Ukraine has already used up its 2018 basic and additional duty free quotas for wheat, maize, honey, grape and apple juice supplies to the European Union (EU).
According to Kyiv-based consulting agency Ukragroconsult, the quotas of 1.035mn tonnes of wheat and 1.125mn tonnes of corn were used in the first five days of January. The quota for duty-free barley exports as of January 5 had been 2.5% used (15,680 tonnes from the approved 615,000 tonnes), local media reported on January 16.
Under the terms of the much vaunted Deep and Comprehensive Free Trade Area (DCFTA) deal that Ukraine signed in 2014 as part of the Association Agreement with the EU it has duty free import quotas on a variety of goods to the EU that are a first step in integration with the EU markets. However, as the various industry lobbies in the EU are so strong – especially the agricultural lobby – these quotas have been kept extremely small. Most of the quotas are usually exhausted in the first two months of the year after which Ukrainian firms have to pay the full import duties of any other trader working with the EU that has no special trade deal.
The result is the DCFTA is neither “deep” nor “free” and has left Kyiv highly dependent on EU and IMF aid money to cover its funding needs rather than being able to trade its way out of its fiscal hole.
Last week, Maksym Martyniuk, First Deputy Agrarian Minister wrote on his Facebook page that Ukrainian farmers have also aready used up the tariff quotas of the EU for honey, grape and apple juice.
The main quota for duty-free supply of honey from Ukraine to the EU is about 8,000 tonnes (for grape and apple juice some 14,000 tonnes). At the same time, there are about 400,000 beekeepers in Ukraine, who produce about 70,000 tonnes of honey per year, while 57,000 tonnes of honey is exported, mainly to the EU, according to the official.
Agricultural production in Ukraine (excluding Crimea and Sevastopol, as well as rebel-controlled territories of the Donbas region) decreased by 2.7% year-on-year in 2017 following a 6.3% y/y decline in 2016, according to the state statistics agency Ukrstat.
Agricultural enterprises reduced production by 3.9% y/y, households - by 1.2% y/y in 2017. Last year, crop production decreased by 3.6% y/y, livestock by 0.4% y/y, Interfax news agency reported on January 16.