26 Apr 2024
Eastern Europe, Caucasus and Central Asia, Trade, economic integration and globalization

Experts Appeal: European Agriculture Stands to Benefit from Ukraine's Integration with the EU

Ukraine possesses vast agricultural potential, with 42 million hectares of fertile land, that has the capacity to significantly enhance the EU's position within the global food market. Agriculture constitutes Ukraine's third-largest economic sector, contributing 10.9% of GDP and employing 2.5 million people, in contrast to the EU's figures of 1.4% GDP contribution and 4.2% sector employment. Strategic decision-making and dialogue are crucial to realize this potential and strengthen Ukraine-EU agricultural cooperation.

While war currently ravages Ukraine, Ukrainian authorities will soon commence accession negotiations for EU membership. This will ultimately lead to the integration of its agricultural production into the EU single market, likely necessitating a reform of the EU's Common Agricultural Policy and agricultural subsidy system.

Global grain markets have experienced substantial fluctuations since the war's outbreak in February 2022. This volatility stems from both a general downward trend in global market prices and unfair practices by Russian trade companies seeking to displace Ukraine from its established markets, particularly in Asia and Africa.

These factors have contributed to a marked decline in the profitability of grain production across most European countries, including Poland. Consequently, farmers' protests have erupted in Poland (and other European nations), with farmers asserting that the European Green Deal and the influx of Ukrainian agricultural products are responsible for the deterioration of their economic situation.

The farmers' perception of Ukraine's role in the decline of grain production profitability is largely attributable to misinformation. It is imperative to disseminate evidence-based information about the current state of grain markets. Both Polish and Ukrainian agricultural experts have an obligation to make every effort to communicate the realities of Polish- Ukrainian trade relations. Tensions between Ukraine and Poland, spurred by misinformation regarding the impact of Ukrainian products on the Polish grain market, must be addressed.

Concurrently, the European Green Deal's agricultural strategies should be clarified for farmers. These strategies are designed to mitigate agriculture's impact on the climate and environment. The promotion of sound agricultural practices aims to ensure the sector's long- term production capacity and enhance its resilience to climate change. The quality of public debate on these issues is suboptimal, and the general public's understanding tends to be oversimplified and lacking adequate factual support.

Presently, the terms governing Ukrainian products' access to the EU's internal market are under negotiation. On 23 rd April the European Parliament gave the final green light to the understanding on the extension of the Autonomous Trade Measures (ATM) for Ukraine in the face of Russia’s war of aggression. Now, the way is increasingly clear for extending the stop to tariffs on food imports from Ukraine until June 5, 2025, to support Ukraine amidst Russia’s continuing war of aggression.

Poland and Ukraine are also engaging in parallel bilateral negotiations. The resulting solutions should facilitate the resolution of immediate issues (such as the estimated 9 million tons of grain stockpiled in Poland) while maintaining a long-term perspective. Decisions
must be grounded in thorough fact analysis and evidence-based policy that foster enhanced economic cooperation across multiple sectors of both economies. Halting the transit of Ukrainian goods through Poland is unacceptable.

All stakeholders involved in the process of integrating Ukrainian agriculture with the EU single market should recognize that it will intensify competition and necessitate adjustments among EU producers of agricultural raw materials and their processors. Experts contend that Ukrainian competition will present a strategic challenge for Polish farmers and will provide an impetus for further modernization of the Polish agricultural and food sector, as well as the exploration of new strategies to bolster Polish food exports. Within the framework of the Single Market, this integration should ultimately yield favourable outcomes for both Polish and Ukrainian agri-food sectors. These benefits include market access for Ukrainian producers, inclusion in EU value chains, and significant restructuring and productivity gains for Polish agriculture.

The above conclusions are the outcome of the first seminar “Cultivating Connections - Polish-Ukrainian Food Trade Talks” organized on 19 th April by CASE Poland Foundation based in Warsaw and CASE Ukraine based in Kiev.

Participating experts:
Ewa Balcerowicz – Chairwoman of the Supervisory Council – Centre for Social and Economic Research, CASE Poland

Grzegorz Brodziak – Chairman of the Board - Goodvalley Agro S.A. Wawrzyniec Czubak – Professor at the University of Life Sciences in Poznań

Volodymyr Lapa – ex-Deputy Minister of Agrarian Policy and Food, currently officer of Ukrainian Army

Veronika Movchan – Research Director at Institute for Economic Research and Policy Consulting

Oleg Nivievskyi – Associate Professor at Kiev School of Economics

Arkadiusz Sadowski – Professor at the University of Life Sciences in Poznań

Contact person:
Grzegorz Brodziak
Phone number: +48608308420
E-mail: grzegorz.brodziak@goodvalley.com