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Read, Debate: Engage.
| topic: | Economic Fairness |
|---|---|
| located: | Ukraine, Poland, Hungary, Romania, Bulgaria |
| editor: | Katarzyna Rybarczyk |
In the wake of the Russian invasion of Ukraine, the European Union lifted tariffs on Ukrainian agricultural products. This move that was meant to support Ukraine’s economy has unfortunately become a nightmare for Eastern European farmers. Now that Ukrainian grains are cheaper than regional products, the overall prices of grains in the EU have dropped. What needs to be done so that Eastern European and Ukrainian producers alike can thrive?
Ukraine is amongst the world’s top wheat exporters. Since numerous developing countries are heavily dependent on Ukrainian exports, preventing flow disruptions during the war has been of utmost importance for the international economy and food security.
For this reason, last year, the EU suspended tariffs and quotas on agri-food imports from Ukraine. It also established “solidarity lanes,” which are corridors for Ukraine’s agricultural exports to transit through. Although the solution has proven successful in providing Ukraine with an economic lifeline, the EU’s proposal to extend the measures for another year has been met with opposition from the bloc’s Eastern members.
Theoretically, Ukrainian products should pass through shipping routes in Eastern European countries to reach other destinations. And yet, large quantities of them are sold in local markers. In Romania, for example, Ukrainian imports used to be practically inexistent; but last year they reached 570 thousand tonnes.
Due to the lower price of Ukrainian grains than those of locally produced ones, farmers are experiencing a significant decline in sales. Romanian and Polish farmers in particular have pointed out that the situation is pushing them to bankruptcy.
Concerned about producers losing livelihoods, last week the prime ministers of Poland, Hungary, Romania, Bulgaria and Slovakia wrote a joint letter to the President of the European Commission, Ursula von der Leyen. In it, they stated that the influx of products such as grains, oilseeds, eggs, poultry and sugar has been “unprecedented,” and called for measures to limit market distortions. Politicians argued that if these steps are not successful, tariff quotas might have to be brought back.
Again, reintroducing customs duties would be a double-edged sword and could cause Ukrainian farmers to struggle. While the European Commission must support Eastern European producers, it should not neglect Ukrainian ones in the process.
More funds should be allocated to compensate for the economic losses of those affected. So far, the European Commission has dedicated €56.3 million for Bulgarian, Polish and Romanian farmers, but taking into consideration the scale of the problem, this sum is not enough.
Maybe even more importantly, however, the inflow of Ukrainian grains needs to be better regulated. Clear limits regarding how many agricultural products can be sold in the region and how many can solely pass through are crucial.
This does not mean that the rest of the products would have to go to waste.
Many countries in the Middle East and Africa have reported a drop in imports from Ukraine due to the war. Redirecting Ukrainian grains to these states could therefore prevent Eastern European markets from flooding, while at the same time addressing food shortages abroad.
Image by Sindy Süßengut
