The export of products from Ukraine is decreasing year by year, which is the result of both the destruction of production plants and communication routes. In relations with Poland, the decline is the result of the introduction of an embargo on Ukrainian products in April 2023. – However, let us remember that last year we imported goods worth approximately EUR 4.5 billion from Ukraine, and we sent goods worth approximately EUR 11 billion – emphasizes Dariusz Szymchycha from the Polish-Ukrainian Chamber of Commerce and adds: – I have the impression that in this entire discussion around the border and Ukraine there is a lack of basic information and hard data, everyone operates on emotions.
Emotions, not hard data
– Exports have been the basis for financing a significant part of Ukraine’s budget since the first year of the war. Unfortunately, exports are decreasing year by year, which is the result of the destruction of production plants and communication routes. Until the outbreak of the war, approximately 60 percent Ukrainian exports passed through the Black Sea – today this sea is mined, Russia withdrew from the agreement on the so-called grain corridor, so these streams of goods must go by land, also through Poland – says Dariusz Szymchycha, first vice-president of the Polish-Ukrainian Chamber of Commerce, to the Newseria Biznes agency.
In the first year of the war, there was a breakdown in Ukraine’s trade – Ukrainian exports shrank by 35.1% and imports by 24.2%. the result of factors strictly related to the war (loss of part of the territory, destruction in industry), as well as the fact that before the outbreak of the war, Russia and Belarus were important economic partners for Ukraine, especially in terms of importing fuel. After February 24, 2022, these commercial relationships ceased. However, the main reason for the sharp decline in the value of Ukrainian trade was the blockade of ports on the Black Sea. Since they have lost their status as the main export gateway, railways and road transport have gained in importance, through which Ukraine currently sends and imports most of the goods across the borders of its western neighbors.
– It is getting worse and worse, the value of Ukraine’s exports is decreasing every year – says the expert. – Last year, the value of Ukrainian exports was USD 36 billion, of which USD 24 billion constituted the export of agri-food products. This shows that as many as approx. 60 percent export values are agricultural goods, very important for maintaining the defense capacity of the Ukrainian state.
Ukraine as a whipping boy?
As noted in the analysis by the Center for Eastern Studies, in 2023, Ukraine sold goods worth USD 36.2 billion abroad, 18.1 percent more than last year. ($8 billion) less than in the previous year. The decline resulted mainly from lower prices on world markets – primarily cereals – and not from a smaller sales volume, as the sales volume increased slightly (by 0.6% – from 99.8 million to 100.3 million tons).
The main direction of Ukrainian foreign sales remains the European Union, which accounts for 65.6 of exports. It was followed by the countries of the Middle East (13.8%) and Southeast Asia (10.5%). Importantly, in 2023, Poland retained its position as the most important recipient of Ukrainian goods in the world, even despite a 28.6% drop in imports. (from USD 6.7 billion in 2022 to USD 4.8 billion last year), the main reason for which was the introduction in April last year ban on the sale of certain species of cereals and oil plants. Since then, the value of food imported from Ukraine has fluctuated at a moderate level, not significantly different from the levels recorded immediately before the outbreak of the war. Most products crossing the Polish border are in transit and are destined for foreign markets. The protest of Polish carriers at the border, which started in November, also contributed to a reduction in Ukrainian sales to Poland. In recent weeks, the flow of goods has slowed down or even prevented farmers’ protests.
– Polish farmers – and not only Polish farmers – have been taking protest actions for several weeks against the EU’s Green Deal policy and various internal problems, such as the lack of subsidies for fuel prices, and on top of that, the Ukraine issue. However, the problems of Polish and European farmers cannot be explained by the fact that Ukraine has good land and produces agricultural products, because it is not Ukraine that influences global prices of food products, e.g. grain prices. These prices are determined on world exchanges – says the vice-president of the Polish-Ukrainian Chamber of Commerce. – The simplest example: in April last year we introduced a ban on the export of grain from Ukraine to Poland, and since then grain prices on world stock exchanges have dropped by 30%. To shows that the problem is not grain from Ukraine, but the decreasing demand around the world and the dumping policy of Russia, because it is currently the world’s largest exporter of wheat.
