Farmers in eastern EU countries see themselves threatened by cheap grain from Ukraine. For Ukraine, on the other hand, exports to and via the EU countries are of crucial importance. In the past few days, Poland, Hungary and Slovakia have taken measures of their own, severely restricting important export routes for Ukrainian agricultural goods. Why is European solidarity with the attacked country shaking?
In the wake of the Russian attack, Ukrainian Black Sea ports, which are crucial for grain exports, were blocked for a long time. To mitigate the effects of the blockade, Ukraine built new overland export routes with the help of European allies. A crucial part of Ukraine’s agricultural exports now leaves the country via this route. In addition, Ukraine has been benefiting from major EU trade facilitation for almost a year. Currently, no duties are levied on Ukrainian exports.
In the EU neighboring countries of the Ukraine – i.e. Poland, Hungary, Slovakia and Romania – the cheap grain from the Ukraine is seen as disproportionate competition for domestic products. Widespread fraud presumably also contributes to the fall in prices. Polish media are reporting on companies that were set up quickly and are buying so-called “technical grain” from Ukraine, which is intended for use in the production of biofuel. The goods are then re-declared as food and sold to mills.
Ukrainian grain is used all over the world. In the large country there is plenty of space on fertile soil and labor costs are relatively low. For example, numerous people in poorer countries in Asia and Africa benefit from the cheap food and feed from Ukraine.
Effects on German agriculture are currently manageable. Bernhard Krüsken, Secretary General of the German Farmers’ Association, told the German Press Agency on Tuesday: “The strong price pressure is mainly concentrated on the neighboring countries, partly because the import and transit processing for Ukrainian grain does not work there.” This pressure is also having an effect on the European market, but to a lesser extent.
Slovakia banned the sale of Ukrainian wheat as food and animal feed on Friday. Transit to other countries should not be affected. Shortly thereafter, Poland and Hungary banned imports of grain from Ukraine. Bans were also justified by the fact that pesticide residues had been found. “Every shipment of grain from Ukraine, be it by road or rail, is controlled and only vehicles in transit are allowed into the country,” said Marton Nobilis, state secretary at Hungary’s agriculture ministry, as reported on the website of state television broadcaster MTV am was reported Tuesday.
On Tuesday evening there were initially signs of relaxation: “We have successfully concluded talks with the Ukrainian side about the transit of products from Ukraine through Poland,” said Poland’s Minister of Agriculture Robert Telus. According to government sources, the transit of Ukrainian grain is expected to resume at midnight on Friday.
Federal Minister of Agriculture Cem Özdemir previously criticized the import ban. “Solidarity with Ukraine remains the top priority,” said the Green politician on Tuesday at the request of the German Press Agency. Poland has shown itself to be a strong partner for Ukraine over the past year. “We regret all the more that Poland has now closed its borders to Ukrainian agricultural exports.”
According to Agriculture Minister Robert Telus, four million tons of grain from Ukraine are currently stored in Poland. According to the Polish Chamber of Grain Trade, the restrictions are related to the infrastructure and capacity of Polish ports. The capacity of the ports is a maximum of 750,000 tons per month, said a spokeswoman. Although the Ministry of Agriculture announced last summer that a new terminal in the port of Danzig (Gdansk) would soon start operations, this did not happen.
Controls, which are intended to prevent pests from being introduced into the EU, cannot be managed with the current volume. EU circles also said that overland transport increases the price of Ukrainian grain, which makes it less profitable to sell it in poorer countries.
After the announcement of the Polish blockade, Ukrainian Minister of Agriculture Mykola Solskyj tried to give the impression that the situation was under control. “Obviously we will have to have difficult talks in the next few months,” he said on Monday night on Ukrainian television. Kiev is in constant negotiations with Warsaw.
So far, about ten percent of Ukrainian agricultural exports have crossed the Polish land border. So far, around six percent of agricultural goods have been exported to and via Hungary. Özdemir described it as vital for Ukraine to bring its goods to international markets.
Trade benefits for Ukraine expire in early June. By then, the EU would have to agree on an extension, which requires a qualified majority. The overland routes for export could gain additional importance. Because whether there will be an extension of the grain agreement negotiated between Turkey and the UN between Ukraine and Russia is an open question. With the agreement expiring in mid-May, the blockade of the Black Sea ports was ended. Kremlin spokesman Dmitry Peskov said on Monday that the prospects for an extension of the agreement were “not rosy”.
