The Agriculture and Fisheries Council discussed the export of grain from Ukraine on Tuesday, following Russia’s withdrawal from the Black Sea Grain Initiative. However, it did not take any new decisions to tackle the situation.
The meeting followed also Ukrainian President Volodymyr Zelenskyy’s statement that the extension of export restrictions on certain agri-food products called for by neighbouring EU member states was unacceptable. "Europe has the institutional capacity to act more rationally rather than closing the border to a particular commodity," he said.
In principle, the EU has suspended import duties, quotas and trade defence measures on Ukrainian exports to the Union (so-called Autonomous Trade Measures, ATM). But in May 2023, the EU adopted temporary preventive measures on imports of wheat, maize, rapeseed and sunflower seed from Ukraine under the exceptional safeguard clause of the ATM regulation.
The measures were adopted because of logistical bottlenecks that disrupted the internal market for these products in Bulgaria, Hungary, Poland, Romania and Slovakia and on the condition that the member states did not maintain any other unilateral restrictive measures. The measures will expire on 15 September but the “front-line” countries have asked for an extension until the end of the year.
According to the European Commission, the preventive measures put in place have not disturbed the flow of grain via the solidarity lanes to other countries beyond the five front-line countries. Between May 2022 and the end of June 2023, the solidarity lanes carried already 60% of the total agricultural goods exports from Ukraine.
Moving vital resources
The solidarity lanes were established last year to ensure that Ukraine can export grain, but also for other goods it needs, from humanitarian aid to animal feed and fertilisers.
The Black Sea Grain Initiative complemented the solidarity lanes and enabled the export of grain from Ukraine through the Black Sea to stabilize global food prices and alleviate food shortages in parts of Africa and the Middle East.
Russia’s unilateral withdrawal from the initiative created an urgent need to expand the capacity of the lanes and to establish alternative routes for exporting the 40 % of Ukraine’s grain that was exported via the Black Sea unless an agreement is found with Russia to return to the initiative. This, however, seems unlikely as Russia has demanded lifting certain sanctions.
Russia claimed that the deal was one-sided due to the sanctions imposed on its own exports, which restricted the sale of Russian agricultural products and fertilisers. It also listed other demands for renewing the grain deal such as easing the sanctions against the Russian Agricultural Bank. In fact, none of the EU sanctions targets the trade in agricultural and food products, including fertilisers.
"Russia’s termination of the Black Sea Grain Initiative and its attacks on port infrastructure and storage capacity in Ukraine are affecting the capacity to export," a Commission spokesperson said on Tuesday.
"The Commission is working intensively with the five front-line member states concerned, as well as with Ukraine and with Moldova." The main platform for this is the coordination platform that was set up following a meeting between Commission President von der Leyen and President Zelensky on 9 May. The platform has already met five times and met again this week.
The spokesperson described the discussions in the platform as intensive and constructive. "Work is intensifying to increase the capacity of the solidarity lanes and also to make sure that we can streamline the procedures and facilitate trade flows to make sure that Ukraine can continue to export. Our main objective is to make sure that we can get the grain out of Ukraine and ensure that we can contribute to food security."
The platform is also monitoring the trade flows with monthly figures published on a trade website to ensure an overview of the situation. According to the Commission, the solidarity lanes are “functioning extremely well and are extremely important for Ukraine." 3.4 million tonnes of grain were exported from Ukraine in May 2023 and in June it was also three tonnes.
Big money
The Commission is investing heavily in the lanes. "We have identified nine projects from the Connecting Europe facility worth about €250 million that will directly support the solidarity lanes. And we made a joint declaration together with a number of financial institutions last year about investing €1 billion into the solidarity lanes as well."
On Wednesday, the Commission briefed EU Member States on the first results of the platform’s work this week, including findings of technical visits to the border crossings and upscaling the capacity on the Danube corridor towards the Black Sea. This information, however, is confidential and further details could not be shared with media, according to the spokesperson.
"The debate reflects the Council's commitment to help Ukraine export its grain, while ensuring the resilience of EU agricultural markets and farmers," said Luis Planas, acting Spanish Minister for Agriculture, Fisheries and Food, at a press conference after the Council meeting. Spain itself is a major importer of agri-products from Ukraine for its animal feed industry.
The minister accused Russia of using food as a weapon of war. "The solidarity lanes are working well but we absolutely need to improve and strengthen them without disturbing the markets of the front-line states."
The Agriculture Commissioner Janusz Wojciechowski is from Poland – one of the front-line countries. He said that the Commission was very worried about the situation yet not surprised. "Now the situation is similar to what it was at the beginning of the war,“ he said, referring to Russia’s withdrawal from the Black Sea Grain Initiative.
Almost everything can be exported via the solidarity lanes and the solution lies in them, he underlined, but the problem are the costs which makes it more attractive to buy grain from Russia. He admitted that the Commission lacks reliable data about the grain stocks in all member states and about the investments needed to improve the solidarity lanes.
The consequences of Russia’s aggression against Ukraine and adverse weather conditions in certain regions are still elements of uncertainty in the European agricultural markets. The Council acknowledged that the resilience of EU farmers remains in question, with rising input costs and adverse weather conditions, and certain regions and sectors affected by other problems.
The question of the temporary preventive measures on Ukraine’s agri-export was supposed to be dealt with at the Council meeting, yet a decision on their extension and eventual inclusion of more products was delayed to the next meeting, scheduled after the summer.
M. Apelblat
The Brussels Times
