A kernel of grain is driving a wedge through Europe’s response to Ukraine
Poland and other EU member states have imposed a ban on grain from Ukraine. This risks leaving Ukrainian farmers in misery – and shows the cracks in the Western front, writes Elena Siniscalco
In the last couple of weeks, EU trade policy was in turmoil. Where Ukrainian grain once made its way through the Black Sea, it now travels by land through its border states. But ill-equipped to deal with the new quantum of wheat passing through, Poland, Hungary, Slovakia and Bulgaria have individually decided to ban new imports. They claim the price of their own agricultural products has been driven down by the glut of crops. The European Commission had to intervene, ultimately introducing emergency safeguards for wheat, sunflower seeds and other products.
While negotiations were taking place in the rooms of Brussels, missiles were crashing down on Ukrainian cities last Friday. One of the Ukrainian agricultural experts interviewed by City A.M. sent several videos of a building on fire in his hometown of Uman. At least twelve people were killed in that Russian attack.
This is the daily reality for Ukrainian farmers – a deadly war, an unfavourable season of heavy rains, and now a protectionist ban on their products.
The initiative was led by Poland – a staunch supporter of Ukraine up until now. Warsaw quickly clarified the ban had nothing to do with its support of Kyiv, calling it a domestic matter. The Polish farming community is very influential – a series of protests staged by angry farmers led to the government’s decision – and with an election in sight, politicians eventually conceded.
The European Commission, taken aback, intervened to ensure that Ukrainian grain and other products could at least transit through these countries to be exported elsewhere. It agreed to €100m in compensation for the rebelling farmers.
Yet the economic case for the ban is questionable. Comparing the gap between global market prices of grain and local prices in Poland, it’s “close to the same it was before the war”, says Oleg Nivievski, head of the Center for Food and land use research of the Kyiv School of Economics.
“This is a big blow to the unity of the EU and its security”, says Nivievski. He might just be right; agricultural policy is nothing like defence, but this still shows cracks in the Western front.
Ukrainians were startled. “If I listen to my European friends complain about their problems, I’m just laughing, because they can’t even imagine what problems we have here” says Alex Lissitsa, the president of the Ukrainian Agribusiness Club. One of his dairy farms of almost 100 cows was destroyed during the war. Lissitsa says that without the “solidarity lanes” established at the beginning of the war through countries like Poland and Slovakia, the only two ways to export from Ukraine are through the river Danube and the Black Sea. Problems with both are well reported: the Danube way is expensive and allows for very limited capacity, and Russia is currently slowing the Black Sea corridor, and plans to close it in mid-May.
The Ukrainian foreign ministry condemned the grain deal as “unacceptable”. Vysotsky Taras, the Ukrainian deputy minister of agrarian policy and food, says that lots of industrial associations in Poland didn’t even support the ban. “Their only target beneficial group is farmers”, says Taras.
International experts tend to agree. “If Ukrainian grain piles up at Polish ports, exporters will stop bidding up the price of local grain for export and prices will fall anyway”, says Dennis Voznesenski, agriculture analyst at RaboBank. Anna Nagurney, a professor of the university of Massachusetts Amherst, also notes that severing transport routes from supply markets to demand markets “can have a major impact on rising food insecurity”. If you remember the food commodity prices crisis of last year, this warning will make you shiver.
Wars are all different, but also share something: after a while, allies get bored of pumping out money and weapons, and support starts to falter, bit by bit. With Ukraine, the EU, the UK and the US have been extremely supportive – out of sheer generosity as much as because the war is on European soil. You could almost think this sacrifice to please local farming communities wouldn’t matter. And maybe it wouldn’t, if it wasn’t that Ukraine is called Europe’s “breadbasket”. It lives off its agricultural sector, and with at least 30 per cent of it either occupied by Russian forces or unsafe, any added pressure is dangerous for the economy.
Ukrainian fields are full of Russian mines: some farmers had to choose between skipping the sowing season or risking their lives. High logistic costs have been driving profits down. Now with a new planting season approaching, farmers won’t know what to do because they don’t know how much they can export with the new ban in place. Once – and if – Ukraine becomes a member of the EU, a similar prospect will become unacceptable. But for now, the Union has made its choice.