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.
