Banning Ukraine grains

Poland, Slovakia and Hungary announced their own restrictions on Ukrainian grain imports on Friday after the European Commission decided not to extend its ban on imports into Ukraine's five EU neighbors.

Ukraine was one of the world's top grain exporters before Russia's 2022 invasion reduced its ability to ship agricultural produce to global markets. Ukrainian farmers have relied on grain exports through neighboring countries since the conflict began as it has been unable to use the favored routes through Black Sea ports.

The flood of grains and oilseeds into neighboring countries reduced prices there, impacting the income of local farmers and resulting in governments banning agricultural imports from Ukraine.

The European Union in May stepped in to prevent individual countries imposing unilateral bans and imposed its own ban on imports into neighboring countries. Under the EU ban, Ukraine was allowed to export through those countries on condition the produce was sold elsewhere.

The EU allowed that ban to expire on Friday after Ukraine pledged to take measures to tighten control of exports to neighboring countries. The issue is a particularly sensitive one now as farmers harvest their crops and prepare to sell.

EU Trade Commissioner Valdis Dombrovskis said on Friday countries should refrain from unilateral measures against imports of Ukrainian grain, but Poland, Slovakia and Hungary immediately responded by reimposing their own restrictions on Ukrainian grain imports.

They will continue to allow the transit of Ukrainian produce.

"As long as Ukraine is able to certify that the grain is going to get to the country of destination, through the trucks and trains, the domestic use ban is not really going to put a dent in Ukraine's ability to get exports out," said Terry Reilly, senior agricultural strategist for Marex. He noted that disruptions to Black Sea exports are a bigger concern.

It is unclear how much Ukraine has pledged to restrict exports or how the new bans would impact the flow of produce from Ukraine.

The issue has underscored division the EU over the impact of the war in Ukraine on the economies of member countries which themselves have powerful agriculture and farming lobbies.

Ukrainian President Volodymyr Zelenskiy welcomed the EU's decision not to further extend the ban on Kyiv's grain exports, but said his government would react in civilised fashion if EU member states broke EU rules.

The three countries argue their actions are in the interests of their economies.

"The ban covers four cereals, but also at my request, at the request of farmers, the ban has been extended to include meals from these cereals: corn, wheat, rapeseed, so that these products also do not affect the Polish market," Polish Agriculture Minister Robert Telus said in a statement posted on Facebook.

"We will extend this ban despite their disagreement, despite the European Commission's disagreement," added Polish PM Mateusz Morawiecki. "We will do it because it is in the interest of the Polish farmer."

Hungary imposed a national import ban on 24 Ukrainian agricultural products, including grains, vegetables, several meat products and honey, according to a government decree published on Friday.

Slovakia's agriculture minister followed suit announcing its own grain ban. All three bans only apply to domestic imports and do not affect transit to onward markets.

The EU created alternative land routes, so-called Solidarity Lanes, for Ukraine to use to export its grains and oilseeds after Russia backed out of a UN-brokered Black Sea grain deal in July that allowed safe passage for the cargo ships.

The EU Commission said existing measures would expire as originally planned on Friday after Ukraine agreed to introduce measures such as an export licensing system within 30 days

The EU said there was no reason to prolong the ban because the distortions in supply that led to the ban in May had disappeared from the market.

The EU said it would not impose restrictions as long as Ukraine exercises effective export controls.

Farmers in the five countries neighboring Ukraine have repeatedly complained about a product glut hitting their domestic prices and pushing them towards bankruptcy.

The countries, except Bulgaria, had been pushing for an extension of the EU ban. Bulgaria on Thursday voted to scrap the curbs.

Romania's government, which unlike its peers did not issue a unilateral ban before May, said on Friday it "regretted that a European solution to extend the ban could not be found."

Romania said it would wait for Ukraine to present its plan to prevent a surge of exports before deciding how to protect Romanian farmers.

Romania sees over 60% of the alternate flows pass through its territory mainly via the Danube River and its farmers have threatened protests if the ban is not extended.

For the last year, Ukraine had moved 60% of its exports through the Solidarity Lanes and 40% via the Black Sea through a UN brokered deal that fell apart in July.

In August, about 4 million tons of Ukraine grains passed through the Solidarity Lanes of which close to 2.7 million tons were through the Danube.

The Commission wants to increase exports through Romania further but the plan has been complicated by Russian drone attacks on Ukraine's grain infrastructure along the Danube and near the Romanian border.

 

 

Ukraine grain saga

From restrictions on Ukrainian grain going to Eastern Europe to costly English breakfasts and drought problems, here’s a snapshot of key food stories from around the world compiled by Agnieszka de Sousa in London for Bloomberg.

The latest chapter of the Ukrainian grain saga in Eastern Europe returned to Brussels. The European Union will look to prohibit the domestic sale of Ukraine’s grain in five member states, only allowing transit to other destinations. That follows unilateral bans by Poland, Hungary, Slovakia and Bulgaria on imports of Ukraine’s produce on fears the supplies are hurting their own markets.

That effectively means Ukrainian exporters face losing sales in those countries. For example, 7% of Ukraine’s corn and wheat exports have gone to Poland this season, according to UkrAgroConsult. Some 7% of its corn shipments have also gone to Hungary.

It’s not the only setback Ukraine’s agriculture sector has faced this week. Its Black Sea exports were again disrupted after inspections of ships under a safe-passage corridor were halted for two days — after a similar stoppage the previous week. Kyiv has blamed the disruption to the grain-export deal — which has been crucial for bringing down global food-commodity costs from records reached after Russia’s invasion — on Moscow. 

While the shipping resumption is good news for both Ukraine and developing nations that import its grain, it highlights uncertainty over the initiative that Russia has repeatedly threatened to quit.

As Muslims around the world sat down for the final days of Ramadan, soaring food prices mean things aren’t what they used to be. Take this downtown Casablanca cafe, where hungry people would flock at sunset for the iftar meal. But with Moroccan prices at the highest since 1984, most of the seats now remain empty.

The average year-on-year food inflation between March and December 2022 was 29% in the Middle East and North Africa region, the World Bank said. Muslims comprise a quarter of the world’s population and food inflation during Ramadan affects a broad swath of the Middle East, Africa and Asia.

Riccardo Fabiani, North Africa project director for the International Crisis Group think tank, said, “It’s a special time of the year, which makes people more sensitive about the issue. The legitimacy of local governments is at risk, protests could intensify and, in general, the fear is that something could break in terms of public order and stability.”

A dry spell is currently wilting crops and delaying plantings in some of Europe’s top produce growers, risking a further run-up in food inflation. Southern Europe is a heavyweight in fruit and vegetables, and the bad weather follows a drought that withered rice paddies and olive groves last year. 

Observation satellites are being deployed to help farmers, utilities and supply chains adjust to persistently hotter and drier weather.