Europe is Facing a Grain Glut (POLITICO)

Seven countries call for urgent steps to tackle glut of food imports from Ukraine, but stop short of calling for reimposition of tariffs.

“If not limited, this increase can cause serious difficulties to EU producers in the agricultural sector. Such a situation requires an urgent response, as EU producers have been already affected,” argue the seven countries in a nonpaper circulated ahead of Monday’s meeting of agriculture ministers in Brussels.

In the wake of Russia’s full-scale invasion of Ukraine, the EU suspended all tariffs and quotas on imports of Ukrainian goods, including agricultural products. The temporary measures are expected to be extended until at least 2024.

Polish farmers, in particular, have complained that the absence of tariffs on agricultural goods is attracting unprecedented volumes of Ukrainian grain into the local market that, instead of being moved out of the country, compete directly with domestic production.

According to the nonpaper, the imports have caused market disturbances in all countries involved. In Bulgaria, for example, sunflower imports from Ukraine increased from 36,074 tons in 2021 to 804,000 tons in 2022. As a result, the nonpaper says, prices of sunflower seeds dropped by nearly a half, and 77 percent of Bulgarian seeds remain “unprocessed at the warehouses.”

The seven countries did not call for an explicit ban or reintroduction of tariffs on Ukrainian products but singled out the free-trade agreement as a key reason for the “dramatic” increases in supply. They called on the EU to seal the so-called solidarity lanes, set up last year to facilitate exports of Ukrainian grain through the EU to third countries, to ensure products do not remain stuck in the bloc’s internal market.

The group also said farmers who have been negatively affected should be compensated, including through increased direct payments, known as coupled payments, from the Common Agricultural Policy budget. They also called for the creation and funding of temporary warehouses and new transport corridors, including by rail.

Earlier this month, the Polish agriculture ministry, which drafted the nonpaper, said it would advocate for excluding certain agricultural products from the temporary duty-free agreement between the EU and Ukraine. A senior diplomat later told POLITICO the ministry’s comments did not reflect Poland’s official position.

Southern European countries, including Spain and Portugal, have been more welcoming of Ukrainian grain, using it to compensate for their own weaker harvests, decimated by last summer’s drought. But, in the nonpaper, the Eastern European countries argue that the overland transport of maize from Ukraine to Western Europe “is to a large extent unprofitable, making it difficult to transport large quantities of this cereal abroad.”