult to see the agreement as anything other than a message, perhaps even a provocation, targeted at Turkey.

Officially, the Turkish government is unruffled, saying the pact doesn't represent a military threat. But the symbolism is clear: with the U.S., UK and Australia recently announcing the Aukus security pact, Ankara fears the EU may be closing ranks when it comes to all military issues.

What will Aukus mean for NATO?

Turkey has long felt left out in the cold, at odds with the European Union over a number of issues. Yet now President Recep Tayyip Erdogan is setting his sights on another country, which also wants to become more independent from Europe: the UK.

Europe's approach to security and defense is changing dramatically. Over the past few months, while the U.S. was negotiating the Aukus pact with Britain and Australia behind the EU's back, a submarine deal between Australia and France, which would have been worth billions, was scrapped.

The EU is happy to keep Erdogan waiting

Officially, Turkey is keeping its cards close to its chest. Addressing foreign journalists in Istanbul, Erdogan's chief advisor Ibrahim Kalin said the country was not involved in Aukus, but they hope it doesn't have a negative impact on NATO. However, the agreement will have a significant effect on Turkey.

"Before Aukus, the Turks thought that the U.S. would prevent the EU from adopting a defense policy that was independent of NATO," says Sinan Ülgen, an expert on Turkey at the Brussels think tank Carnegie Europe. "Now they are afraid that Washington may make concessions for France, which could change things."

Macron sees post-Merkel power vacuum

Turkey's concerns may well prove to be justified. Outgoing German Chancellor Angela Merkel always argued for closer collaboration with Turkey, partly because it is an important trading partner and partly because it has a direct influence on the influx of migrants from Asia and the Middle East to Europe.

Merkel consistently thwarted France's plans for a stricter approach from Brussels towards Turkey, and she never supported Emmanuel Macron's ideas about greater strategic autonomy for countries within the EU.

But now she that she's leaving office, Macron is keen to make the most of the power vacuum Merkel will leave behind. The prospect of France's growing influence is "not especially good news for Turkey," says Ian Lesser, vice president of the think tank German Marshall Fund.

Ankara fears the defense pact between France and Greece could be a sign of what is to come. According to a statement from the Turkish Foreign Ministry, the agreement is aimed "at NATO member Turkey" and is damaging to the alliance. Observers also assume the agreement means that France is supporting Greece's claims to certain territories in the Mediterranean which remain disputed under international law, with Turkey's own sovereignty claims.

Paris is a close ally of Athens. In the summer of 2020, Greece and Turkey were poised on the threshold of a military conflict in the eastern Mediterranean. Since then, Athens has ordered 24 Rafale fighter jets from France, and the new pact includes a deal for France to supply them with three frigates.

Photo of French President Emmanuel Macron and Greek Prime Minister Kyriakos Mitsotakis on September 27 in Paris

French President Emmanuel Macron and Greek Prime Minister Kyriakos Mitsotakis on September 27 in Paris

Sadak Souici/Le Pictorium Agency/ZUMA

Erdogan’s EU wish list

It's not the first time that Ankara has felt snubbed by the EU. Since Donald Trump left the White House, Turkey has been making a considerable effort to improve relations with Brussels. "The situation in the eastern Mediterranean is peaceful and the migrant problem is under control," says Kalin. Now it is "high time" that Europe does something for Turkey.

Erdogan's wish list is extensive: making it easier for Turks to get EU visas, renegotiating the refugee deal, making more funds available to Turkey as it continues the process of joining the EU, and moderniszing the customs union. But there is no movement on any of these issues in Brussels. They're happy to keep Erdogan waiting.

Britain consistently supported Turkey's ambition to join the EU

Now he is starting to look elsewhere. At the UN summit in September, Erdogan had a meeting with British Prime Minister Boris Johnson at the recently opened Turkish House in New York. Kalin says it was a "very good meeting" and that the two countries are "closely allied strategic partners." He says they plan to work together more closely on trade, but with a particular focus on defense.

 Turkey's second largest export market

The groundwork for collaboration was already in place. Britain consistently supported Turkey's ambition to join the EU, and gave an ultimate proof of friendship after the failed coup in 2016. Unlike other European capitals, London reacted quickly, calling the coup an "attack on Turkish democracy," and its government has generally held back in its criticism of Turkey.

At the end of last year, Johnson and Erdogan signed a new free trade agreement, which will govern commerce between the two countries post-Brexit. Erdogan has called it "the most important treaty for Turkey since the customs agreement with the EU in 1995."

After Germany, Britain is Turkey's second largest export market. "Turkey now has the opportunity to build a new partnership with the United Kingdom and it must make the most of it," says economist Ali Kücükcolak from the Istanbul Commerce University.

Erdogan is well aware of this, as Turkey is in desperate need of an economic boost. Inflation currently stands at 19%, and the currency's value is consistently falling. Turks are feeling the impact on their daily lives: food and rent are becoming increasingly expensive, while salaries remain unchanged.

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