Unrest has been brewing in Eastern Europe for some time over the volume of Ukrainian grain that has flooded their markets via the ‘corridors of solidarity’ since the Russian invasion in February last year. Bulgaria has become the latest country to introduce a ban on the import of agricultural produce from Ukraine, joining Poland, Hungary and Slovakia. And speculation has been rife that Ukraine’s southern neighbour Romania is about to follow suit.
The European Union quickly condemned the bans, stating the unilateral moves were “unacceptable”. The bloc lifted tariffs on Ukrainian grain and oilseeds last year to help the embattled nation transport its produce to the rest of the world amid widespread disruption to traditional export pathways.
As members of the EU, the moves are considered illegal. Such trade policy can only be set at the EU level rather than by individual member states. However, the four countries are panicking as the excess supply of grain and other agricultural products has driven down local prices and is damaging the livelihoods of domestic farmers.
The Eastern European countries became transit routes for Ukrainian grain that could not be exported via the Black Sea. Transport bottlenecks then trapped millions of tonnes of grain in countries bordering Ukraine, forcing farmers to compete with the cheaper Ukrainian grain as it spilled into their domestic markets.
Poland, a staunch ally of Ukraine since the war began, was the first to introduce a ban, stating it was required to protect its agricultural market against destabilisation. The radical move to close its borders to almost all Ukrainian agricultural produce commenced on April 15 and trailed protests earlier this month, ultimately leading to Deputy Prime Minister Henryk Kowalczyk resigning his post as Minister of Agriculture.
The resignation follows months of pressure from farmer bodies who have criticised his lack of action to slow the flood of Ukrainian grain and oilseeds onto the Polish domestic market. With the 2023 winter crop harvest fast approaching, many storage facilities are still full, with farmers unwilling to sell into the falling market and waiting for prices to rise.
While the sanctions were initially intended to prevent the transit of Ukrainian agricultural produce through Poland, the two countries announced after a meeting in Warsaw between Polish and Ukrainian ministerial delegations last week that they had reached an agreement to resume such movements, effective at midnight on April 20.
According to Poland’s new Minister of Agriculture, Robert Telus, all goods transiting the country will go in convoy for an undisclosed period. The customs and tax authorities will escort the shipments to their destination, that being the border with another European country, or Polish ports for discharge onto vessels bound for export.
Hungary, the only Eastern European country that has refused to supply military support to Ukraine following Russia’s invasion, was next to pull the trigger. The country’s Agriculture Minister cited the absence of meaningful EU measures to control the flooding of local markets with cheaper Ukrainian produce when announcing that his nation would follow Poland in restricting imports from its war-torn neighbour until the end of June.
Budapest has called for aid from the EU to assist with the movement of Ukrainian grain and oilseeds through those central European countries whose farmers are suffering at the hands of cheaper imports. Hungary has banned the import of 25 products, the most important of which are wheat, barley, corn, rapeseed, sunflower seed, vegetable oils, flour, honey and several meat products. The government will continue to permit the transit of Ukrainian agricultural produce through Hungary under strict regulations.
On Monday of last week, Slovakia, which shares a 97-kilometre border with Ukraine, became the third country to ban the import of Ukrainian grain and food products. In a domino effect, Slovak Agriculture Minister Samuel Vlčan said his government had to respond to similar actions instigated by its neighbours, Poland to the north and Hungary to the south, to avoid being inundated with unwanted agricultural produce.
However, Slovak authorities also claim that they have detected traces of a chemical, not authorised for use in the EU, in wheat imported from Ukraine. The pesticide, banned in the EU in 2020, was discovered in a 1,500 metric tonne shipment not originally intended for the Slovak market but destined for third-world customers.
Bulgaria joined the renegade band on Wednesday of last week, with the country’s caretaker government stating that the ban would come into effect on April 24. It excludes goods in transit to other countries but was taken to stem the large volumes of agricultural products arriving and remaining in the country over the past twelve months.
Rumours had been circulating that Romania would join the crusade, but Ukrainian media was reporting late last Friday that Bucharest had agreed not to ban the import of Ukrainian grain at the moment and intends to wait until the European Commission undertakes measures to help farmers in Central and Eastern Europe. Since the war began last year, Romania’s Black Sea ports have been a critical export pathway for Ukrainian grain and oilseeds.
In response to the pressure mounted on Brussels, the European Union plans to activate the agricultural reserve and is proposing €100 million (AUD166 million) in compensation for farmers in five countries bordering Ukraine. The calculation was done based on objective criteria, such as pressure on local prices from the excessive supply of cereals and oilseeds and tensions in the logistics pathways from increased transit of products from Ukraine.
The European Commission also announced that it would instigate emergency “preventative measures” for wheat, corn, sunflower seed and rapeseed after a joint complaint was tabled from Bulgaria, Hungary, Poland, Romania and Slovakia. The new measures, to be put in place until the end of June, would permit Ukrainian grains to enter the five countries only if they were destined for export to other EU member states or the rest of the world.
The European Commission has asked Bulgaria, Hungary, Poland and Slovakia to withdraw their individual import bans so that the general ban can be implemented. Talks are expected to continue this week on increasing the list of products eligible for the general ban before they are prepared to lift their unilateral sanctions.
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