Since the beginning of Russia's aggression against Ukraine, the European Union member states have tried to support Kiev on all possible levels: not only in the military field, but also in the economic field. The conflict in Ukraine disrupted global supply chains as the country was one of the world's largest exporters of some food products, including cereals. In 2023, the European Union, despite pursuing a pro-Ukrainian policy, introduced a ban on the import of some Ukrainian food products. What is the reason for this and what are the consequences for wholesale trade in Europe?
Ban on the import of Ukrainian food products
In recent years (even before Russia's invasion of Ukraine), tightening of trade regulations and food import regulations has become increasingly common internationally. One of the recent examples of such tightening is the ban on the transport of Ukrainian food in wholesale trade, which has caused a lot of controversy and economic consequences. In this article, we will look at this issue from different perspectives.
The initiators of the ban on food imports from Ukraine were 5 so-called frontline countries: Poland, Slovakia, Romania, Bulgaria and Hungary. It resulted directly from the earlier free flow of agricultural goods to the EU. Ukrainian food products raised concerns among local farmers in several respects. The first was the low prices of Ukrainian agricultural products, which harmed the interests of local farmers. There were also concerns about the quality of Ukrainian products and food safety.
Poland did not wait for the European Union
The aforementioned frontline countries decided to protect the interests of their farmers: they formed a coalition within which they conducted negotiations with Brussels on the introduction of appropriate solutions. As Polish Minister of Agriculture Robert Telus stated, “We have opened the eyes of the European Union and this is a very important thing. We want to develop such tools that will serve Poland, the European Union, Ukraine and our farmers for many years”. The goal of the front-line states is not to cut themselves off from supporting Ukraine, but only to protect their own interests, and thus the interests of the EU.
Despite the coherent position of the front-line coalition, negotiations with Brussels were prolonged. Therefore, in April 2023, the Polish Minister of Development and Technology, Waldemar Buda, signed the regulation on the List of agricultural products that have been banned from Ukraine to Poland. These provisions entered into force on April 15, 2023 and were to last until June 30, 2023. The following products have been banned:
- cereals
- sugar
- dried fodder
- seeds
- hop
- linen and hemp
- fruits and vegetables
- processed fruit and vegetable products
- fault
- beef and veal
- milk and dairy products
- pork
- mutton and goat
- eggs
- poultry meat
- ethyl alcohol of agricultural origin
- bee products
- other products
Poland's independent action was supposed to be a "temporary solution" and as it turned out, it accelerated the decision-making of EU officials. On May 2, 2023, the Polish regulation was replaced by EU preventive measures regarding the transport of selected food products from Ukraine.
How long will the ban last?
The ban on imports of Ukrainian agricultural products will probably be maintained for the next few months. This is to protect the interests of European farmers, for whom the influx of cheap Ukrainian food could be disastrous. Preventive measures are expected to be maintained at least until the end of the European harvest. In addition, there are still discussions about extending the preventive measures to more Ukrainian food products, and the introduction of customs duties and trade tariffs on food products from Ukraine is not ruled out. Currently, the European import ban covers five products: wheat, maize, rapeseed, sunflower seeds and sunflower oil.
In addition, the frontline countries are developing a plan to support their farmers. In Poland, the general purchase of grain is to be undertaken with a state subsidy, thanks to which farmers are not to lose on the sale of goods. In addition, the country plans to maintain the system of subsidies for fertilizers and agricultural fuel. Farmers from five frontline countries are also to receive financial support from Brussels.
Exceptions to the prohibition
The implemented preventive measures and the ban on food imports from Ukraine provide for some exceptions. First of all, the ban does not apply to natural persons transporting food for their own needs. However, it is not possible to use food delivered to the EU for commercial purposes. The Polish government also agreed to the transit transport of Ukrainian food through the territory of Poland, but strictly ensuring that the transit of the transported products could not be withdrawn while being transported through the territory of the Republic of Poland.
What does the import ban mean for wholesale trade?
What could the ban on food imports from Ukraine mean for wholesale and retail trade? Of course, target consumers have the greatest fears: experts point out that the lack of an influx of cheaper Ukrainian food may result in an increase in the prices of food products obtained from local producers. And this, taking into account the already troublesome inflation in Central and Eastern Europe, can be clearly felt by consumers. On the other hand, obtaining food from local markets increases food security: agricultural products and meat produced in the European Union must be subject to detailed procedures and requirements that ensure high quality and safety of food on the tables of Europeans.
Local farmers are certainly happy with the ban. It will help protect their interests, because simply (due to other tax, price and procedural conditions) they were not able to offer lower prices for their products than the prices of food previously imported from Ukraine. This not only threatened the collapse of some farms, but also rural revolts and threats to local and European supply chains.
The ban on imports of Ukrainian food also gives Central and Eastern European farmers from the EU additional opportunities. Currently, Western Europe is struggling with the effects of bird flu, which naturally increased the demand for poultry and eggs from frontline countries (including Poland). In addition, the prices of agricultural products from the eastern EU Member States are still attractive to the western recipient, which may increase the export of these goods within the European Community.
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