The flood of tons of grain diverted to the EU market from Ukraine in the wake of the war has driven an unexpected wedge between some of Kyiv’s closest allies in the European Union.
Alarmed by the impact of these movements on local prices, the governments of Poland and Hungary have temporarily suspended imports of Ukrainian grain and other agricultural products for which the EU has lifted tariffs to facilitate their transit to other countries in Africa and the Middle East. Bulgaria and Slovakia are considering taking similar steps.
The European Commission has exclusive powers over international trade policy and has warned that “unilateral actions are unacceptable” but, at the same time, admits the problem, and yesterday announced that it will shortly present a more ambitious proposal to compensate affected producers.
A combination of different factors, from logistical to purely commercial, has led to a large part of Ukrainian grain, cheaper than that produced in the EU, accumulating in Poland instead of flowing to international markets, which is causing a fall in local prices plummeted, a situation that sparked protests from farmers and led to the resignation of Agriculture Minister Henryk Kowalczyk. His successor since last week, Robert Telus, received yesterday in Warsaw his Ukrainian counterpart, Mykola Solskyi.
Poland is one of Ukraine’s staunchest allies in the country’s defensive war against Russia, but Prime Minister Mateusz Morawiecki’s ultra-conservative Law and Justice (PiS) government is facing elections this fall, and the countryside is one of its electoral strongholds. The second country to announce measures has been Hungary. Its farmers are also affected, although the veto also has to do with the lukewarm position of the ultra-conservative Viktor Orbán in condemning Russia.
In February, Brussels proposed to extend by one year, until June 2024, the exemption from tariffs, quotas and other trade barriers to imports from Ukraine adopted a few months after the outbreak of the war. The decision is not made. The five neighboring EU countries of Ukraine, the most affected by the diversion of goods, demanded to reintroduce customs duties on certain products (much of the cereal was already free) and called for European measures to offset the effects of the arrival of these imports.
Brussels reacted by mobilizing in March 56 million euros from the Community agricultural reserve for Bulgarian, Polish and Romanian farmers. The requests of Hungary and Slovakia, however, were rejected. The European Commission will soon present another proposal to mobilize more aid and include the two countries whose producers were left without support.
Brussels has to analyze the legal basis used by the Polish government to justify the veto, but it hopes to resolve the matter with more aid. Community sources consider that the trickle of decisions announced in recent days, which arrive after a letter was sent to Ursula von der Leyen demanding measures, is nothing more than a way of putting pressure on the European Executive.
The conflict is still a warning of how complicated hypothetical EU accession negotiations with Ukraine, one of the world’s largest cereal producers, would be. European leaders will decide by the end of the year whether to open talks with Kyiv. To this day, to the effects of the logistical problems that have weighed down the output of the Ukrainian cereal, the decline in global sales is added. Given the general fall in prices and the additional cost of road transport, some exporters have chosen to wait.
The import vetoes, added to the possible expiration of the international agreement that has allowed exports through the Black Sea, could leave huge quantities of grain blocked in Ukraine. Around three million tons of grain leave the country each month through the Black Sea. According to Kyiv, each month only 200,000 tons transit through Polish territory to European ports. Warsaw and Kyiv have opened negotiations to unblock transit. “The ultimate goal is not for the ban to be in force indefinitely, but to ensure that Ukrainian grain, arriving for export, goes where it needs to go,†says Polish Deputy Foreign Minister Pawel Jablonski.
