‘The Market Is Dead’: Ukraine’s Farmers Count the Cost of Grain Deal’s Collapse
Farmers in Ukraine, such as Valery Kolosha, are facing the consequences of Russia's actions that restrict Ukraine's grain exports.
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Posted 8/26/2023, 11:00:00 AM
wsj.com
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Ukrainian farmers are expected to maintain the same area of winter wheat sowing for the 2024 harvest, despite higher logistics costs during the wartime export crisis.
Russia's blockade of Ukrainian grain exports and extreme weather events have raised concerns about global food supplies, but the OECD suggests that the situation may not be as dire as it seems, with adjustments and adaptations being made to production and logistics chains to mitigate potential shocks in the market.
Russia is sticking to its conditions for a return to the Black Sea grain deal, including the reconnection of its state agricultural bank to the international SWIFT bank payments system, while Ukraine refuses to alter its stand and be hostage to "Russian blackmail."
The Polish government is urging the European Union to extend the ban on imports of Ukrainian grain in order to protect its own farmers, as Prime Minister Mateusz Morawiecki emphasizes the importance of the upcoming parliamentary elections in determining Poland's agricultural future.
Poland, Slovakia, and Hungary will impose their own restrictions on Ukrainian grain imports after the European Commission decided not to extend a ban affecting Ukraine's five EU neighbors.
The European Commission's ban on grain shipments from Ukraine into five bordering EU nations has expired, leading Poland, Hungary, and Slovakia to impose their own import restrictions, citing protection of their farmers' interests. Meanwhile, North Korean leader Kim Jong Un visited Vladivostok, Russia, prompting concerns about potential arms deals between Pyongyang and Moscow.
Sanctions imposed on Russia due to the invasion of Ukraine have resulted in fuel shortages, scarcity of readily available items, and impacts on the aviation industry, paper production, plywood manufacturing, cell-phone reception, tire and lubricant supply, and the production of military vehicles.
Russia's bumper wheat harvest, coupled with the disruption of Ukraine's food exports due to the Kremlin's war, has cemented Russia's position as the leading exporter of wheat and has resulted in the lowest wheat prices in almost three years. Despite Russia's efforts to raise prices to benefit its own farmers and generate more tax revenues, the supply glut has depressed prices and made Russia the "price maker" in the market.
Ukraine plans to sue Poland, Hungary, and Slovakia over their bans on Ukrainian agricultural products, which were implemented to protect their own farmers from increased Ukrainian exports following Russia's blockade on Ukrainian ports; Ukraine argues that the bans are legally wrong and a systemic concern regarding whether international trade partners can trust Brussels.
Poland has announced that it will cease supplying weapons to Ukraine amidst a heated dispute over grain exports, with fears of Ukraine flooding the market with low-cost grains due to blocked Russian export routes through the Black Sea.
Slovakia and Ukraine's farm ministers have agreed to establish a licensing system for trading in grains, with the ban on Ukrainian grain imports to Slovakia being lifted once the system is set up.