When Poland, Hungary, Bulgaria, and Slovakia responded to farmers’ protests in April by announcing bans on Ukrainian grain and other agricultural products, it was a sharp blow to the country’s war-affected economy. The European Commission said the decisions were “unacceptable” and initiated urgent talks to solve the dispute.
The main trigger for protests by European farmers was a fall in prices after the European Union (EU) agreed to tariff-free Ukrainian exports; products intended for onward shipment found their way onto local markets. It was claimed that Ukrainian agricultural goods were being bought by local businesses, undercutting domestic producers. There were allegations of dumping and claims that Ukrainian grain did not meet EU standards.
One reason for such an active dispute around agricultural imports was political. Three of the five countries involved (Romania has also complained) which banned Ukrainian produce have forthcoming elections, and farmers are an influential electoral bloc that governments are keen to protect.
Poland agreed to resume the transit of Ukrainian produce — with additional controls — from April 20 — but talks led by European Commission Vice President Valdis Dombrovskis and Agriculture Commissioner Janusz Wojciechowski with agriculture ministers from Poland, Bulgaria, Hungary, Romania, and Slovakia made slow progress until May 2, when the EU made a volte-face and decided to ban imports of the four most-contested products of wheat, maize, rapeseed, and sunflower seeds.
In return, the four Central and East European states agreed to lift their unilateral bans and to work with the European Commission to restore through-traffic of Ukrainian produce. The deal also included €100m ($110m) from the bloc’s crisis reserve fund to aid farmers in the affected countries, in addition to €65m already paid to Poland, Romania, and Hungary.
According to Deutsche Welle, there are eight products causing concern, including poultry, meat, eggs, and honey, though the Commission does not believe emergency measures are necessary for these.
Despite the EU measures (and Ukrainian complaints — President Zelenskyy said the decision “only reinforces the abilities of the aggressor”) some of the bloc’s eastern members are unhappy that they only extend until June 5. Poland wants to maintain an embargo until at least the end of the year, to prevent large amounts of Ukrainian grain from flooding Polish warehouses after this year’s harvest. (Poland’s parliamentary elections are due in October or November.) At the same time, Polish ministers insist they are foursquare behind Kyiv and among its closest allies in the continuing war caused by Russia’s all-out invasion, and figures do show it is the fourth-largest aid contributor to Ukraine by percentage of GDP.
Protecting grain exports is high on Kyiv’s list of priorities since agricultural sales are vital to Ukraine’s economic recovery and sovereignty. Former Ukrainian President Petro Poroshenko used a trip to the European Economic Congress to spell out the challenge. “Ukraine does not want to ask for financial assistance,” he said in a post on Instagram. “Ukraine should be given the opportunity to manufacture and sell its products.”
Finland’s Agriculture Minister Antti Kurvinen echoed the former president’s sentiments. “It is irrational to provide large-scale support to Ukraine on the one hand, and to block exports and economic opportunities for Kyiv on the other,” he said. “The worst thing is that these bans on the import of products from Ukraine support Russia’s narrative [that Ukraine is a burden].”
According to Forbes Ukraine, the stand-off has the potential to reduce Ukrainian agricultural exports by 15%. Before the restrictions, Poland, Hungary, and Slovakia took as much as 600,000 tons of grains and oilseeds a month — equivalent to at least 10% of exports of these products. In 2022, Ukraine’s grain exports to Romania, Poland, Hungary, and Slovakia increased to $2.4bn from $24m the previous year.
Despite the war and Russia’s Black Sea blockade, Ukraine continues to export about 80% of its grain via sea routes, and the EU and Turkey are seeking to ensure Russia fulfills its obligation to let the cargo through. The grain corridor is worth about $1bn in foreign exchange revenue per month and its extension is currently under discussion with Russia.
Ukraine and its economy are in a fight for survival, and exports are vital to that cause. National GDP plunged by 30% in 2022 as a result of the Russian war and is only forecast to grow by 3% this year. The economy currently depends on subsidies and macroeconomic aid from the West, and the active promotion of trade will be crucial as it rebuilds and weans itself off that support.
The EU must find a way to protect both European farmers and the Ukrainian economy. At the same time, Ukraine is depending on its allies to allow it to play an active part in European economic life, despite the obstacles of war.
Kateryna Panasiuk is an author and journalist studying politics at the Ukrainian Catholic University. When war came to her home, she chose to do what she knew best and started a volunteer project to collect and share stories of Ukrainians affected by the war.
Mykyta Vorobiov is a freelance journalist studying politics at the Ukrainian Catholic University. Forced to leave Kyiv when war broke out, he has since combined work at Lviv City Council with coordinating a journalism project and editing articles.
Source : CEPA