Why is the EU imposing restrictions on Ukrainian imports?

2023-05-10 07:56:00, Kosova & Bota CNA

Why is the EU imposing restrictions on Ukrainian imports?

Illustrative photo

The European Commission has imposed some restrictions on imports of corn, sunflower seeds and some other Ukrainian products in Poland, Hungary, Romania, Slovakia and Bulgaria, until June 5.

Where the decision has resulted in the unilateral lifting of the bans, which have been imposed by Poland, Hungary, Slovakia and Bulgaria, citing the need to protect their farmers.

Romania has not imposed a ban on imports.

Why is Ukraine exporting through Eastern Europe?

Ukraine exported its agricultural products through ports on the Black Sea until they were blocked by Russia last year due to the war launched by Moscow.

Three ports in the Odesa region have been reopened in the meantime, after the agreement between Ukraine and Russia, mediated by the United Nations and Turkey, in July last year.

The agreement envisages the creation of a safe corridor for exports to help combat the global food crisis.

Other Ukrainian ports, including one of the most important, in Mykolaiv, remain closed.

Ukraine, one of the largest exporters of wheat and sunflower seeds, has been forced to return to land routes and has expanded exports through small ports on the Danube River.

The easiest land route, north through Russia's ally Belarus, has been closed since the start of the war, forcing Ukrainians to export most of their grain through Eastern Europe.

To facilitate this option, the European Union has decided - in June 2022 - for a one-year suspension of import tariffs for Ukraine.

How much have exports increased in Eastern Europe?

The increase in exports of Ukrainian wheat and sunflower seeds, through the Eastern region of the European Union, has been very large.

Ukrainian customs data showed that in 2022, 3.39 million tons of corn, 1.47 million tons of wheat and 529,689 tons of barley were exported to Romania.

In 2021, 526 tons of corn were exported and no wheat or barley was exported at all.

Meanwhile, Poland has received 2.08 million tons of corn, 579,315 tons of wheat and 44,114 tons of barley in 2022.

In the previous year, 6,269 tons of corn and 3,033 tons of wheat were exported to this country. Barley, not at all.

An increase in the amount of exports has also been observed in Hungary and Bulgaria, although the volume is not as high as in Romania and Poland.

Why are European farmers unhappy?

Farmers in the east of Europe have initially benefited financially from the conflict in Ukraine, as the prices of their products have increased, in line with global markets.

However, they later faced great competition in the local markets, as Ukrainian products were also added there.

It has become more difficult, and more expensive, for them to transport their products, as the trucks and train cars they once used are now full of Ukrainian goods.

Later they also faced a drop in prices, and they blamed Ukrainian imports for this.

But the drop in prices is a global trend, which traders have attributed to factors such as large exports from Brazil and Russia, as well as lower-than-usual demand from China.

Even the drought in some parts of Central Europe last year has created financial difficulties for farmers in the region.

Hungary's corn harvest, for example, fell to 2.8 million tons last summer, less than half of the previous year's harvest of 6.4 million tons, according to the International Wheat Harvesting Council.

How important are these exports for Ukraine?

The closure of Ukrainian ports last year has forced the country to export wheat and sunflower seeds through Eastern Europe by train, truck and ferry.

All the goods have been transported through the regions in the east of Europe, as the borders of Ukraine and Russia and Belarus have been completely closed.

The agreement mediated by the United Nations to enable an open corridor for product exports has slightly eased the pressure from European roads.

United Nations data show that about 29.3 million tons of agricultural products were exported from Ukrainian ports to the Black Sea through safe corridors, including 14.8 million tons of corn.

However, the operationalization of only three ports has meant that the capacity has been insufficient and agricultural products have been transported mainly by land routes, despite the fact that this option is more expensive than shipping by sea.

According to the Grain Shipping Organization, Ukraine is expected to ship about 24 million tons of corn in the 2022/23 period.

However, only 62 percent of this quantity has already been transported, when there are less than two months left for the end of the season.

However, the importance of land routes will increase greatly if Russia refuses to continue the agreement that allows goods to be transported by sea beyond the middle of May this year.

How important are these exports to global markets?

Ukraine was the fourth largest wheat exporter in the 2020/2021 season, after the United States, Argentina and Russia.

Ukrainian wheat has been shipped to 95 countries, and among the key buyers have been: China, Egypt, Pakistan, Spain and Libya.

The International Wheat Harvesting Council has predicted that Ukraine will export 28 million tons of wheat in the 2023/24 season, which could make it the eighth largest exporter in the world.

Brazil has made the best use of this space, as exports have almost doubled, from 26.2 million tons in 2021/2022, to 50.9 million tons in the current period of 2022/23.

How has the war affected wheat prices?

Wheat and corn prices, which have risen since the start of the war in Ukraine, had fueled concerns that the conflict could sever the supply chain of Russia and Ukraine, the world's two biggest wheat exporters.

The countries that depend the most on wheat originating from Russia and Ukraine.

However, prices have now fallen to pre-war levels.

This is because Russian wheat exports have increased, after the record amount of harvest last summer.

Even the decrease in the amount of Ukrainian corn exports has served Brazil, which has increased several times the amount of exports of this product./ Rel