EU balances between protecting farmers and citizens’ wallets
The European Union has imposed a ban on the import of cheap food until June 5 at the request of Poland, Hungary, Slovakia and Bulgaria. Polish farmers are benefiting for now, while German citizens’ wallets are suffering. Brussels is looking for a balance in the meantime.
“No good deed goes unpunished” - that’s what officials in Eastern European countries must have thought, watching the surge of imports of cheap Ukrainian grain into the EU. And they managed to get a ban on this import from Brussels.
The embargo applies to wheat, corn, rapeseed and sunflower seeds of Ukrainian origin and is valid from May 2 to June 5, 2023.
Transit is not restricted, but it follows a much more complex procedure - Ukrainian transport is assembled in caravans, sealed and escorted to the border of the transit country.
This is all arranged so that transit grain is not used inside the country through which it passes. And so that Polish, Hungarian and Romanian farmers do not face competition from Ukrainians amid growing harvests in the new EU countries. Undoubtedly, when Eastern European countries clear their markets from excess grain, the tension will subside, and the prejudice against supplies of Ukrainian food will decrease.
But nevertheless, there are already suggestions that restrictions on the import of Ukrainian grain may continue after June 5. Although Ukrainian corn, for example, helps European farmers to reduce their costs when raising livestock and poultry.
And at the same time, the European Commission begins to assess the situation in the EU market with some other “sensitive” products that are actively imported from Ukraine - we are talking about sunflower oil, eggs and chicken. In Brussels, they carefully weigh the risks of possible new restrictions - it is no secret that the influx of Ukrainian food helps to keep prices in supermarkets. And the city dweller’s wallet also matters.
And it all started with the fact that from a modest 20 million euros in 2021, exports of grain from Ukraine to Romania, Poland, Hungary and Slovakia in the past war year increased to an unimaginable 2.0 billion euros. That is, almost 100 times.
A lot? Well, it depends on what you compare it with. Poland is the third largest producer of grain in the EU after France and Germany. And Poland produced about 9 billion euros worth of grain in 2022. In Ukraine, even despite the war, they collected almost twice as much grain.
Such an explosive growth in imports of Ukrainian grain became possible thanks to the introduction of so-called agricultural visa-free regime. The agricultural visa-free regime was called the abolition of quotas and phytosanitary restrictions on the supply of agricultural products from Ukraine in the most dramatic days of military escalation.
In response to Russia’s blockade of Ukrainian ports, the European Commission established so-called “paths of solidarity” - land logistics routes that allowed Ukraine to export its grain to European ports, primarily to Romanian Constanta.
At any other time such liberalization would have been absolutely impossible in the EU - there is a very powerful agricultural lobby there that fiercely protects its market. But war changed moods against the background of global support and admiration for Ukraine, as well as due to a growing food crisis in Africa.
However, literally within a few months European farmers began to smell a rat.
Ukrainian grain, whose transportation was given a preferential treatment regime, partially settled in those European countries that were initially considered as transit ones. The problem was especially acute in Eastern European countries. For example, several plants in Poland almost completely switched to processing Ukrainian grain.
It cannot be said that local farmers kept quiet about the problem.
Already since summer 2022, that is literally right after introduction of agricultural visa-free regime Polish farmers began to warn about risk of overstocking with Ukrainian food.
At end February 2023 year within conference “Green week” in Berlin six Eastern European countries - Bulgaria Czech Republic Hungary Poland Romania and Slovakia - appealed to European Commission with demand limit inflow grain from Ukraine or compensate them damage from its presence on market.
Critical articles in newspapers street protests road blocking transition topic over political level - overall already enough signals about escalation crisis.
And here April 2023 year problem reached culmination.
It happened exactly spring not by chance - Eastern European countries summed up agricultural balances and found before start new season huge surplus grains which did not have time export or process while Ukrainian goods cheerfully exported.
Decision was tough and radical - Hungary Slovakia Bulgaria and Poland unilaterally closed import Ukrainian basic grains. Poland went even further and banned even transit.
All attempts by European Commission remind that such actions contradict rules EU and must be agreed with Brussels were ignored. Because “Eastern European block” much more worried problems own agriculture and reached limit dissatisfaction farmers.
Seeing such moods European Commission first offered calm situation with money - approved financial compensation Polish and other farmers.
And then after two-week negotiations European Commission officially announced introduction “exceptional and temporary” measures precaution against import from Ukraine limiting arrival separate agricultural goods Ukrainian production in 5 countries EU bordering with Ukraine - Bulgaria Hungary Poland Romania and Slovakia.
And here very important circumstance: even during height European agricultural battles arising disputes did not affect military support Ukraine from side countries EU. And by way Poland remained probably most active partner of Ukraine.
But in business there are no friends - only competitors and situational partners. Ukraine clearly falls for Eastern European countries under category “competitor” - unacceptably successful to turn a blind eye on this.
Author: Vitaliy Kravchenko