The European Commission has prepared options to support the export of Ukrainian grain

The European Commission (EC) has extended for a year the abolition of import duties for Ukrainian goods in the EU and by the same document regulated the restrictions on the supply of certain types of Ukrainian agricultural products to Eastern European countries until September 15. The published EU statement, among other things, contains a description of measures that should help Ukraine export the crop next season. Taking into account that in the new agricultural year due to the military operation of the Russian Federation, the production of grain and their export volumes in the country will noticeably decrease, it will apparently now be possible to export them in almost any scenario.

The European Commission extended for a year temporary measures to liberalize EU trade with Ukraine, which were introduced in the summer of 2022 and included, in particular, the abolition of import duties for industrial products and the removal of all quotas and duties on the import of agricultural products, as well as the suspension of anti-dumping duties on the import of some Ukrainian goods. At the same time, a new statement by the EC extended until September 15 the ban on the export of wheat, corn, rapeseed and sunflower from Ukraine to border countries Bulgaria, Hungary, Poland, Romania and Slovakia, introduced on May 2. Recall that since February, these countries have been complaining about the multiplied increase over the past year in the import of agricultural products from Ukraine, which, according to their estimates, posed a serious threat to local farmers (see “Kommersant” of February 2).

The EC document clarifies that the export ban is still needed due to “logistical problems” and “limited grain storage capacity” in Eastern European countries. What distinguishes the EC’s latest statement from the previous one is primarily the reservations it contains.

Thus, it follows from the document that the European Commission expects to gradually ease restrictions on the import of products and finally remove them by mid-September.

Some “relaxations” will take effect now — for example, the number of “tariff positions” for the four types of cereals that are subject to the ban is reduced from 17 to 6. In addition, the European Commission reserves the right to review the decision to extend the ban if the countries of Eastern Europe will hinder the transit of Ukrainian products.

As follows from the statement, to improve the work of the “solidarity corridors” a working group has already been created, consisting of representatives of Ukraine and neighboring European countries and headed by EC Vice President Valdis Dombrovskis.

The first meeting “at the technical level” took place on June 2. Recall that Kyiv exports about 60% of grain through Europe, another 40% is exported by the Black Sea as part of a grain deal. The working group will, among other things, increase the export of products through Europe, which will help in the event of a failure of the grain deal by Russia, which is dissatisfied with its implementation.

However, even if the deal is maintained, the pressure on the markets of the countries through which the “corridors of solidarity” pass will decrease next season due to a reduction in grain production in Ukraine. Recall, according to the latest data from the US Department of Agriculture, in the 2023/24 season, wheat production in Ukraine will decrease by 21% compared to the previous agricultural year, to 16.5 million tons. The production of other types of grains will also decrease – from 34.06 million tons to 28.67 million tons. At the same time, wheat exports will decrease from 15 million tons in the 2022/23 season to 10 million tons in the 2023/24 season, corn – from 26.9 million tons to 16.5 million tons. Apparently, Ukraine will be able to export such volumes of products with the support of the EU in any case.

It should be noted that the European Commission did not expand financial support for farmers affected by the influx of Ukrainian agricultural products.

In fact, the EC is gradually shifting the responsibility for resolving the crisis to the authorities of Eastern European countries – this is evidenced, in particular, by the commission’s approval of the allocation of €1 billion from the Polish budget to support local agricultural producers (see “Kommersant” of May 23).

Christina Borovikova