Poland demands EU action to reduce impact of Ukrainian grain glut on CEE markets

Poland demands EU action to reduce impact of Ukrainian grain glut on CEE markets
Thousands of tonnes of Ukrainian grain have been stuck in Poland since the government offered to store it when Russia blocked Black Sea export routes. / bne IntelliNews
By Wojciech Kosc in Warsaw March 31, 2023

Poland wants the European Union to take “immediate action” to limit the inflow of Ukrainian grain to the EU market, Prime Minister Mateusz Morawiecki said on March 29.

Thousands of tonnes of Ukrainian grain have been stuck in Poland since, early into the war waged by Russia, Poland offered to store it and help with exports to markets Ukraine typically supplied, such as Africa or the Middle East, after Russia blocked Ukraine's seaborne export routes. The Black Sea export route has subsequently been reopened.

But the logistics side of the effort fell short, resulting in the grain now impacting the local market. That has quickly turned into a political problem for the Polish government, facing a tough reelection battle later this year. 

Farmer protests have taken place in Poland and other countries in the wake of grain prices dropping as a result of surplus grain now flooding the markets it was never supposed to trade on.

In Bulgaria, farmers began a three-day blockade on March 29 of main checkpoints on the border with Romania to protest tariff-free imports of Ukrainian grain, AP reported. They claimed the oversupply of Ukrainian grain left them with 40% of their harvest from 2022 still lingering unsold. 

Another problem is that unsold grain has to be stored in silos, taking up space that should be empty now ahead of this year’s harvest. 

Six Central European states asked the European Union in February to take steps to mitigate problems caused by increased Ukrainian grain imports into the region. Poland, Hungary, the Czech Republic, Slovakia, Romania and Bulgaria  made a joint request at the EU Agriculture and Fisheries Council meeting in Brussels for immediate measures.

Morawiecki told reporters on March 29 that he would send a letter demanding action to the European Commission President Ursula von der Leyen.

“Our letter demands not only money … but in addition to that, we demand the use of all regulatory instruments, precisely such as quotas, deposits, protective duties, or any other which will limit the import or block the import of Ukrainian grain into Poland,” said Morawiecki. 

The PM also said that Poland would not hinder efforts to move grain to Polish ports to export it.

“If someone wants to export [grain] through the territory of Poland to Gdansk and from there further to Africa, the Middle East or any other countries of the world, let them do it, be my guest,” Morawiecki said.

To address the problem, Poland has earmarked PLN1.12bn (€240mn) for compensating farmers struggling to cope with low prices of grain. The government also plans to subsidise transporting grain to ports, simplify procedures to build new silos, as well as emergency-buy grain to export to Africa as humanitarian help.

The government will also offer farmers PLN10bn worth of preferential “liquidity loans.”

Poland, alongside Bulgaria and Romania, may also receive some €60mn in help from the EU’s agricultural crisis reserve, Politico Europe reported on March 30. Given the amount Poland itself targeted to deal with the problem, the EU help appears to be far too little. The reserve is only €450mn a year in total.

“The Czech Republic and Hungary were also considered for emergency funding but didn’t make the cut,” according to Politico Europe.