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HomeBusinessPolish farmers hurt by Ukraine grain imports – DW – 08/06/2023

Polish farmers hurt by Ukraine grain imports – DW – 08/06/2023

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“We still see some stupid boasting going on, on television,” says Polish farmer Andrzej Waszczuk, a reference to ruling Law and Justice (PiS) leader, Jaroslaw Kaczynski. The latter has promised that the purchase price of wheat will be 1,300 zlotys (€280, $300) per ton, that imports from Ukraine will be suspended and that there will be intervention buying.

“But the devil is in the details, and nobody says anything about the details. We won’t fall for such games. We are waiting for specific solutions that will be felt by us. As long as there are no definite tangible and noticeable signs of improvement on the market, we will protest,” Waszczuk says.

Farmers in Poland are anxious that Ukrainian grain earmarked for the Middle East and Africa may leak into the domestic market and lower prices in Poland’s poorest region once the ban is lifted in September. 

“The situation in which Ukrainian grain flows into Poland causes significant challenges for our farmers who have to compete with agricultural products imported from abroad,” Wiktor Szmulewicz, president of the National Council of Agricultural Chambers, says.

Competing with agricultural products, which are produced according to different standards and costs than those applicable in the European Union, creates an uneven playing field for Polish farmers, Szmulewicz adds.

The owner of a purchase point near Hrubieszow, who wanted to stay anonymous, says he had to pay farmers as much as 1,600 zlotys per ton last year and soon after the harvest, grain prices began to fall rapidly, by as much as half. 

A policeman standing near a train
Polish farmers are concerned that Ukrainian grain is damaging their markets and have been staging protestsImage: Attila Husejnow/SOPA/picture alliance

It was then that the protests began. Wieslaw Gryn, another Polish farmer, set up the Deceived Village Association in response and says protests will restart after the harvest.

Jan Bieniasz, managing director of a farmers’ cooperative in the village of Laka, says about 80% of the grain coming out of Ukraine in 2022 was via Poland — and much was “leaking into the local markets, bringing down prices.” Ukrainian grain at the border was 20% cheaper than Polish grain, he adds. 

The Polish People’s Party (PSL) says about one-third of Ukrainian grain leaks into Poland, though this is disputed

Some claim these are rumors stoked as part of Russia’s hybrid war to drive a wedge between Poles and Ukrainians.

The farmers’ union AgroUnia says, for example, that “Ukrainian oligarchs and international investment funds that have invested huge amounts of money in food production in Ukraine will benefit from the current situation.”

Wirtualna Polska, a news outlet, investigated which Polish companies bought cheaper Ukrainian grain in 2022 and then sold it on the Polish market at a higher price. Their findings showed that several of the largest buyers allegedly had links with high profile PiS politicians.

The government has promised to publish its own list of companies that bought cheaper Ukrainian grain but still hasn’t done so. 

Three EU countries ban imports of Ukrainian grain

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Warsaw talks tough

With parliamentary elections to be held later this year and growing resentment about the costs of Poland’s role in the Ukraine war effort being exploited by the far-right Confederation alliance — now with 12% to 13% in the polls — the PiS-led government faces a dilemma.

Poland has said it will not resume grain imports from Ukraine after September 15, when the EU-wide ban 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 but have said they are open to the continued transit of Ukrainian grain through their territories.

Conflict with Kyiv

Ukraine wants the EU to keep open the grain corridors that enable it to export its grain overland through Poland and other Eastern EU member states while the Black Sea route is closed.

France, Germany and Spain back Ukraine’s stance, saying trade restrictions undermine the integrity of the bloc’s internal market — and its efforts to support Ukraine. German Agriculture Minister Cem Özdemir said the only player benefiting from Poland’s actions was Russia as it looks to squeeze Ukraine out of the global grain market.

Extending the ban now could undermine Ukrainian exports and boost Russian grain exports, in particular at a time when Russia is offering free grain to some African countries.

Ukraine has to export grain

This year’s grain harvest in Ukraine had been projected to fall only about 10% from last year to about 60 million tons. However, Russia’s withdrawal from the grain deal last month and subsequent missile attacks on grain warehouses, including in the port of Chernomorsk, where about 60,000 tons of grain were destroyed, have reduced supply and increased prices.

Oleg Pendzin, executive director of the Economic Discussion Club in Kyiv, believes that these events will not significantly impact grain prices inside Ukraine. One of the reasons, he says, is that the country’s population has declined as a result of the large exodus of people fleeing Ukraine, thus reducing demand for grain on the domestic market.

Ukraine’s population of 40 million means about 18 million tons are needed to make the country fully self-sufficient in grain, he says. Around 8 million people have so far left Ukraine, which means that domestic consumption of grain has decreased to 13-14 million tons, Pendzin told Ukrainian Radio.

Ukraine’s surplus grain is believed to be in the region of 45 million tons — more than Poland’s total annual grain production. This means Ukraine has to export most of its grain. The question is where, and how to get the grain to consumers if the Black Sea is blocked and Central and Eastern Europe countries want to ban exports via their countries.

How the war effects Ukraine’s wheat exports

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New routes for Ukrainian grain

During the recent NATO-Ukraine summit, new routes for the export of Ukrainian grain were discussed. 

At the moment, most of the grain from Kyiv is exported by land, and the key points in this process will be the Baltic ports, especially in Poland.

The EU Commissioner for Agriculture, Janusz Wojciechowski, said the EU is ready to export almost the entire agricultural production of Ukraine via so-called solidarity corridors, that is, by road, rail and river routes through the territory of EU countries. 

There is also the possibility that the new sea route for Ukrainian grain will lead through the territorial waters of Romania and Bulgaria. According to Bloomberg, Romania has increased the capacity of the port of Constanta for the shipment of Ukrainian grain through the Black Sea.

But just how viable that is remains unclear. On Wednesday, Russian drones hit the port city of Izmail on the Danube River that forms part of the Ukraine-Romania border. According to Ukraine’s infrastructure minister, Oleksandr Kubrakov, around 44,000 tons of grain, earmarked for delivery to Africa, China and Israel, was damaged in the attack.

Meanwhile, the Ukrainian Ministry of Foreign Affairs says an agreement has been reached between Kyiv and Zagreb on the export of Ukrainian grain through Croatian ports.

The new Baltic route for Ukrainian grain could handle 25 million tons in the ports of Lithuania, Latvia and Estonia. Its activation, however, requires the introduction of appropriate administrative facilities on the Polish side.

Edited by: Rob Mudge

Grain exports: What is Ukraine’s plan B?

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