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bne May 2023 Companies & Markets I 5
concentration of pesticides” was being examined to see if it complies with the EU’s phytosanitary standards. Slovakian Minister of Agriculture Samuel Vlcan said the analysis would show by the end of this week whether the concentration of pesticides poses a health risk.
Poland also suspended grain imports from Ukraine until at least July, including imports for transit, and was testing it to make sure it complies with EU standards. The government also said that it is going to start emergency purchases of grain from Polish farmers.
Poland's new Agriculture Minister Robert Telus said on April 16 that the ban was necessary to "open the eyes of the EU
to the fact that further decisions are needed that will allow products from Ukraine to go deep into Europe, and not stay in Poland". Telus' predecessor, Henryk Kowalczyk, resigned earlier this month over the issue.
The huge surplus of Ukrainian grain is a problem for Poland’s ruling Law and Justice (PiS) party, which is looking to win over rural voters ahead of elections in October where it is seeking an unprecedented third consecutive term in office.
“Had we not introduced the ban now, it would have been all over for us in May,” the news website gazeta.pl quoted an unnamed PiS official as saying.
In the past few days, PiS’ top figures, including the all-powerful party chairman Jaroslaw Kaczynski rushed in to try to appease farmers, including holding a special party convention in one of PiS’ rural strongholds.
Blocked
Ukrainian grain exports were rerouted towards Central Europe following a Russian naval blockade last year. This grain was meant to be stored temporarily and then re-exported but, because of logistical problems, it remained in Central Europe and was eventually sold cheaply due to lax controls, causin
a glut, bringing down food prices and hurting local farmers.
Grain from Ukraine started flowing again via the Black Sea following the Istanbul grain deal brokered by Turkey and the UN. Since then the deal has been renewed for 120 days twice, with the latest renewal happening last month to run until May 18. However, the Kremlin continues to complain that
its own grain exports remain restricted and is threatening to cancel the deal after only 60 days.
The Istanbul deal came amid fears that the blockade of Ukrainian grain exports would cause a global food crisis,
as Ukraine is, along with Russia, one of the world’s biggest grain exports. Between them, the two countries account
for almost a third of the global grain trade. Many emerging markets, especially in North Africa and the Middle East, are dependent on Ukrainian grain imports. However, only a small proportion of grain has actually been exported to Africa, while Europe accounted for 40% of the imports last year.
European agricultural ministers are now calling on Brussels to find “long-term” solutions to the problem of Ukrainian grain imports. Last month the Commission proposed giving farmers a total of €56.3mn to mitigate the fallout caused by an “excessive supply” of Ukrainian grain imports. However, farmers say this is not enough and in several countries they have been holding protests and blockading roads to demand more compensation and to halt the arrival
of Ukrainian grain.
On April 14, six European countries called for a single European mechanism for purchases of Ukrainian grain and for imposing customs duties on Ukrainian agricultural products to prevent the market being flooded.
Hungary has banned not only grain but also oil-bearing crops as well as some other crops like honey, to protect its own producers. Nagy claimed that Ukraine uses agricultural technologies that are no longer permitted in the EU, which allows it to cut costs and flood European markets with large amounts of poultry, eggs and honey in addition to grain and oil-bearing crops.
The Hungarian ban will be in place until June 30, and Nagy expressed hope that the European Union will find a long-term solution to the issue while the ban is in place. He also expects the EU to ensure “fair” market conditions for European agriculture.
The grain bans highlight the longer term problems that Ukraine will face in its bid to join the EU. Ukraine and Moldova were granted EU membership status in June last year, but are facing a long vetting process before they can
“Only a small proportion of grain has actually been exported to Africa, while Europe accounted for 40%
of the imports last year”
accede to the trade club. There is a lot of resistance to Ukraine’s membership by Europe’s agriculture lobby due to the vast size and low costs of its agriculture sector.
The same issue is behind the tiny duty-free quotas assigned to Ukraine as part of the Deep and Comprehensive Free Trade Area (DCFTA) it has with the EU. These are typically used up within the first few weeks of each year. The small quotas are a gesture to the growing cooperation between Ukraine and the EU, but their small size is a de facto protectionist measure to limit Ukraine’s competition with the EU's agro-producers.
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