The EU is discussing the possibility of canceling benefits for the export of some types of agricultural products. How will it affect the Ukrainian economy? The chair of the UAC Andrii Dykun, expressed his view of the situation in a blog for the Economic Truth publication.
The Ukrainian agricultural community was shaken by the statement of the Deputy Minister of Agriculture of Poland, Janusz Kowalski to cancel the preferential treatment of Ukrainian agricultural products. On January 30, 2023 at a meeting of the EU Council of Ministers of Agriculture, Poland proposed to apply strict controls to corn imports from Ukraine.
According to Kowalski, they have already created a coalition of states and had the support of Hungary, Romania, Bulgaria and Slovakia.
Kowalski also announced that after June 5, 2023, when the EU's free trade agreement with Ukraine expires, the Ministry of Agriculture of Poland will propose to exclude some agricultural products from the list of simplified trade.
It refers to poultry and apples. He said that with such restrictions on imports, Poland will protect its agricultural producers on the European market.
It is obvious that after the beginning of the great war, now Ukraine is in an extremely difficult situation since independence. Russia is purposefully destroying our agricultural sector, part of the seaports are occupied, full-fledged exports are stopped, fields are "seeded" with mines, enterprises are completely destroyed.
Losses of the agricultural sector due to war have exceeded 40 billion dollars. Under such circumstances, there can be no question of any competition. Ukrainian farmers are confused by questions of survival, not competing.
Before the invasion of Russia, the agricultural sector provided the country with almost 20% of GDP, and in 2022 it became the basis of domestic exports and the guarantor of foreign exchange earnings from trade, providing 53% of all exports.
Now agriculture is a key component of the economy. From the first days of the war, Ukraine felt the strong support of the European Union. In May 2022, the European Commission and the border states, in particular Poland, opened the ways between Ukraine and the EU for the export of agricultural products.
This made it possible to support the economy of Ukraine and the food security of the world, since grain was exported through these routes to the countries that need it the most: Africa, Asia and the Middle East.
Next, the European Union made an extremely important decision for our country: until June 5, 2023, it suspended all anti-dumping duties, tariff quotas, duties for industrial products and the application of minimum input prices for fruits and vegetables.
The western border for Ukraine is a lifeline that was sincerely extended to us. For us, this is a forced step due to the blocking of Ukrainian ports. Farmers are forced to export their products through the western border and EU ports. Delivery is carried out by motor vehicle, which needs additional expense.
The grain agreement is constantly violated due to artificially created additional inspections of vessels by the Russian side. The agreement expires in March, and Ukrainian farmers do not know whether it will be extended and for what period.
Therefore Ukraine is completely dependent on the export of its goods through the western border, and therefore, the proposal of the minister is critical for further support of the economy of Ukraine and the agricultural sector of the state.
European Commissioner for Agriculture Janusz Wojciechowski assures that assistance to Ukraine is a strategic priority and this is beyond debate, but Poland's initiative to cancel tariffs is causing a heated debate.
Indeed, exports to the EU for three quarters exceeded pre-war indicators by 6.3% or $1.2 billion. In particular, in monetary terms, the export of corn, sunflower oil, sunflower seeds and wheat increased the most. However, in general, during the year, the export of agricultural products decreased by 15.5% (4.3 billion dollars).
The war leads to a reduction in production and a decrease in export potential. In 2022, in general, the volume of production in the agricultural industry decreased by 30%. In particular, grain production decreased by 40%, oil crops by 22%, eggs by 20%, milk and meat by 12%.
Farmers sowed 3.8 million hectares of winter crops, which is 26% less compared to the autumn figure of 2021 in the controlled territories and 43% less than the sowing in the entire territory of Ukraine. In Ukraine, the situation with sowing of spring crops is difficult. According to agrarian forecasts, grain production will decrease by 37% compared to 2022 and by 60% compared to 2021.
In the conditions of war, temporary trade preferences for Ukrainian products are extremely important, especially for supporting the war-ravaged economy. Therefore, the preservation and continuation of the preferential trade regime of Ukraine with the European Union is a matter of the further survival of our country.
The extension of the existing trade liberalization measures during Russia's war against Ukraine and until the end of the negotiations on Ukraine's membership in the EU will be a powerful sign of the European solidarity with Ukraine in its fierce struggle against the aggressor.
This will allow Ukrainian farmers to continue their work, support the state's economy with foreign exchange earnings from exports and, together with the whole world, contribute to global food security.
The All-Ukrainian Agrarian Council, together with the leading agrarian associations, called on the leaders of the EU countries to preserve and indefinitely extend Ukraine's preferential trade regime with the European Union.
I personally appealed to the chairman of the committee on agriculture and rural development of the European Parliament, Norbert Linz.
We also sent an appeal to the EU Council of Agriculture Ministers, the EU Agriculture and Fisheries Council and members of the union of the two major agricultural organizations - COPA and COGECA, which represent the strongest interest group of European farmers.
I understand the concerns of European farmers, but I ask the EU authorities to find methods of supporting their producers, which will prevent the deepening of the crisis in Ukraine and contribute to the strengthening of food security in the world.Tuesday, 31 January 2023