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28 May 2024

News

27.02.2024

EU - Ukraine relations in agriculture: stormy weather ahead?

Ukrainian Agribusiness Club together with UCABevent agency organized an online  discussion  “EU - Ukraine relations in agriculture: stormy weather ahead?” on the 23-th of February during which speakers shared their thoughts about the situation on the ground with Ukrainian agrifood exports to the EU countries, impact on Ukraine and the EU markets as well as the necessity to preserve existing EU trade preferences for Ukraine.

Key speakers:

  • Nazar Bobitski, Head of the UCAB EU office
  • Taras Vysotskiy, the First Deputy Minister of Agrarian Policy and Food of Ukraine
  • Alex Lissitsa, Founder and President of UCAB
  • Heinz Strubenhoff, adviser to KfW, European Commission, German Government
  • Oleg Nivievskyi, Dean of the Faculty of the Graduate Economics Studies at Kyiv School of Economics.

 

As Ukrainian agrifood exports generate over 60% of the country’s currency revenues, the threat of new restrictions for the Ukrainian agricultural products becomes the matter of life and death for Ukraine’s macroeconomic stability. The EU accounts for more than half of Ukraine’s shipment of agrifood products, hence any policy decisions affecting EU Ukraine agrifood trade will have direct and profound impact on the country’s economy. Moreover, they may set a negative background in the longer term for Ukraine’s relations with its EU neighbours and for negotiations on Ukraine’s accession to the EU.

According to the words of Oleg Nivievskyi, Dean of the Faculty of the Graduate Economics Studies at KSE, there are global factors behind what's happening within the European Union. “The facts are telling that Ukrainian exports didn't destabilize the European market, and if you look at the prices, their dynamic was in compliance with the market price. This is of key importance when you analyze the market - if the prices are set the way the world market sets the prices, then nothing really happens on the domestic market. Therefore, there is no kind of flow of imports that really affects or reduces the prices as many commentators pointed out. It's not just about economics,  it's also about the politics and development of the Common Agricultural Policy (CAP) that has really influenced the current situation on the Ukrainian border. I think that CAP led to the fact that farmers in the European Union became relatively uncompetitive on the global market”.

The report of agri food trade between the EU and major partners for the 10 months of 2023 shows that the UK remains the largest agri food partner in terms of export and imports in the EU. Ukraine indeed has anticipated the largest possible increase of both exports and imports from the EU of agri food products, so far the overall volumes of Ukraine's agri food trade imports into the EU remain at the level of 6%.

Heinz Strubenhoff, adviser to KfW, European Commission, is convinced that reduction in agricultural trade imports from Ukraine wouldn’t have an effect on the prices in the European market: “The ongoing situation is completely different than two years ago when we had high prices on the world markets and low stocks. Now we have low prices and the stocks are growing, so farmers are feeling these market developments in their pocket and getting emotional.  European Farmers are concerned about two issues: imports from Ukraine and Ukrainian large farms. But it seems to be clear that the exports of Ukrainian agri food are too small to influence the market prices. This has to be considered by the Polish, Slovak, Hungarian governments and advised to their farmers. I think it should be kept in mind that the EU is the regulator of European markets, not national governments and hope that the autonomous trade measures (ATM) will be prolonged”.

“The provocateurs that spilled grain at the Polish border have committed criminal act against not only the European market regulations. It is not acceptable that we are encountering these issues on European roads, but clearly understandable that some circles have a certain interest in these provocations. We should expect that Donald Tusk, who has experience in Europe as a President of the European Commission, would act moderately, fairly and bring the guilty to justice”, – added Heinz Strubenhoff.

At the same time Alex Lissitsa, Founder and President of UCAB, emphasized 2 factors that should be considered by foreign partners in the EU:

  • Ukrainian agrarians are suffering losses as well.  Yes, our country sells a lot if we look at the numbers, but at the same time if we ask the farmers, all of them will reply that they incur losses while selling their products on the global market with very low prices, especially  wheat and corn. The only product which is economically feasible for us is soybean or partly sunflower. That's the biggest issue for us right now, so not only the European farmers are experiencing problems with money and liquidity.
  • It has to be clarified in the European Union that the problem is not Ukraine, a global market that is currently completely dominated by russia. This country managed last year to produce and export a record number of wheat, including 10 mln tons of wheat stolen from Ukraine. And, unfortunately, it seems that russia will dominate on the global market of wheat again in 2024. Due to the information which is coming from the enemy country russia, they expect to gain a good harvest of wheat this season and they will provide to the global market about 60 million tons of wheat that will make that about 30% of the global wheat market.  Considering the figures coming from South America, especially Argentina, they have a good  harvest of wheat. So those countries, Argentina and russia are going to dominate the global wheat market this year. Examining  the numbers coming from Brazil regarding corn, the situation is the same. Brazil in 2024 will probably be the largest exporter of corn for the first time in history.

 

The Ukrainian government, specifically the Ministry of Agrarian Policy and Food of Ukraine together with the Ministry of Economy, are now conducting the dialogue at all levels with our neighbors, specifically Poland and the European Commission, looking for effective tools to resolve the issue as well as avoid the worst outcome - trade and import reductions that would benefit no one.

“Ukraine has already had six months of positive experience trying to find compromise solutions in cooperation with Bulgaria and Romania. We have agreed that Ukraine is to introduce licensing of four products: rapeseed, corn, wheat and sunflower,  which had the most critical conditions of production for our Eastern neighboring European countries. We have agreed that none of the licenses are provided without a permission issued by the government of this country. This mechanism from September has demonstrated good results so it is an example that when both sides are interested it is not easy but always possible to find some common solutions” , – mentioned Taras Vysotskiy, the First Deputy Minister of Agrarian Policy and Food of Ukraine.

According to Taras, with regard to the EU our share of export in the European consumption is still minor. Therefore, examining any case of calculations, we realize that we are able to succeed in ensuring bilateral trade with all members of the European union.

Finally, Nazar Bobitski, Head of the UCAB EU office, concluded that very soon the European farmers would find that they have much more in common with the Ukrainian colleagues fighting European bureaucracy in terms of Common Agricultural Policy Funds and the European Green Deal Policy Guide. “Ukraine indends to discuss mutual cooperation with their European peer associations, stakeholders in Europe in order to rationalize a bit the myths and help to reduce the fear of European farmers”- stated the expert.




  • Baker TILLY
  • Agroresurs
  • AMAKO
  • Limagrain
  • Zeppelin
  • Amazone
  • LNZ Group
  •  Agricom Group
  • horsch
  • uahk
  • Сygnet
  • Syngenta
  • Agco
  • Agroregion
  • Eridon
  • MHP
  • Maschionet
  • Maisadour
  • DuPont Pioneer
  • Agroscop
  • Agrimatco
  • NCH Advisors
  • Continental farmers Group
  • credit agricole
  • claas
  • john deer
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