The opening up of EU Solidarity Lanes has led to a glut of Ukrainian grain in Central Europe. Now, Poland, Hungary, and Slovakia have banned the import of agricultural products from Ukraine. While the EU and Ukraine have condemned the bans, other countries are mulling their introduction.
Russia’s invasion of Ukraine disrupted global supply chains, not least in the agriculture sector. Ukraine is a global leader in grain production, and the halt in exports that followed the invasion prompted a sharp rise in food prices around the world.
Two international initiatives succeeded in lowering prices: a deal that saw Black Sea ports reopen for grain exports and the creation of what have been dubbed Solidarity Lanes to allow grain exports through the EU.
The latter initiative, however, has created problems of its own, not least a glut of cheap Ukrainian grain in Central Europe that has angered local farmers.
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Immediately after the invasion began at the end of February 2022, Ukraine’s Black Sea ports—used to export much of its grain—were blocked by Russia. A deal with Russia, mediated by Turkey and the United Nations in July 2022, has since allowed at least 27.5 million tonnes of grain and other agricultural produce to be exported from the Ukrainian ports of Odesa, Chornomorsk and Yuzhny/Pivdennyi.
However, the deal has almost collapsed several times, most recently on April 11 when inspections of ships were halted. Russia has been insisting that a random list of vessels be chosen for inspection each day and has threatened not to renew the agreement over complaints that a parallel agreement covering its own agricultural exports is not being upheld.
To help Ukraine circumvent the obstacles to Black Sea shipping routes, the European Commission announced the creation of Solidarity Lanes in May 2022. The European Union suspended duties and quotas on many Ukrainian products to ease their shipment to the bloc—and beyond.
Now, however, there is a bottleneck. While Ukrainian exports are down by almost 18 per cent to 36.9 million tonnes on the year, the global economic downturn has reduced demand from Africa which, tied in with a lack of transport capacity to export the grain, worsened by issues in rail logistics, has led to grain silos in Central and Southeastern Europe becoming full. Grain prices in the region have subsequently fallen considerably, hurting local producers.
In March, the EU announced 56.3 million euros of compensation to affected farmers in Poland, Bulgaria, and Romania. Farmers and national governments said the amount was not enough to be effective, and on March 31 Poland, Bulgaria, Romania, Hungary and Slovakia called on the European Commission to authorise additional relief measures.
Farmers demonstrated across the region. Some in Bulgaria blocked border crossings, and those in Poland tried to physically block the railway line on the Ukrainian border but were prevented from doing so by police.
‘A chain of bankruptcies’
At a protest in Bucharest on April 7, Liliana Piron—executive director of the League of Romanian Agriculture Producers’ Associations—said, “We are less than three months away from the new harvest and the danger is real, that the goods we will have ready this season will not be able to be sold at prices above production costs. We will witness a chain of bankruptcies of Romanian farmers.’’
In Poland, the ruling Law and Justice (PiS) party relies on rural areas for support and faces parliamentary elections later this year. Its critics blame the government for the crisis and have accused companies with links to the government of buying up cheap, low-quality Ukrainian grain to re-sell as higher quality Polish products.
“A handful of people in this country connected to PiS are getting rich on the back of this trade, while the rest of us are getting poorer”, said Michał Kołodziejczak, the head of the AgroUnia farmers’ union.
Although the PiS government has otherwise been a staunch supporter of Ukraine, the increasing politisation of the grain crisis has prompted it to unilaterally ban many agricultural imports from Ukraine.
“Today, the government has decided on a regulation that prohibits the importation of grain, but also dozens of other types of food, to Poland,” PiS party leader Jarosław Kaczyński told a party convention in eastern Poland on April 15. The ban on Ukrainian dairy products, sugar, eggs, meat, fruit, and vegetables will remain in effect until June 30, when EU tariff exemptions on Ukrainian produce are set to expire.
The Ukrainian Ministry of Agrarian Policy and Food was quick to respond, saying that it “regrets the decision of its Polish counterparts” and hopes a new agreement between the two countries can be reached.
‘Unilateral actions are not acceptable’
However, on the same day, Hungary announced it would also ban Ukrainian grain imports, and Bulgarian agriculture minister Yavor Gechev announced on April 16 that the country would likely do the same.
“Bulgarian interests must also be preserved,” Gechev said. “Moreover, when two EU countries react in this way, if we do not react similarly, the accumulations (of Ukrainian grain) on Bulgarian territory may become even larger, so we are working (on the issue).”
Slovakia announced its own ban on Ukrainian food imports on April 17, although transit routes will remain open. Romania is the only country affected by the glut of Ukrainian grain that has so far stated it has no intention of instituting a similar ban, although the socialist PSD, part of the ruling coalition, on April 18 called for a halt to Ukrainian agricultural imports.
The EU has been quick to condemn the bans.
“In this context, it is important to underline that trade policy is an exclusive EU competence and, therefore, unilateral actions are not acceptable,” a spokesperson for the European Commission said on April 17.
“In such challenging times, it is crucial to coordinate and align all decisions within the EU.”
Brussels is reportedly working on a new compensation package for affected farmers, but in order to defuse the row and see the import bans lifted, it will likely need to be far more generous than the 56.3 million euros offered in March.
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