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| Most of Ukraine's grain is exported by road, and the main points in this process will be the Baltic ports, especially in Poland. Wheat is harvested in a field near the village of Zghurivka in the Kiev region, Ukraine. (Source: Reuters) |
Polish farmers worried
Farmers in Poland worry that Ukrainian grain destined for the Middle East and Africa could leak into the domestic market.
“The influx of Ukrainian grain into Poland poses significant challenges for farmers who have to compete with agricultural products imported from abroad,” said Wiktor Szmulewicz, chairman of the National Council of Agricultural Chambers.
According to Jan Bieniasz, CEO of a farmers' cooperative in the village of Laka, about 80% of grain exports from Ukraine in 2022 went through Poland and much of it "leaked into the local market, causing prices to fall."
Ukrainian grain at the border is 20% cheaper than Polish grain, he added.
In this regard, the Polish government announced that it will no longer import grain from Ukraine after September 15, when the ban across the European Union (EU) is lifted.
Four other EU countries - Romania, Bulgaria, Slovakia and Hungary - have also asked the EU to extend the ban on domestic sales of Ukrainian grain products until the end of the year.
Who benefits?
Ukraine wants the EU to keep open grain corridors that would allow it to export grain via Poland and other member states, while the Black Sea route is closed.
France, Germany and Spain backed Ukraine's stance, saying the trade restrictions undermined the integrity of the EU's internal market and efforts to support Ukraine.
German Agriculture Minister Cem Özdemir said: "The only player that benefits from Poland's actions is Russia, which seeks to push Ukraine out of the global grain market. Extending the current ban could weaken Ukraine's grain exports and boost Moscow's."
This year’s grain harvest in Ukraine is forecast to fall by about 10% from last year, to about 60 million tonnes. However, Moscow’s withdrawal from the grain deal last month and subsequent missile attacks on grain warehouses have reduced supplies in Kiev and driven up prices.
Oleg Pendzin, Executive Director of the Economic Discussion Club in Kiev, believes that the above events will not significantly affect Ukrainian grain prices.
“One of the main reasons is that the country’s population has decreased because of the conflict with Russia, which has reduced demand for grain on the domestic market,” he said. Ukraine’s population of 40 million means that about 18 million tonnes are needed for the country to become fully self-sufficient in grain.
To date, about 8 million people have left Ukraine, which means that domestic grain consumption has dropped to 13-14 million tons."
Ukraine’s grain surplus is estimated to be around 45 million tonnes – more than Poland’s entire annual grain production. This means Ukraine has to export a large portion of its annual grain harvest. The question is where and how to get the grain to consumers if the Black Sea is blocked and Central and Eastern European countries want to ban exports?
New route
At the recent NATO summit, new routes for Ukrainian grain exports were discussed. Currently, most of the grain from Kiev is exported by land, and the main points in this process will be the Baltic ports, especially in Poland.
EU Commissioner for Agriculture Janusz Wojciechowski noted that the bloc is ready to export almost all of Ukraine's agricultural output through the solidarity corridor (i.e. by road, rail and river routes through the territories of the bloc's countries).
It is also possible that the new sea route for transporting Ukrainian grain will pass through the territorial waters of Romania and Bulgaria.
Romania has increased the capacity of its Constanta port for transporting Ukrainian grain across the Black Sea, Bloomberg reported.
However, whether the above proposals are feasible or not remains an open question.
Kiev and Zagreb have reached an agreement on exporting Ukrainian grain through Croatian ports, the Ukrainian Foreign Ministry reported. The new Baltic route for Ukrainian grain can handle 25 million tons at the ports of Lithuania , Latvia and Estonia. However, the activation of this route requires the creation of appropriate administrative facilities on the Polish side.
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