The list of countries that prohibit the import of Ukrainian cereals is still growing. Poland and Hungary were joined this Tuesday, April 18 by Slovakia, while Bulgaria announced that it was going to extend the scope of its sanctions to ten other types of products, such as honey, flour or vegetables.
A decision that may seem curious, when we know that Poland, Hungary, Slovakia and Bulgaria are among Ukraine’s allies in its war against its Russian neighbor. “In fact, a significant proportion of products are sold at rock-bottom prices within the EU. This competitive advantage […] cause serious disturbances in the internal market”, explains the Hungarian decree.
A logistical problem
To understand the basis of the decision, we must go back to May 2022. Faced with the economic slump in which Ukraine finds itself, the European Union took the decision to suspend customs duties on the country’s products for one year. A measure that was to help kyiv sell off its grain stocks in Western Europe. “The Ukrainian economy is very dependent on its exports of agricultural products, and in particular wheat. This represents 10 to 12% of the country’s gross domestic product”, explains to L’Express Thierry Pouch, chief economist at the Chambers of Agriculture of France.
But impossible to reach Germany, France or Spain by boat, because of the Russian occupation in the Black Sea. Ukrainian goods must therefore transit by land, in trains or trucks. The rail and road network quickly found itself congested by this sudden influx of goods. “A single ship can contain up to 65,000 tonnes of grain, compared to only 3,000 tonnes for a train. In this bottleneck, we have therefore witnessed a phenomenon of temporary storage in the countries bordering Ukraine” , details the specialist in agricultural issues Thierry Pouch. Since then, an agreement with Russia has allowed Ukraine to cross the Black Sea, but under very strict conditions.
To unclog silos and granaries, some of these seeds will be sold on local markets. An increase in supply which mechanically lowers prices, and mechanically reduces the income of farmers in the countries concerned. To stem the haemorrhage, the countries bordering Ukraine have therefore chosen to ban imports.
Between escalation and de-escalation
The decision was strongly criticized by the European Commission. “It was important to stress that trade policy is the exclusive competence of the EU and that unilateral actions are not acceptable,” fumed the spokesperson for the European executive, Miriam Garcia Ferrer on Monday.
Between kyiv and Warsaw, it is nevertheless time for de-escalation. The two countries agreed overnight from Tuesday to Wednesday on a crisis resolution protocol, implying that the goods are not stored on Polish soil. The transit of Ukrainian cereals will resume in the country in the coming days. To ensure that the products are not sold on Polish territory, shipments should be equipped with GPS trackers.
But the situation remains tense with the other countries bordering Ukraine. According to Thierry Pouch, the way out of the crisis could be done with the mediation of the European Union: “The European Commission can offer financial aid to the European countries most affected by this drop in prices, thanks to the crisis management envelope provided for by the common agricultural policy”, specifies Thierry Pouch.
A call that Ursula Van der Leyen seems to have heard. She announced on Wednesday that the European Commission would release 100 million euros to support farmers in Eastern Europe most affected by the fall in prices. She insisted on recalling that access to external markets for Ukraine was “crucial for its resilience in the face of Russia’s war of aggression”.