Floodgates of Agrarian Protests In Europe Are Open: Time for Sugar, Poultry, Berries...

A new food scandal in Europe is just around the corner. The agrarian community of Ukraine has frozen again in tense anticipation. Although Brussels expresses full support and assures that Ukrainian-made food products do not ruin the overall picture, dissatisfaction with the buoyant supply of food and agricultural raw materials from the banks of the Dnipro River is growing. The second or third wave of the food tsunami is imminent. The probable time is from the second half of January to the beginning of spring.

 

Alarm bells

The feeling of yet another clash between the food interests of Ukraine and certain European countries for the enormous EU market is literally in the air. All the more so since the European Council decided to launch negotiations on Ukraine’s and Moldova’s EU accession.

Most recent events hint very clearly that a new “food” scandal is just around the corner.

Let’s recollect. On September 15, 2023, the European Commission lifted the ban on the supply of agricultural products from Ukraine, but several states ignored Brussels’ decision and closed their borders again. The question of free access of food to EU markets poised in midair – even despite the fact that Ukraine has introduced new export rules (verification, licensing) for the supply of wheat, barley, oats, corn, soybeans, rapeseed, sunflower, oil and meal (Resolution of the Cabinet of Ministers No. 1132).

Recently, Ukraine and Bulgaria have finally agreed on the licensing regime for the exports of sunflower, rapeseed, corn and wheat. Moreover, the issue of liberalization of sunflower supplies was strongly pushed through by Bulgarian processors. At the same time, the neighbors pressed on and expanded the list of licensed goods to include dry milk, frozen raspberries, honey.

Slovakia simply prolonged the ban on agricultural products from Ukraine. Honey, sugar, barley and flour were added to the “grain list.”

Hungary also keeps its doors shut.

Added to these is the bad mood of the European sugar farmers, whose life for the last two seasons is not so sweet as they would like it to be. After the lifting of the ban on the exports of sugar on September 15, domestic exporters became more vigorous. For the first three months of the 2023/2024 season, we have 184,000 tons of sales to foreign markets. That's how much was sold for exports in total for the calendar year of 2022 — 181,000 tons.

According to the Ukrtsukor association, the largest deliveries are bound for Poland, Bulgaria and Hungary. European sugar beet producers have estimated that the volume of Ukrainian sugar supplies to the EU could reach 800,000 tons at the end of the season, while the quota was only 20,000 tons per year until 2022.

Poultry producers in France and Poland, experiencing an influx of Ukrainian chickens, are also concerned. Considering the rapid growth of supplies from Ukraine at one of the latest meetings of Copa-Cogeca (one of the largest associations of EU farmers), the participants proposed to introduce an import threshold, which would lead to the automatic triggering of protective measures for any agricultural product, as soon as the volume of supplies from Ukraine in a certain period exceeds the average quarterly indicator for 2022. Automatic transit exclusively outside the EU is offered as a way out.

 

Beyond competition

Although not rapidly, exports are still growing. According to the State Customs Service of Ukraine, deliveries of poultry meat to foreign markets for 11 months of 2023 amounted to 389,000 tons worth $734 million against 373,000 tons for $787.5 million for 11 months of 2022. The share of the EU in total agricultural exports is about 60%, according to the results of 2022.

Ukrainian honey has always been in demand in Europe, 49,500 tons of which were sold on foreign markets for $110 million in 11 months against $43,850 tons for $125.8 million for the corresponding period of 2022. (For comparison: the honey quota for 2021 within the framework of the free trade zone with the EU is 6,000 tons.) Germany, Poland and France actively bought honey, according to the data of the Ministry of Internal Affairs.

The export of eggs in January–November 2023 reached 54,000 tons, including 46,000 tons of shell eggs. The first buyer is Singapore, followed by Poland, the Netherlands, Denmark and Italy. For 11 months of 2022, the export of eggs was estimated at 28,000 tons.

Ukrainians who participate in constant meetings and negotiations with the EU say that Copa Copega requested the European Commission to immediately restore, from January 1, 2024, all quotas and duties on food supplies from Ukraine. EU farmers believe that the supply of Ukrainian food to the territory of the European Union disrupts the market. In other words, Europe is certain that it will not be able to compete with the industrial agribusiness of Ukraine.

Constant comparisons of Ukraine's agriculture with its agricultural holdings and the farming system of most Western countries add fuel to the fire.

To be honest, the only common denominator is competition for markets and the end consumer. Farmers in the EU are hostile to all supplies of foreign food.

Let's add one more undeniable argument – money. Emotional conversations about possible billions of subsidies for Ukraine's agriculture do not stabilize the situation either.

 

About money

Rural subsidies in the EU are indeed high. Over the past few years, a little more than 30% of the total budget has been used to support farmers in various countries. (The EU budget for 2023 is €186.6 billion.)

At present, almost every country in Europe is calculating the consequences of Ukraine's possible rapid accession to the community. German analysts estimate the consequences of Ukraine's full membership in the EU in the amount of €130 to 190 billion, depending on assumptions regarding the area of arable land and the population of Ukraine. Possible subsidies for agriculture are estimated at €70 to 90 billion.

We haven't even sat down at the negotiating table yet, but troubles are already plentiful. Everyone likes the European pie so much. Other “cakes” are also attractive. Immediately after the start of the negotiations on accession to the EU, the agricultural sector can count on financing even as part of the preparations for accession.

One such instrument is IPARD, i.e. pre-accession assistance for rural development. The EU is ready to help form rules, standards, policies, practices for activities in a single community system.

They say that the local agricultural department is already working in this direction.

 

Fires of possible conflicts

At the moment, it is difficult to assess whether Europe regrets or not that it opened the floodgates to Ukrainian food last year after carefully prescribing algorithms to protect its own market for many months. Ukraine gained unhindered access to the EU market without being a member of it.

We took the chance. In 2021, the EU bought €7 billion worth of Ukrainian food. According to the results of 2022, we grew to €13.2 billion, or to 8% of all European imports.

The main trading partners in the agricultural segment are Romania, Poland, Spain, the Netherlands, Italy, Germany and Hungary. Ukraine's aggregate turnover with these countries is 78%.

In nine months of 2023, the EU food purchases from Ukraine amounted to €8,750 million, which is €891 million (11%) more than in the entire 2022 (mainly thanks to the increase in grain supplies in the first half of the year).

It is a good result, and it should be maintained because the majority of domestic farmers and processors are more interested in their neighbors than ever. A large stable market with a capacity of half a billion people.

Moreover, the EU will continue to keep its doors open until at least June 2024. There are scandals, there will be conflicts, but the caravan or, more precisely, trucks go on. Although the talk that it is time to stop the regime of liberal trade is also getting louder. So, you need to roll up your sleeves and get to work more energetically. What does domestic business do.

A separate task for Ukrainian officials is to put out the fires of possible conflicts before they start and reach agreement on a liberal trade regime for one more year.

This is important since statements are already made that even if Ukraine joins the EU, access for Ukrainian goods, especially agricultural products, should be closed for 20 years. The initiators are Poles, who cite their history of EU accession, arguing that they were forced to fulfill strict conditions.

Read this article in Ukrainian and russian.