Farmers from Central and Eastern Europe are furious because their countries are being flooded with wheat from Ukraine, causing the price to fall sharply. Since last year, many products from Ukraine no longer have to pay a customs levy.
With this measure, the European Union wanted to boost Ukraine’s ailing economy. Ukrainian farmers were initially unable to sell their grain because Russia temporarily blocked the usual export route via the Black Sea. But now that the war continues, solidarity is under pressure.
Poland, Hungary, Bulgaria and Slovakia decided to close their borders to wheat from Ukraine, in violation of EU rules. Romania is also one of the countries that suffer from the abundance of wheat. According to the Romanian Ministry of Agriculture, it has already cost the five countries involved 400 million euros.
Polish grain farmer Michal Koszarek is very worried, because his silos are full and he can’t get rid of his wheat:
Although the countries went against European rules by closing their borders, President Von der Leyen of the European Commission said he understood. On top of the previously announced 56.3 million euros, she wants another 100 million euros to be released for the distressed farmers. However, the countries must immediately reopen their borders.
Poland then did this for grain transports from Ukraine, but does impose additional requirements on transport companies to prevent the grain from remaining in Poland. In this way, the government wants to contain the abundance of Ukrainian grain.
In the year before the war, the European Union imported about 350,000 tons of wheat from Ukraine. Some 4 million tons of wheat have already entered the EU since this summer. For countries bordering Ukraine, the differences are relatively much larger. For example, Poland imported more than 170 times as much wheat from Ukraine last season as before the war.
The large influx of wheat has also led to a sharp fall in the price. Last summer the market price was about 440 euros per ton, now it is 250 euros per ton. Still 50 euros per ton more than before the war.
Damage and frustration
Yet it is now much less interesting to transport the grain via Europe. Transport costs are very high, partly due to fuel prices. And so it is more attractive for local grain traders to sell the wheat in the five border countries. The cheap Ukrainian wheat was seen as a profitable investment, but the abundance in those countries makes it much more difficult for local farmers to sell their own wheat.
ING economist Warren Patterson does not think the problem will last very long. “The world food market is still tight. The past season was an exceptionally good wheat year.” He expects the next harvest year to be less good. For example, this year Ukraine has been able to sow a third less than the previous season due to the war.
In his view, this problem cannot be easily solved in the meantime. If the EU were to impose trade tariffs again on, for example, wheat from Ukraine, this could have major economic consequences for the country at war. But doing nothing can lead to damage and frustration for farmers in the EU countries bordering Ukraine. “I don’t see an easy fix that won’t hurt someone,” Patterson said.
For the European Commission, solidarity with Ukraine is still paramount. The money that Ukraine earns from the sale of grain is indispensable in the fight against Russia, says the Commission. The unrest in Eastern Europe threatens that solidarity. And with extra money for the farmers, the Commission wants to dispel that unrest. But the end of the protests does not seem to be in sight for the time being.
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