Following Russia’s suspension of the “Black Sea Grain Agreement” last week, Ukraine’s grain export issues continue to brew. On July 25th, the International Monetary Fund (IMF) warned of a potential 10 to 15% increase in global grain prices. This warning came after Russia’s drone attack on the Ukrainian-Romanian border town of Reni, a port on the Danube River, on the 24th, which led to the suspension of as many as 30 ships at another Danube port.
After the outbreak of the Russo-Ukrainian War, the Danube’s grain transport routes to Europe have become the lifeline for Ukrainian grain exports outside the Black Sea. The Russian actions, starting with the suspension of the Black Sea agreement, bombing Ukraine’s Black Sea ports, and then attacking the Danube river transport cities, suggest Ukraine’s grain exports are at risk of disruption not just from the Black Sea but also from alternative routes to Europe.
The remaining option is the more costly land transport across the border.
The title of “Europe’s Granary” has always been one of the core elements of Ukraine’s national identity. Its blue and yellow flag represents wheat fields under the blue sky. However, Ukraine, not being a member of the EU single market, has never been the main supplier of grain to Europe. The title “Europe’s Granary” refers not to being a source of European grain, but to supplying grain produced in Europe to distant lands (According to 2021 data, the largest buyers of Ukrainian wheat exports were countries like Egypt, Indonesia, and Pakistan).
Following the Russo-Ukrainian war, Ukraine quickly became a candidate for EU membership, and may formally initiate the accession process by the end of this year. Given Russia’s control of the Black Sea and the danger this poses – recent British intelligence reports suggest Russia is planting mines in the Black Sea – and with the increased capacity of Danube transport and rail links, Ukraine has the objective conditions to reduce its previous reliance on the Black Sea for over 90% of grain exports, and to push its products into the EU market.
Before the “Black Sea Grain Agreement” was reached last July, the EU had proposed a “Solidarity Corridor” to Ukraine, making it easier for Ukrainian grain to enter EU countries and export to other regions.
However, due to the lack of infrastructure in EU countries to transport Ukrainian grain exports, and alleged plans by local businesses in countries like Poland to profit from cheap Ukrainian grain, a significant portion of Ukrainian products have flooded the European market, undermining the interests of farmers long protected by EU agricultural policy. Farmers in multiple countries have staged high-profile street protests, and Poland’s Agriculture Minister even resigned over the issue in April. Poland, Bulgaria, Slovakia, Hungary, and Romania all unilaterally decided to block Ukrainian grain imports at one point, disregarding EU common market policy.
These unilateral actions threatened the unity of the EU single market policy. The European Commission reached an agreement with these countries, allowing them to ban imports of related goods until Ukraine’s grain is guaranteed not to be exported to other EU or third countries. The Commission increased agricultural subsidies to these countries, hoping to buy their compliance.
However, the European Commission’s agreement to restrict Ukrainian grain imports is due to expire on September 15th this year. With the “Black Sea Grain Agreement” no longer in effect and the Kremlin repeatedly stating it has no intention of rejoining the agreement, if the European Commission continues to restrict Ukrainian grain imports, it will only compound Ukraine’s grain export difficulties and undermine the public relations message of unity between the EU and Ukraine.
The issue is that Poland is scheduled to hold elections in late October or early November. The ruling Law and Justice Party (PiS) has a significant voter base among conservative Polish farmers. Therefore, Poland has threatened to close its borders again if the EU does not extend the restrictions.
Ukrainian President Volodymyr Zelensky has publicly criticized the extension of restrictions on Ukrainian grain as “totally unacceptable and totally un-European.” EU countries like the Baltic States, which actively support Ukraine, have proposed various plans to facilitate the transport of Ukrainian grain to appease Poland. Meanwhile, the Commission is continuing closed-door negotiations with the Polish authorities to resolve the dispute.
Poland’s Ministry of Agriculture has indicated it will release a list of companies buying Ukrainian grain, but it has yet to implement this plan. There are speculations that these companies may be pro-government, and public disclosure would embarrass the Law and Justice Party. Therefore, Polish authorities have more political incentive to take a hard line on the issue of Ukrainian grain imports before the elections.
This crisis over Ukrainian grain entering Europe reveals the significant barriers to Ukraine’s EU accession. At a time when all of Europe is showing solidarity with Ukraine, anti-Russian countries like Poland are willing to “stab Ukraine in the back” for their own interests. In a post-war future, all countries will consider the huge impact of Ukraine joining the EU on the EU’s agricultural market, and agriculture is the sector where EU protectionism is most prevalent.
Many Ukrainians believe that defeating Russia would make their dream of “leaving Russia and joining Europe” come true. However, the more realistic scenario might be that the threat from Russia is the best leverage for Ukraine to “leave Russia and join Europe.”