Long term solutions needed to cope with the surge of imports from Ukraine

Yesterday, Agriculture Commissioner Janusz Wojciechowski intervened in the Agriculture Committee on the situation on the European cereals market in relation to the war in Ukraine and the end of the “Black Sea grain deal”.

The Commissioner wanted to explain in detail the enormous pressure that the import of Ukrainian cereals has brought to the market of the five neighboring countries (Poland, Romania, Slovakia, Hungary, Bulgaria) and which has justified the block of imports of maize, wheat, rapeseed and sunflower seeds in these countries until 15 September.

This protectionist measure will therefore soon expire and the Commissioner said he was concerned about the impact this could have on the markets. Mr Wojciechowski recalled that in 2022 Ukrainian grain poured into the five countries to the value of EUR 5 billion more than before the war. The Commissioner then presented his proposal -and he emphasized that it is his proposal that has not been validated by the Commission and will be discussed at the College- to break the deadlock.

According to the Commissioner, today it is possible to export from Ukraine through the solidarity corridors, but cereals still remain in the EU (and do not go to third countries as was previously the case) due to the increased transition costs of passing through several European countries and ports, greatly increasing the cost of Ukrainian cereals and making them uncompetitive for third countries. This is why the Commissioner is proposing European transit subsidies to cushion these additional costs and proposing compensation of €30 per tonne. The Commissioner believes it would therefore take a budget of EUR 600 million to cover 20 million tonnes of cereals.

According to our assessment this proposal of a transport subsidy would equal an export subsidy which would directly compete with local production in third countries. Therefore it will not probably not be accepted internally after the European Commission legal assessment. Instead, we consider that the focus of the European Union should be in fostering alternative logistic facilities and processing within the European Union in order to rebalance markets and invest in sustainable, long term solution instead of short term quick fix that are legally uncertain and not viable in the medium to long run.

However it is clear that solutions must be put on the table. Our infographic with the latest figures from European customs highlights the continuing dynamic of cereal and oilseed imports from Ukraine, a minima jusqu’au mois de juin pour lequel les données sont disponibles. Sugar imports, which did not exist before autumn 2022, have increased to significant levels, upsetting the balance of the domestic market.

During the 5 first months of 2023, the EU imported 3 Mt of wheat (meaning the whole 2022 imports), has increased by + 60 % its imports of maize compared to the same 2022 period (Jan-June), + 200% its imports of soja and by a dramatic 1180% the sugar imports.

Therefore, measures are needed to help Ukraine to export its productions while preserving a fair and balanced EU agri market. The EU should support investments in infrastructures and processing.