From a formal perspective, there is still no ban on the export of grain from Russia
According to Dariusz Szymwycha, the current situation – related to farmers’ protests and the blockade of the Polish-Ukrainian border – is currently based largely on emotions, but it lacks reliable, hard data and basic facts.
– The value of Ukraine’s exports to the EU is twice less than the value of agri-food exports from Poland. We are talking about the fact that Ukrainian goods are price competitive – and they probably are, but on the other hand, the Ukrainian farmer does not receive direct subsidies and other aid from the European Union. So let’s not put ourselves in the position of the wronged and let’s not blame the Ukrainians for what they did not create, because the Green Deal and certain changes in farming methods are a decision of the European Union, not Ukraine, after all, Russia’s attack on Ukraine was not its decision, only the action of the Russian Federation – says Dariusz Szymczeja.
And adds:
It is already a phenomenon that Poland banned the export of grain from Ukraine last year, protecting its internal market, while formally there is still no ban on the export of grain from Russia. This is because under WTO agreements food should not be subject to an embargo. This is a paradox – formally we can export grain from Russia, but we cannot export it from Ukraine. The question is whether this is fair, just and reasonable.
The Vice-President of the Polish-Ukrainian Chamber of Commerce also estimates that Polish enterprises also suffer from reduced trade. Last year, the trade surplus between the two countries amounted to approximately EUR 7 billion in favor of Poland – imports from Ukraine amounted to approximately EUR 4.5 billion, and our exports to this country – approximately EUR 11 billion. As Piotr Kalisz, chief economist at Citi Handlowy, wrote in Money.pl, even if the export of ammunition and fuel were eliminated, the surplus would exceed EUR 3.5 billion. The first two months of protests have already shown that Polish exports to this country – after excluding fuel, ammunition and weapons – were approximately EUR 80 million (approx. 10%) monthly lower than the previous trend. If, as in recent months, Ukraine continues to increase exports by sea and invests in the development of river transport through Romania, exports via Poland will decline as a result.
Business isn’t slow, but…
According to the expert, both the Polish government and the European Commission missed the moment to solve this crisis.
– Possible problems related to a larger inflow of agri-food products to European markets than in previous years were already discussed in the fall of 2022. Unfortunately, the previous government missed it, and the European Commission took the simplest solution: we open the market. This is no way to solve important social problems. Of course, one must understand the nervousness of Polish farmers who are not struggling with business and have looked for the simplest explanation in this increased inflow of goods, which in fact has no major impact on the market situation. I am glad that the current government, Minister Siekierski, is talking to farmers and partners from Ukraine. Perhaps this will end with a kind of license, i.e. setting a certain export quota for specific products that will be delivered to Poland, to specific recipients, after checking their quality in terms of phytosanitary. Such a solution would probably be satisfactory for both Polish and Ukrainian farmers. Let us not forget that without money from agri-food exports, Ukraine’s defense capabilities – and therefore also the certainty of our security in Poland – will be much smaller – emphasizes Dariusz Szymwycha.
Last week, the Minister of Agriculture and Rural Development, Czesław Siekierski, met with representatives of protesting farmers on the Polish-Ukrainian border and announced that negotiations regarding an agreement, which will be coordinated by the deputy head of the ministry, Michał Kołodziejczak, are to start next Thursday. On Wednesday, there will be another round of meetings with the Ukrainian side.
– There is no doubt that we need to help Ukraine. But opening up to the import of agricultural products to the EU cannot take the same form as it currently does. Polish farmers and farmers from other EU countries will not be able to withstand the competition. We need greater protection of the EU market here and now, as well as appropriate long-term mechanisms, said Czesław Siekierski during the meeting of the EU Agriculture and Fisheries Council.
During the meeting, the minister raised the need to compensate farmers as soon as possible for the costs they incurred in connection with the implementation of the Green Deal and the excessive inflow of agricultural products from outside the European Union, including from Ukraine. Support for farmers in these respects should come from both the European Union budget and national budgets. He announced submitting an application to the European Commission to pay compensation to farmers, as well as an application for support from the EU budget for grain exports from European Union stocks, including from Poland.
Source: Newseria
