EU could introduce limited, temporary ban on Ukraine grain imports

26 Apr 2023 | Serina Gothard

The European Union could be close to implementing a temporary, limited ban on agricultural imports from Ukraine in a bid to placate farmers in several member states bordering on Ukraine who say imports have depressed the local market and caused them losses, Commissioner Janusz Wojciechowski indicated late Tuesday.

Wojciechowski said following a meeting of EU agriculture ministers, at which measures were discussed, that the current European Commission proposal on the table was for a temporary import ban on five products – wheat, corn, rapeseed, sunflower seed, and sunflower oilseeds – into the five member states most affected by imports – Hungary, Slovakia, Bulgaria, Romania, and Poland.

These products account for about 90% of all imports from Ukraine into the EU.

Imports into other member states would not be affected under the current proposal and it is understood transit via EU member states to third countries would still be allowed.

The Commissioner said that a few ministers from these five countries were pushing to add other products, such as sugar, honey, milk products, and poultry meat to the list of banned imports, but he did not consider this to be necessary.

Wojciechowski expects that the EU will approve the ban, possibly as early as next week.

If approved, it is likely to take effect from June 5 and could run until the end of 2023.

"Everything shows that this decision will be approved by member states," he said.

The Commission has also proposed additional financial aid for farmers of around €100 million ($110.5 million), to be taken out of Common Agricultural Policy crisis funds.

Before this meeting, the leaders of the five EU member states called on the European Commission last week to take action against the duty-free imports of Ukrainian grain into Europe.

The leaders argued that an influx of grain was causing financial harm to local farmers.

All five countries said they felt the proposed support of €100 million would be insufficient.

Proposal follows unilateral bans

Before the appeal, Hungary, Poland, Slovakia, and Bulgaria had already imposed a unilateral ban on imports of agricultural products from Ukraine.

"We don't have time to react because the new crop will be harvested very soon. We already know that corridors of solidarity do not work as they were intended," Bulgarian Agriculture Minister Yavor Gechev told the meeting.

"New measures are needed. We should also think about funds that would guarantee the markets of Ukraine, Bulgaria, Romania, Poland, Slovakia, and Hungary," Gechev said.

The Bulgarian minister also explained that while the market disruptions are currently experienced primarily by the countries directly bordering Ukraine, the situation could spread to other parts of the European Union in the future.

According to Hungarian Minister of Agriculture István Nagy, while no formal EU solution has been reached, Hungary intends to uphold its ban on importing grain from Ukraine.

Nagy said of the meeting that the direction of the negotiations was promising, stating that the EU has acknowledged the unilateral bans imposed by member states on Ukrainian agricultural imports and accepts the coercive measures taken.

"The EU has recognized the seriousness of the situation, understands the member state's decision, and is looking for solutions that allow the measures to be maintained," he told Hungarian journalists in Luxembourg.

"We are together, and the most important thing is that we talk together. We are fighting in solidarity for our cause," Polish Minister Ryszard Telus said ahead of the Tuesday meeting.

"The European Union has already agreed to some of our proposals," he said, adding that "although some products have already been included in the list for discussion, we still have others we want to fight for together."

Commissioner Wojciechowski and ministers from several member states reiterated their solidarity with Ukraine, meanwhile.

In a statement released ahead of the meeting German Agriculture Minister Cem Özdemir said solidarity with Ukraine remained the top priority and a coordinated and rule-based European approach was needed.

"There must be no slacking off in the development of solidarity lanes, and I would appreciate it if the Commission coordinated this more closely," he said.

The Czech minister expressed similar support.

"Since the beginning of the Russian invasion, the Czech Republic has supported Ukraine and we will continue to do so,” Minister of Agriculture Zdeněk Nekula said.

“Trade liberalization and the so-called solidarity route are essential tools for global food security. But there is a need for the routes to serve the transit of agricultural products to countries that urgently need Ukrainian production."

Nekula said clear rules needed to be set for the EU as a whole.

“The debate on this topic was very comprehensive and I expect the Commission to come up with a pan-European solution that will work in the long term," said Nekula.

It is important to note that any proposals and any EU solution would need to be approved by the ministers of the EU member states.

Market skeptical

Many market sources said they doubted it would come to a ban, meanwhile.

“We sent weapons to Ukraine, insist on export corridors to feed the world and we ban imports? It makes zero sense,” one German broker said.

“It seems strange that in a common market, some member states can decide themself what they prefer to do,” another said.

Others pointed out that transit was the key, as it would allow Ukraine to continue exporting via the EU without affecting the flow of local agricultural products out of the bloc.

At the time of publication, Euronext milling wheat was trading only slightly firmer, with May up €1.25/mt at €244/mt and September up €0.25/mt at €243/mt.

Euronext rapeseed was much higher, but this followed a sharp fall in prices just before the close Tuesday.

The May rapeseed contract was trading at €458.25/mt at the time of publication, up €16/mt on the previous settlement, while August was at €447/mt, up €10/mt.