EURACTIV - The Brief : Grain damage The fallout of a controversial decision by the European Commission to help Ukraine export grain looms large and is mostly negative.

 

The Brief — Grain damage

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By Georgi Gotev | EURACTIV.com

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The fallout of a controversial decision by the European Commission to help Ukraine export grain looms large and is mostly negative.

Ukraine is one of the world’s largest exporters of wheat, oilseeds, and other major agricultural products. When Russia launched its full-scale aggression on the country, many Europeans were surprised to find some processed food shelves empty.

Before the Russian aggression, Ukraine exported agricultural products predominately through its ports in the Azov Sea and the Black Sea. Ukraine’s shore of the Azov Sea fell under Russian control following Moscow’s invasion, and so is a large part of its Black Sea coast.

Three of Ukraine’s ports subsequently re-opened under an agreement brokered by the UN and Turkey last July, in an effort to create a safe corridor for exports to help tackle what was then labelled as the global food crisis.

Other ports, including the important port of Mykolaiv, remain closed.

Ukraine had to turn to land routes and expand trade through small Danube river ports. The easiest land route, via Belarus, could not be used for obvious reasons, as Alexander Lukashenko turned the country into Russia’s war minion.

Thus Ukraine had to move as much grain as possible through Eastern Europe.

Last June, the European Commission took what looked like an obvious decision: it announced a one-year suspension on import tariffs for Ukraine. At that time, even Poland, the most affected country, didn’t object, believing that helping Ukraine is the utmost goal.

Today the EU executive is backtracking, under pressure especially from Poland, but also from other Eastern member states.

Since the conflict began, around 17 million tonnes of major agricultural products have left Ukraine by truck and train, most of it via the border with Poland.

The volume includes 8 million tonnes of corn, 2.2 million tonnes of wheat, 1.47 million tonnes of rapeseed, 1.44 million tonnes of sunflower oil, 1.31 million tonnes of sunflower seed, 1.22 million tonnes of meals and 950,000 tonnes of soybeans. This compared to 40.6 million tonnes which left Ukraine from seaports.

Farmers in the eastern European countries were quick to complain that the influx of Ukrainian products has lowered prices and reduced their sales.

What the Commission had not obviously foreseen is that the Ukrainian agricultural products would be stranded in the Eastern EU countries and would not circulate further to the global market.

The prime ministers of five eastern EU countries – Bulgaria, Hungary, Poland, Romania, and Slovakia – wrote to Commission President Ursula von der Leyen last month saying the increase in shipments had been unprecedented and tariffs may need to be re-introduced unless the influx could be stopped by other means.

The issue has created a political problem for Poland’s ruling nationalist Law and Justice (PiS) party in an election year as it has angered people in rural areas where support for the PiS is usually high. Polish farmers even tried to disrupt a visit to Warsaw by Ukrainian President Zelenskyy, with the resignation of Poland’s Agriculture Minister Henryk Kowalczyk earlier this month linked to the crisis.

The EU executive’s first reaction was to say that unilateral action is unacceptable.

This development takes place while the UN-brokered deal to export millions of tonnes of Ukrainian grain via the Black Sea nears its mid-May expiry, with the prospects of Moscow agreeing to an extension uncertain, as Russia says a separate deal meant to ease its own agricultural and fertiliser exports has not been upheld.

In the meantime the Commission backtracked and on Wednesday (19 April) announced a €100 million package in compensation for farmers in the five EU countries bordering Ukraine, as well as plans to introduce restrictions on imports of Ukrainian wheat, maize, sunflower seeds and rapeseed.

An EU official said this would only allow the grains to enter the five countries from Ukraine if they were set for export to other EU members or to the rest of the world. This measure would last until the end of June.

Separately, the European Commission, which oversees trade policy for the 27-nation EU, plans an investigation into whether measures are required for other sensitive products.

The latest development is that European Trade Commissioner Valdis Dombrovskis asked Bulgaria, Hungary, Poland, and Slovakia to withdraw their individual import bans and that the Commission could approve a general ban of Ukrainian grain and oilseeds to the five countries affected until 5 June.

This is not the end of the story, but the fallout looms large. And it is mostly negative.

Anti-Ukrainian sentiments in Eastern European countries, coupled with fury against the Commission, is a bonanza for Vladimir Putin.

Also, the hopes for quick decisions regarding Ukraine’s EU accession are facing risks. If Ukraine, without EU subsidies, is such a threat to the internal market of the Union, how much worse could it be if it started benefitting from the EU’s Common Agricultural Policy funds?

For Ukraine, there is also a serious risk of having millions of tonnes of grain stranded inside the country, which in the coming years could lead to a large reduction in the planting area and harvest as well as the closure of farms and processing plants.

A positive outcome could be – the writer of this Brief believes – if the Polish ruling party pays the price of the scandal and loses the election later this year. That’s a long shot, but worth watching out for.

In an unexpected visit, NATO Secretary-General Jens Stoltenberg arrived in Kyiv on Thursday (20 April) for the first time since Russia launched its full-scale invasion last February in a show of support for Ukraine as it prepares to launch a counteroffensive.

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The European Parliament on Thursday (20 April) voted in favour of starting interinstitutional negotiations on directives for single and long term permits to reside and work in an EU country, to speed up application procedures for third-country nationals.

Finally, check out our Economy Brief: Towards better labour politics.

Look out for…

Commission President Ursula von der Leyen receives the Director General of the European Space Agency (ESA) Josef Aschbacher. 

Health and Food Safety Commissioner Stella Kyriakides delivers a keynote speech to the conference “At a turning point: Healthcare systems in Central and Eastern Europe” organised by the American Chamber of Commerce to the EU. 

Agriculture Commissioner Janusz Wojciechowski in Miyazaki City, Japan; participates in a meeting of G7 agricultural ministers; attends a tea ceremony and a welcome reception.

Justice Commissioner Didier Reynders receives Moldovan Prime Minister Dorin Recean. 

[Edited by Zoran Radosavljevic/Nathalie Weatherald]