Farmers inspect unsold grain storage at a farm in Sedziejów, Poland, Monday, April 17, 2023.
Bartek Sadowski | Bloomberg | Getty’s paintings
Bulgaria is the most recent country to ban agri-food imports from Ukraine, joining its eastern European neighbors in halting agri-food imports amid an oversupply that they are saying is hurting the livelihoods of domestic farmers.
Bulgaria’s interim government said on Wednesday that the ban, which excludes goods in transit to other countries, is temporary but has been put in place consequently of huge volumes of grain and agricultural products arriving and staying within the country over the past yr, causing problems for local producers.
“If this trend continues or intensifies after similar bans have been introduced by other countries, it could have very serious consequences for Bulgarian corporations,” Bulgaria’s caretaker Galab Donev said in a press release.
Western countries have tried to assist Ukraine sustain vital exports of grain and agricultural products because the starting of the war with Russia, but trouble has been mounting in Eastern Europe recently.
Following a wave of farmers’ anger, Poland, Hungary and Slovakia recently introduced temporary import bans on Ukrainian grain and other agricultural products, saying they created unfair competition and trading conditions for local farmers. The import suspensions are expected to last until the tip of June.
This was also stated by the ruling Social Democratic Party in Romania plans to use to the ruling coalition for a brief ban on imports of Ukrainian agri-food products to “protect Romanian farmers”.
On Wednesday, the country’s agriculture minister said that Bucharest could be built immediate customs checks on all agricultural and food products originating in Ukraineand would seal and monitor grain cargoes transiting through Romania. The minister said that Ukraine was also asked to seek out solutions to limit grain exports to Romania.
The choice to ban agricultural imports from Ukraine angered the European Union, on condition that the bloc sought to assist Kiev maintain exports as an economic lifeline for the war-torn country.
Ukraine is one in every of the world’s largest exporters of wheat, corn and sunflower seeds, and Russia’s blockade of its ports last yr led to global increases in food prices and shortages of some staples, hitting poorer countries hard.
The UN and Turkey negotiated a deal between Ukraine and Russia allowing grain exports from the country via the Black Sea, which helped ease the crisis. The EU has also created “paths of solidarity” helping Ukrainian exports leave the country by overland routes in Europe, and the suspension of import duties on Ukrainian exports.
But eastern European countries now say logistical challenges and provide bottlenecks have meant that cheaper Ukrainian agricultural products have flown into their very own countries and never been transported, putting pressure on warehouses and forcing prices down. Farmers protested the situation, putting pressure on national governments to take motion.
National interests come first
Rifts over low cost food imports from Ukraine have created an ungainly tension between Kiev and its eastern European neighbors, especially at a time when Ukraine relies heavily on goodwill for political, military and economic support because the war with Russia continues.
Any deterioration in relations with Poland is especially undesirable for Kiev, as Warsaw stood out as one in every of Ukraine’s staunchest supporters on the EU level, promising battle tanks and MiG fighters when its continental neighbors still opposed the concept earlier within the yr.
Polish farmers protesting against the import of Ukrainian agricultural products, which, as a substitute of being transported through Poland to their destination countries, remain behind within the country and flood the local market.
Nurphoto | Nurphoto | Getty’s paintings
Nevertheless, Poland is worried about voter sentiment and farmers’ protests on this issue, because it is holding parliamentary elections this yr, as is Slovakia.
The Slovak Ministry of Agriculture and Rural Development told CNBC that despite the temporary ban on imports from Ukraine, the country continues to be open to “solidarity transit”, meaning that Ukrainian grain can still go through its territory to other countries. The grain could be sealed “to forestall it from entering the Slovak market,” the statement said.
“There may be a necessity to unravel the issue… so as to stabilize the market and costs of agri-food products,” the ministry said, adding that it had informed the European Commission concerning the challenges it faced. The ministry added that “we’d be thankful for a Europe-wide solution [to] Ukrainian grain, since the topic concerns the protection of the whole European internal market.
The Hungarian Ministry of Agriculture meanwhile summarized for CNBC the comments of its Minister István Nagy, who said that “if the present market trends proceed, they’d cause such serious damage to the Hungarian agricultural sector that extraordinary measures have to be taken to stop them.”
It said Ukraine’s agricultural sector was operating using production methods not allowed within the European Union, and consequently had “extremely low production costs”, adding that Ukraine had began exporting large quantities of poultry, eggs and honey to Europe. market, aside from cereals and oilseeds, which prevented Hungarian and Central European farmers from selling their products.
“The Hungarian government will at all times stand by Hungarian farmers and protect Hungarian agriculture,” Nagy stressed.
EU, Ukraine perplexed
The suspensions caused consternation in Ukraine, which issued a press release deploring Poland’s decision to suspend grain imports and that Ukraine “has at all times been sympathetic to the situation in Polish agriculture and responded quickly to numerous challenges.”
There was a positive development within the dispute after Polish and Ukrainian ministers met for 2 days of talks to debate how you can resolve tensions, with officials agreeing on Tuesday that no Ukrainian agricultural products would remain in Poland and would only be allowed to transit through the country under escort.
How agreement will prove in practice. CNBC has contacted each the Ministry of Agriculture of Ukraine and Poland and is awaiting further comments on the deal.
Truck drivers queue greater than ten kilometers before the Rawa-Ruska border crossing on the Ukrainian-Polish border, April 18, 2023.
Yuri Diachyshin | AFP | Getty’s paintings
The European Commission was perplexed by unexpected import bans imposed by several of its Member States (it already has tense relations with Hungary and Poland), saying unilateral trade motion is unacceptable under EU policy.
It said on Monday it was in touch with the EU Member States that introduced the bans and was examining the legal basis for the suspensions.
Nonetheless, he added that he recognizes that the nations of Eastern Europe support Ukraine in lots of areas and that it will not be about “sanctioning, but about finding solutions based on EU law that are within the interest of Ukrainians and the EU.”
He also said he recognized the impact of the “oversupply” of Ukrainian imports on EU farmers, especially those from neighboring countries.
The Commission has already introduced a package of measures value €56 million ($61.3 million) compensation for injured farmers in Poland, Bulgaria and Romania for what it described as “the economic loss brought on by increased imports of cereals and oilseeds and [to] limit the impact of market imbalances on their planting decisions.” It is usually planning a second support package, it said on Monday, with details yet to be finalized.
Ships, including those carrying grain from Ukraine and awaiting inspection, are anchored off the coast of Istanbul on November 2, 2022 in Istanbul, Turkey.
Chris McGrath | Getty’s paintings
There are actually fears that bans on imports from Eastern Europe could bolster Russia’s case for abandoning the “Black Sea Grain Initiative” brokered by the UN and Turkey last yr, which allowed Ukrainian grain to depart the country through several seaports.
Although the deal has been prolonged several times, it’s already under serious strain as Russia is repeatedly accused of blocking grain ships leaving Ukraine; On Monday, EU foreign policy chief Josep Borrell accused Russia of blocking 50 ships loaded with agricultural products from leaving Ukrainian ports.
Moscow has too he said there was no guarantee he would comply with a contract extension May 18 when it expires.
Fix: This story has been updated to remove an incorrect detail of grain suspension in Hungary.