When global grain prices began to fall last year after soaring in the early months of the war in Ukraine, Poland’s then-agriculture minister asked farmers to hold onto their crops in the hope of higher profits, but that bet failed for some. , according to Reuters analysis.

After almost a year, Polish farmer Artur Konarski still has about 150 tonnes of grain in storage and says some of his competitors in Poland, the EU’s third-largest wheat producer, have even larger stocks in silos.

The perfect storm

Farmers in Poland and other Eastern European countries, who had been storing crops to get higher prices, were hit by a perfect storm.

Rising exports from Brazil and Russia pushed global grain prices lower as the EU opened its borders to duty-free imports of Ukrainian grain in a show of solidarity after Russia blocked Ukrainian Black Sea ports. While the EU’s aim is to allow Ukrainian farmers to export grain and oilseeds to their traditional markets in Africa, the Middle East and Asia and help alleviate the global food crisis, large quantities of grain remain in Eastern Europe.

Due to the lack of locally produced grain, farmers and ranchers in Poland have turned to imports of Ukrainian grain, which has arrived in the EU by train and truck, traders and farmers say.

Eastern European governments blame farmers, but Adrian Wawzyniak, a spokesman for the Polish Farmers’ Union, says some of the region’s problems are self-inflicted because farmers, encouraged by politicians, kept their crops.

“These events led to a decrease in sales by farmers during the harvesting and storage of grain, and now we are feeling the consequences due to a decrease in income from the sale of grain,” Wawzyniak explained.

Local buyers have alternative sources.

After opening borders for Ukrainian grain last year, Poland imported 2.08 million tons of corn and 579,315 tons of wheat, compared to 6,269 tons of corn and 3,033 tons of wheat in 2021.

Since farmers stopped selling, millers and livestock farmers bought Ukrainian grain, the Polish trader claims.

Despite being a staunch ally of Ukraine, Poland banned the import of Ukrainian grain in April after complaints from rural farmers who strongly support the ruling PiS party.

Dispute with Brussels

Hungary, Slovakia and Bulgaria quickly followed Poland’s lead, entering into a dispute with Brussels over trade policy and demanding compensation from EU funds for angry farmers.

The unilateral imports were lifted last week only after the European Commission agreed to block the sale of wheat, corn, rapeseed and sunflower seeds from Ukraine to Poland, Hungary, Slovakia, Bulgaria and Romania from May 2 to June 5.

But the problem is unlikely to disappear.

Negotiations with Russia to extend an agreement that allows some grain to be exported through Ukrainian ports on the Black Sea to ease the global food crisis are uncertain. If the grain corridor agreement, which expires this month, is not extended, Ukrainian farmers will have little choice but to send all their grain exports through Eastern Europe.

Grain traders say that the price of grain in Ukraine is in line with the European market, but below the level required by many farmers in Eastern Europe.

The price of wheat in Europe rose in October to more than €350 per tonne, but has since fallen to pre-invasion levels of around €235 per tonne.

“Farmers blame governments for low prices due to imports from Ukraine, which is not true,” says a Polish trader.

And farmers in Ukraine complain that they receive much less than the market price, since transportation to Eastern Europe is calculated at about 100 euros per ton, which is much more than the cost of transporting grain to Ukrainian ports on the Black Sea.

EU restrictions on grain imports have worsened the already bleak outlook for agriculture in Ukraine, which before the invasion was the world’s third-largest grain exporter. Ukrainian farmers say that they have had to significantly reduce their acreage due to difficulties and high prices for products supplied to them from abroad.

“Romanian farmers lost the opportunity to sell their grain starting from May 2022”

The influx of Ukrainian grain into Eastern Europe also affects the ability of neighboring EU states to export their own grain due to a lack of available trucks and railcars.

In Romania, farmers complain that local processors and factories are not interested in their wheat and corn crops, claiming that Ukrainian grain trucks are arriving at their gates. Farmers say they cannot find trucks to transport their produce as logistics costs have risen 70% from pre-war levels.

“Small sellers, traders, food processors won in the EU and in the supply chain. Romanian farmers systematically lost the opportunity to sell their grain, starting from May 2022,” says Cesar Gheorghe from the consulting firm AGRIColumn.

According to the Ministry of Agriculture in Kyiv, since the beginning of the conflict, about 17 million tons of basic agricultural products have left Ukraine by roads, railways or the Danube.

The entire volume of grain, which is approximately 38% of Ukrainian exports, went to neighboring EU countries, as Ukraine’s borders with Russia and Belarus were closed.

“The desire of local producers to preserve the harvest in anticipation of a price increase created a deficit on the local market, so consumers hurriedly turned to Ukrainian grain available at that time,” says the Union of Grain Producers of Ukraine UGA.

Another 28 million tons of agricultural products from Ukraine were exported through Ukrainian Black Sea ports, according to UN data.

(Source: Agerpres)