What is behind fresh bans on Ukrainian agri products in EU countries, and what it means

Following a series of local farmers’ protests against Ukrainian grain, Ukraine’s EU neighbours are now banning grain imports one by one.

Furthermore, Poland, Hungary, and Slovakia have embargoed a significant portion of Ukrainian agriculture, with Bulgaria also mulling the same move.

LIGA.net explains what is happening and what consequences it may have for the Ukrainian economy.

What happened

Poland was the first country to officially ban imports of agricultural products from Ukraine on 15 April. Jaroslaw Kaczynski, the president of Poland’s ruling Law and Justice party, explained that it was a "duty to protect our own citizens".

The ban followed a long-running conflict between the Polish government and local farmers, who had repeatedly protested against Ukrainian grain and blamed it for falling prices on the domestic market.

In order to quell the farmers’ concerns in Poland, the agriculture minister resigned, and Ukraine agreed to temporarily suspend grain exports until the new harvest.

Kyiv and Warsaw also announced that a special group would investigate illegal imports of Ukrainian grain to Poland.

This did not help, however, and Poland decided to radically restrict imports from Ukraine by the end of June.

The ban applies not only to grain, but also to most agricultural products – sugar, dry feed, seeds, hops, flax and hemp, fruits and vegetables, processed fruit and vegetable products, wine, beef and veal, milk, lamb and goat meat, eggs, poultry, ethyl alcohol of agricultural origin, bee products, and others.

"The ban is complete, including a ban on transit through Poland," Polish minister of development and technology Waldemar Buda said on Twitter.

W związku z pojawiającymi się pytaniami, zakaz ma charakter pełny, łącznie z zakazem tranzytu przez PL.
Kwestia tranzytu będzie przedmiotem dyskusji ze stroną UA na temat zbudowania szczelnego systemu i gwarancji wyłącznie przejazdu produktów przez PL. https://t.co/jfPs9CFmvd

— Waldemar Buda (@waldemar_buda) April 16, 2023

On 16 April, Hungary followed suit, banning imports of grains and oilseeds, as well as some other agricultural products from Ukraine until 30 June, though its decision did not affect transit of those products.

A Hungarian government spokeswoman told Reuters that the ban might be extended if Brussels did not address the issue with Ukrainian grain by then.

And the next day, on 17 April, Slovakia decided to suspend imports of grain and other selected products from Ukraine. Earlier, it had banned the processing of grain from Ukraine and the sale of Ukrainian grain products on the domestic market, citing a pesticide found in one of the wheat shipments that is banned in the EU.

In addition, Bulgaria is also mulling a similar embargo on Ukrainian agriculture products.

"If we do not react, the accumulation of stocks [of Ukrainian agricultural products] in Bulgaria may become even larger," Bulgarian agriculture minister Yavir Gechev said the other day.

Romanian farmers have also held several rallies against Ukrainian grain in April, but so far, the Romanian government has not announced any intention to restrict Ukrainian imports or transit.

Why it matters

Ukraine’s ministry of agrarian policy has said that it "regrets" Poland’s ban, adding that the decision "contradicts previous agreements."

Last week, the two countries agreed that Ukraine would limit exports to Poland of wheat, corn, sunflower seeds and rapeseed until 1 July 2023, so that they would go to Poland only for transit. The Polish side violated this memorandum.

For Ukraine, such decisions by neighbouring countries mean significant losses, which are still extremely difficult to calculate. While those countries have never been key markets for Ukraine’s agricultural exports, they have become one of the main gateways for exports in more than a year of the full-scale war against Russia.

A year after Russia’s full-scale invasion, Ukraine exported about 10 percent of its agricultural products across the land border with Poland (500,000 to 700,000 tonnes per month), which could then reach the ports of the Netherlands and the Baltic states, Ukraine’s agriculture minister Mykola Solskyi said.

Another six percent of Ukrainian grain went through the Hungarian border.

The EU countries’ embargo, particularly the ban on transit, puts Ukraine at a disadvantage, Veronika Movchan, a research director and head of the Ukraine-based Centre for Economic Research, tells LIGA.net in an interview.

Ukraine can export grain and oil only through three Ukrainian ports within the Black Sea grain initiative, which has been increasingly sabotaged by Russia lately. In particular, on 17 April, Russia again blocked the inspection of ships involved in the grain deal, Ukraine’s ministry of communities, territories and infrastructure said.

In recent months, about 50 percent of Ukraine's agricultural products have been exported through the so-called ‘solidarity lanes’, says Denys Marchuk, deputy head of the All-Ukrainian Agrarian Council. Last year, agricultural products accounted for 53 percent of Ukraine's exports and brought USD 23.4 billion, according to an agro-export report created jointly with Ukraine’s ministry of agrarian policy.

"So those steps by our key partners actually put almost half of Ukraine's agricultural exports at risk," Mr Marchuk tells LIGA.net in an interview.

What's next

"We understand that Polish farmers are having a hard time, we all know who and what is the reason for this," Mr Solsky said, "but it is obvious that everyone in the world knows that Ukrainian farmers are having the hardest time."

On 17 April, the minister, together with Ukraine’s deputy prime minister Yuliia Svyrydenko went to Warsaw for talks that would continue on Tuesday.

Ukraine is also scheduled to hold talks with Romania and Slovakia this week, Mr Solskyi said.

Mr Marchuk believes that both political and economic reasons are behind the neighbouring countries’ decisions.

In Poland, the parliament will be re-elected in the autumn, and elections in Slovakia and Bulgaria are due in 2024.

"Farmers are an important part of the electorate in these countries, and Ukrainian grain has proven to be a convenient factor for manipulation," he adds.

In addition, many of those countries are subsidised through EU funds, and the ‘Ukrainian factor’ might be their governments’ attempt to get even more money, Mr Marchuk believes.

On 20 March, the EU pledged to allocate EUR 56.3 million in compensation to the farmers affected, including EUR 30 million to Poland, EUR 16.7 million to Bulgaria, and less than EUR 10 million to Romania.

While their embargoes completely violate EU rules, they seem to be working.

"it is important to underline that trade policy is of EU exclusive competence and, therefore, unilateral actions are not acceptable," the European commission said in response to Poland’s and Hungary's steps.

Andrii Tereshchuk, counsel at Ilyashev & Partners Law Firm, explains the ban on imports of Ukrainian grain to Poland, Slovakia, and Hungary contradicts the EU Treaty in terms of common trade policy of the member states.

First of all, however, those restrictions contradict the Ukraine-EU association agreement, in particular the provision on the abolition of duties and restrictions on Ukrainian imports, which was approved last year, Mr Tereshchuk tells LIGA.net in an interview.

It is only up to the European Commission to reintroduce the restrictions based on the results of a relevant study, which will confirm that the import creates serious difficulties for producers of similar goods in the EU.

"Currently, we have a situation in which several EU member states have unilaterally, without providing appropriate justification, imposed not even import duties, but a complete ban on Ukrainian goods," Mr Tereshchuk explains.

On 17 April, Miriam Ferrer, a European commission spokesperson for agriculture and trade, said that the bloc was preparing a second package of measures to support countries "affected by imports from Ukraine".

The package, expected to be presented "in the next few days", is still in the works, so the European commission is yet to reveal its amount or beneficiaries.