Drought in Russia: Grain region particularly affected
In Russia, the main region for grain cultivation has been experiencing dry conditions for weeks. This is likely to result in lower yields and poorer quality than previously expected.
Until Thursday, most imports of Ukrainian goods into the EU are duty-free. However, the Ukrainian agricultural sector is now preparing for higher import duties into the EU.
"Before the Russian invasion, we [Ukraine] already had a trade agreement with the EU. Now we are reverting back to that," said Ukrainian Prime Minister Deny Schmyhal during a visit to Finland last week, as reported by various Ukrainian media outlets.
What is the current situation for Ukrainian goods?
Since the start of the Russian war, the EU has exempted Ukraine from most import duties. This was decided by the EU as part of the Autonomous Trade Measures (ATM).
However, there is a "safety valve" in the form of customs quotas for certain sensitive agricultural products, including poultry, eggs, sugar, oats, corn, coarse semolina, and honey.
These products can only be imported duty-free up to a certain predetermined amount. If Ukrainian imports exceed these quantities, duties will be imposed on the goods.
What will happen from Thursday onwards?
On Thursday, June 5, the ATM rules will expire. A free trade agreement that the EU and Ukraine agreed upon in 2014 will come into effect. Ukraine will be allowed to import significantly less duty-free agricultural products than before.
What duties will be imposed on Ukrainian poultry?
The "transitional arrangement" allows Ukrainian exporters to import around 7/12 of the annual quotas from the 2014 free trade agreement duty-free by 2025.
For example, by the end of the year, 20,070 tons of sugar could be imported duty-free from Ukraine into the EU, compared to more than ten times that amount previously. Additionally, duties of up to €419/ton will apply. The duty-free export quota for poultry meat will decrease from 137,000 tons to 90,000 tons.
What do Ukrainians want?
The goal of the Ukrainian government was to find a different successor to the ATM. However, the EU Commission and the Ukrainian government have not yet reached an agreement on new trade rules.
Since June 2, representatives of the EU Commission and the Ukrainian government have been negotiating the future of EU-Ukraine trade. Brussels insiders have confirmed this to top agrar.
"The transitional solution will cost Ukrainian agricultural exporters up to 1.2 billion euros by the end of the year," complains Nazar Bobitsky to top agrar. Bobitski represents the Ukrainian agricultural sector to EU institutions.
It is uncertain what agreement Ukraine and the EU will reach in the long term. Bobitski says, "Little information is coming out of the negotiations between the EU Commission and the Ukrainian government."
What do European farmers fear?
In the past, EU farm organizations have repeatedly warned against excessive agricultural imports from Ukraine. Their umbrella organization Copa-Cogeca demanded in mid-May, "European farmers should not have to shoulder an unreasonably large part of EU support for Ukraine."
Copa-Cogeca analyzed, "The liberalization of trade with Ukraine has had significant negative effects on crucial agricultural and production sectors of the EU. Ukraine's access to the EU market was intended to support the Ukrainian economy. In reality, many European producers have come under intense pressure."