Farmers inspect unsold grain stores at a farm in Sedziejowo, Poland, Monday, April 17, 2023.
Bartek Sadowski | Bloomberg | Getty Images
Western nations have sought to help Ukraine maintain its vital grain and agricultural exports since the start of the war with Russia, but trouble is brewing in Eastern Europe where a glut of plentiful Ukrainian produce and cheaper seems to harm the interests of national suppliers. .
Following a growing wave of anger from their own producers, Poland, Hungary and Slovakia have in recent days introduced temporary bans on imports of Ukrainian grain and other agricultural products, saying it has created a competition and unfair trading conditions for local farmers. The import suspensions are to last until the end of June.
Bulgaria also said it was considering a ban while on Tuesday Romania’s ruling Social Democratic Party said that he plans to ask the country’s ruling coalition to temporarily ban Ukrainian agri-food imports in order to “protect Romanian farmers”.
The decision to ban agricultural imports from Ukraine has angered the European Union as the bloc has sought to help Kiev maintain exports as an economic lifeline for the war-torn country.
Ukraine is one of the world’s largest exporters of wheat, corn and sunflowers, and Russia’s blockade of its ports last year led to higher global food prices and shortages of some staple foods. base, hitting the poorest countries hard.
An agreement between Ukraine and Russia to allow grain exports to leave the country via the Black Sea was brokered by the UN and Turkey, which helped ease the crisis. The EU has also created what is called “solidarity paths” help Ukrainian exports to leave the country by land routes in Europe, as well as the suspension of import duties on Ukrainian exports.
But Eastern European countries now say that logistical challenges and supply bottlenecks have meant that cheaper Ukrainian agricultural products have flowed into their own country and not been moved, which which has put pressure on storage facilities and lowered prices. Farmers protested the situation, pressuring national governments to act.
National interests first
The disruptions caused by Ukraine’s cheap food imports have created awkward tension between Kyiv and its Eastern European neighbors, especially at a time when Ukraine largely depends on goodwill for political support. , military and economic as the war with Russia continues.
Any deterioration in relations with Poland, in particular, is undesirable for Kyiv, as Warsaw has emerged as one of Ukraine’s most vocal supporters at the EU level, promising battle tanks and MiG fighter jets while its continental neighbors still balked at the idea. at the beginning of the year.
Polish farmers protesting against imports of Ukrainian agricultural products, which instead of being transported via Poland to destination countries tended to stay in the country and flood the local market.
Nurphoto | Nurphoto | Getty Images
Still, Poland is wary of voter sentiment and farmer protests on the issue as it holds parliamentary elections later this year, as does Slovakia.
Slovakia’s Ministry of Agriculture and Rural Development told CNBC that despite its temporary ban on imports from Ukraine, the country continues to be open to “solidarity transit,” meaning Ukrainian grain can still pass through its territory. to other countries. The grain would be sealed “so as not to end up on the Slovak market,” he said in a statement.
“The problem needs to be solved (…) in order to stabilize the market and the prices of agricultural products,” the ministry said, adding that it had sensitized the European Commission to its challenges. The ministry added that “we would appreciate the pan-European solution [to] Ukrainian grain because the subject is related to the protection of the entire European internal market.”
The Hungarian Ministry of Agriculture meanwhile summarized to CNBC the comments of its Minister István Nagy who said that “if current market trends prevail, they will cause such serious damage to the Hungarian agricultural sector that extraordinary measures must be taken. taken to stop them”.
He said Ukraine’s agricultural sector operated with production methods that were no longer allowed in the European Union and therefore had “extremely low production costs”, adding that Ukraine had started exporting large quantities of poultry, eggs and honey to the European Union. market, in addition to cereals and oilseeds, which has prevented Hungarian and Central European farmers from selling their products.
“The Hungarian government will always stand with Hungarian farmers and protect Hungarian agriculture,” Nagy stressed, the ministry noted.
EU and Ukraine perplexed
The suspensions caused consternation in Ukraine, which issued a statement in which it regretted Poland’s decision to suspend grain imports and that Ukraine “has always been sensitive to the situation of the Polish agricultural sector and responded quickly to various challenges.
There were positive developments in the dispute after Polish and Ukrainian ministers met for two days to discuss a way to resolve the tensions, with officials agreeing on Tuesday that no Ukrainian agricultural products would remain in Poland and that they would only be allowed to transit through the country under escort.
How the agreement will work in practice remains to be seen. CNBC has contacted the Ukrainian and Polish agriculture ministries and is awaiting further comments on the deal.
Truckers line up for more than ten kilometers at the Rava-Ruska border crossing on the Ukrainian-Polish border on April 18, 2023.
Yuriy Dyachyshyn | AFP | Getty Images
The European Commission has been puzzled by surprise import bans from several of its member states (it already has frayed relations with Hungary and Poland), saying unilateral actions on trade are unacceptable under policy of the EU.
He said on Monday he was in contact with the EU member states that introduced the bans and was reviewing the legal basis on which the suspensions were enacted.
He added, however, that he recognized that Eastern European countries had supported Ukraine in many areas and that it was not a question of “punishing, but of finding solutions based on the right of EU which are in the interests of Ukrainians and the EU”.
He also said he recognized the impact of the “oversupply” of Ukrainian imports on EU farmers, especially those in neighboring countries.
The commission has already introduced a package of measures worth 56 million euros ($61.3 million) to compensate affected farmers in Poland, Bulgaria and Romania for what he described as “the economic loss due to increased imports of grains and oilseeds and [to] limit the impact of market imbalances on their planting decisions.” It also provides for a second support package, he said on Monday, the details of which have yet to be finalized.
Vessels, including those carrying grain from Ukraine and awaiting inspections, are anchored off the coast of Istanbul on November 02, 2022 in Istanbul, Turkey.
Chris McGrath | Getty Images
There are certainly fears that import bans from Eastern Europe will strengthen Russia’s case for abandoning the UN-brokered ‘Black Sea Grains Initiative’ and Turkey last year and allowed Ukrainian grain to leave the country via several seaports.
Although the deal has been extended several times, it is already under strain, with Russia repeatedly accused of blocking grain ships from leaving Ukraine; On Monday, EU foreign policy chief Josep Borrell accused Russia of preventing 50 ships loaded with agricultural products from leaving Ukrainian ports.
Moscow also has said there was no guarantee he would agree to extend the deal beyond May 18, expiration date.