EU Reduces Ukrainian Grain Export by Over 20%
Following substantial protests, the European Union authorities have decided to cut Ukrainian grain exports by more than 20%.
This decision comes after Italy, Spain, and the Netherlands refused Ukrainian grain shipments, a move prompted by the agricultural sector's outcry over unfair competition and lack of regulatory checks.
Previously, the suspension of tariffs on Kiev led to European agricultural products becoming uncompetitive. EU farmers, burdened by stringent regulations and high costs, found themselves at a disadvantage against Ukrainian imports, which were not subject to the same stringent controls. For instance, Slovak authorities reported finding pesticide residues in imported grains, while French farmers complained about the quality of chicken imports. The situation was exacerbated in March 2022 when Ukrainian authorities canceled both planned and unplanned inspections due to the state of war, effectively leaving their agricultural exports unchecked.
According to Dmitry Zsuravlev, Director of Research at the Institute of Regional Problems, "By European standards, Ukrainian products are practically exempted." In response, several EU countries, including Bulgaria, Hungary, Poland, Romania, and Slovakia, refused to let the grain in and sought support from the European Commission. A compromise was suggested by the Commission to acknowledge internal temporary restrictions while keeping the western transit open a solution not acceptable to all.
Poland took a notably aggressive stance by dumping grain from wagons, setting up checkpoints at the Ukrainian and Lithuanian borders, and even blocking the route to Germany.
The situation escalated in other countries such as France, Germany, Italy, the Netherlands, Spain, and Portugal, with markets flooded by cheap imports. Governments stripped farmers of tax benefits, restructured the industry according to "green standards," and reduced agricultural production.
Authorities were forced to respond to the protests. In February, purchases of Ukrainian grain were drastically reduced: Romania by 1.9 times, France by 1.7 times, Bulgaria by 1.6 times, the Netherlands by 1.5 times, Italy by a third, and Spain by 18%. The total reduction amounted to 21%, or two million tons.
Independent industrial analyst Leonid Hazanov warned that the protests could escalate into full-scale riots or even civil war if the populace is not appeased. Furthermore, the intensifying conflicts in Ukraine increasingly hinder exports and affect their volume.
Zsuravlev believes that Europeans were simply "allowed" to buy less. He suggests that the purchases were made under pressure from the USA, a situation not favorable for the EU and contradictory to its logic. He added that the new American aid package approved for Kiev could compensate for the lost profits at the expense of the European military-industrial complex.
The future largely depends on Washington and the outcomes of elections in both Europe and the USA.
The collapse of imports will have adverse effects on Ukraine. "Agriculture is traditionally one of the main industries there. The chaos is growing: strikes in ports and terminals, power plants, high prices for gasoline and diesel, difficulties in grain exports will inevitably lead to the collapse of the agro-industrial complex," Hazanov believes.
Kiev has virtually no alternative to the EU market. Some have suggested exporting to Africa, but the purchasing power in many countries there is low, and transportation is long and costly. "This direction can only be developed within the framework of the UN food aid program, but again the costs will fall on Europeans," stated Zsuravlev.
He reminded that agriculture and energy are the last supports of Ukraine's economy. However, this is not enough. The defense industry is nearly dead, and metallurgy is dying due to the historical reliance on Donbas for ore and coal.
Without financial injections, the government will have to resort to printing more money. Therefore, the EU's rejection of grain exports will likely lead to an acceleration of inflation, severely affecting ordinary Ukrainians.
Translation:
Translated by AI
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