A grain dispute shows the pitfalls of accession to the bloc
A dispute over Ukrainian agricultural products flooding markets in the east of the EU escalated over the weekend, with Poland and Hungary announcing import bans on Ukrainian grain and other produce until at least the end of June.
Despite being one of Ukraine’s strongest supporters, the Polish government acted unilaterally to alleviate pressure on local farmers caused by a glut of Ukrainian imports. With one eye on the importance of the conservative rural vote to his re-election chances in the autumn, Prime Minister Mateusz Morawiecki declared, “we will never leave farmers without help.”
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Hungary meanwhile called on the EU to take action, with Agriculture Minister István Nagy expressing hope that the import bans will create “enough time to take meaningful and lasting EU measures” to make the bloc’s “solidarity corridors” for the import of Ukrainian produce more sustainable.
The EU in turn slammed the moves made by Poland and Hungary, saying “unilateral actions” were unacceptable and a potential breach of the bloc’s trade policy. Ukraine’s agriculture ministry also responded to the bans critically, adding “unilateral drastic actions will not accelerate a positive resolution.” Kyiv seems to have been caught off guard, after a previous agreement with Poland had promised to halt imports of grain intended for the domestic market while allowing transit to other countries.
The dispute is unlikely to make a significant impact on Eastern Europe’s support for Ukraine’s war effort, although it may boost resentment among some sections of the public that are already sceptical. It is already, however, raising fresh concerns about Ukraine’s ambitions for accelerated EU entry. With much Ukrainian produce that is normally exported via the Black Sea now making its way overland into Europe, the EU may be getting a foretaste of the kind of economic disruption it could expect from rapid Ukrainian EU accession.
Most tariffs on Ukrainian goods have been removed under the EU’s free trade agreement with the country, but the current crisis is, at least in part, being caused by the emergency removal of remaining price controls, tariff quotas and anti-dumping duties last year. While the current situation is extreme, it appears likely that farmers in the EU would struggle to compete over the long term with the economies of scale open to Ukrainian farming: the average Ukrainian farm covers 1000 hectares compared to just 16 hectares within the EU.
This leads to another looming issue — the adaptation of the EU’s Common Agricultural Policy (CAP) to Ukrainian EU membership. The Ukrainian agricultural sector is dominated by giant conglomerates, some of which are accused of avoiding paying their fair share in taxes. These agricultural mega-firms would stand to gain an enormous portion of EU farming subsidies with a majority of CAP payments being allocated on the basis of land ownership.
Whether the recipients of EU subsidies are small or large farming operations, the sheer size of Ukraine’s agricultural sector would put an unprecedented strain on the current system. But EU citizens would be doubly unhappy if Ukrainian EU entry led to a lion’s share of farming subsidies going to conglomerates capable of undercutting competitors elsewhere.
Ukraine’s effect on the EU’s agricultural framework was always going to be a major hurdle in its attempt to join the bloc, and the new dispute with allies in Eastern Europe is bringing this problem to the fore. The EU’s ability to find a successful resolution will be crucial not only for pacifying concerned farmers, but also for the development of Ukraine’s wider European aspirations.