EU tariffs on Russian grain imports to the EU will have little impact

EU tariffs on Russian grain imports to the EU will have little impact
The EC has proposed high import tariffs on Russian and Belarusian grain imports, but the volumes and value of Russia's grain trade with the EU is so small, the new rules will have little effect. / bne IntelliNews
By Ben Aris in Berlin March 25, 2024

The introduction on high tariffs on the import of Russian grain to the EU will have virtually no impact as the volume of Russian grain arriving in the EU is so small and is not worth a lot of money.

The European Commission has proposed imposing a tariff of €95 per tonne on Russian and Belarusian imported grain, a plan being debated at the EU summit in Brussels on March 22.

Nominally the measure seeks to avert potential market destabilisation by preventing the arrival of large amounts of grain from Russia which has been enjoying several years of record large harvests.

However, the increase in tariffs will have almost no impact on Russia, as a high-ranking EU official noted that Russia's nearly 5mn tonnes of annual grain exports to the EU constitute merely 1% of the EU's total grain market and was only worth €1.3bn in 2023, less than 1% of what Russia earns from oil exports.

Russia has long since diversified its grain exports to the so-called friendly counties in the Global South. Russian grain exports may total up to 65mn tonnes in the agricultural year of 2023-2024, President Vladimir Putin said at a meeting with agricultural sector workers earlier this year.

With sanctions having largely run their course following the adoption of the thirteenth sanctions package in December that contained no new product groups, the new proposed grain tariffs are little more than symbolic gesture.

Nevertheless, the proposal encompass a broad spectrum of grain products, including essential commodities like wheat, maize and sunflower meal. "The measures are designed to prevent EU market destabilisation through any future significant redirection of Russian grain products onto the EU market," the EC said in a statement.

Grain prices spiked in the months following the start of the war two years ago on uncertainties over continued deliveries of Ukraine’s grain. Between them, Russia and Ukraine account for the largest part of traded grain. However, prices rapidly returned to normal after the establishment of the Black Sea grain deal that was renewed twice before being suspended last summer.

Since then, Ukraine has restarted seaborne grain exports after it pushed Russia’s fleet back from its coast and established solidarity corridors to expediate exports.

While the EC is selling the restrictions as a safeguard of EU's grain market from potential imbalances and ensure the continuity of fair competition within the bloc, as bne IntelliNews reported, members states like Poland and France are currently battling irate farmers that are campaigning to painful green regulations on agricultural production. The restrictions on Russian and Belarusian agricultural products are partly designed to provide some political capital in that argument.