EU to study whether all Ukrainian grain can be exported by land

Rift between countries in the bloc over how to handle end of Black Sea deal

A combine harvester unloads grain into a trailer on Monday during the summer wheat harvest in Ukraine. Bloomberg
Powered by automated translation

The EU is to examine the possibility of increasing the capacity of land routes for Ukrainian grain exports after Russia pulled out of a deal that kept the Black Sea route open.

The bloc's agriculture commissioner Janusz Wojciechowski warned on Tuesday that the plan would be expensive.

He declined to give a figure, but said it would be necessary for Ukrainian grain to remain competitive with Russia. The two countries at war are also among the world's top grain exporters.

Before Russia exited the UN-Turkey brokered Black Sea Grain Initiative last week, Ukraine exported 40 per cent of its grain via the Black Sea and the remainder through the EU's so-called "solidarity lanes".

The lanes were set up in May last year by the European Commission to help Kyiv export its produce over land borders with Poland and Romania by rail and road.

"We are ready to export [via] the solidarity lanes almost everything that Ukraine needs," Mr Wojciechowski said at a press conference in Brussels.

"Taking into account the production of grains of cereals and oilseeds in Ukraine, this is about four million [tonnes] per month, and we achieved this volume in November 2022."

Mr Wojciechowski said that he would present his proposal to the commission.

"Without this, there is a risk that Russia will benefit from this situation because it'll be cheaper to buy grain from Russian than pay for grain from Ukraine transported by Poland to Baltic ports," he said.

"The cost of this operation will always be higher than Russia can offer on the global market."

The EU's 27 agriculture ministers met on Tuesday to discuss the impact of Ukrainian grain exports on neighbouring states.

Five of these so-called "frontline states" - Bulgaria, Romania, Poland, Hungary and Slovakia - have been lobbying the commission to extend a ban on imports of certain Ukrainian agricultural products after it expires on September 15.

Introduced in May, the ban on imports of Ukrainian wheat, maize, rapeseed and sunflower oil has led to tensions with Kyiv.

Ukraine has strongly criticised their request, with President Volodymyr Zelenskyy saying an extension of the ban would be "unacceptable".

Except for Hungary, the states are also strong military supporters of Ukraine.

They have stressed that they are not trying to undermine Kyiv but to protect their farmers, who have complained about a drop in prices caused by a glut of cheap Ukrainian produce.

Poland, which is also facing a parliamentary election later this year, has taken the lead in voicing the five countries' concerns in Brussels.

Mr Wojciechowski avoided taking a position on their request during his press conference, focusing instead on the need for investment in the solidarity lanes. He also criticised Russia for using "food as a weapon".

He said that EU imports of Ukrainian produce jumped after Russia's invasion last year from about €7 billion ($7.73 billion) in 2021 to €13 billion in 2022.

Out of the €6 billion increase, €5 billion went to the five states requesting the ban be extended.

"You can imagine how big the problem is," said Mr Wojciechowski.

There are deep disagreements among EU countries on how to tackle the issue. Some of the frontline states have warned that they would introduce protective measures even if the commission refused to extend the ban.

The German and French agriculture ministers on Tuesday strongly pushed back against their lobbying efforts.

"There can be no unilateral decisions," said France's Agriculture Minister Marc Fesneau. "We can only respond to challenges of market destabilisation together."

German Agriculture Minister Cem Ozdemir said the commission needed to make clear any extension was "not possible".

He insisted that Poland's internal political disputes ahead of elections later this year should not be played out "on Ukraine's back".

A spokeswoman for the commission said Brussels was working "very intensively" with the five EU member states and Ukraine to try to find a solution.

"These measures are targeted and temporary," Miriam Garcia Ferrer said. "They were put in place for a very specific situation of logistical bottlenecks and facilitation of trade that was happening in these bordering countries."

There are alternative proposals on the table.

Lithuania has suggested setting up a so-called "Baltic route" for Ukrainian grain exports.

The move, proposed by three Lithuanian ministers in a letter seen by Reuters, would create "a viable and trusted alternative route" for exporting Ukrainian produce, including grain, through the ports of Tallinn, Riga, Ventspils, Liepaja and Klaipeda, said the letter, signed by three Lithuanian ministers.

The five ports have a combined grain export capacity of 25 million tonnes, said the July 21 letter.

It asked the commission for targeted action to create the route, such as "implementing measures to facilitate cargo handling between different railway gauges", and moving customs and other controls of the produce from the Polish border to the Baltic ports.

The railways of Ukraine and the Baltic states are built on a Russian gauge which is incompatible with that used in Poland, the only practical route between the countries.

Lithuanian Agriculture Minister Kestutis Navickas said in Brussels that his government would like all administrative procedures to be shifted from the Polish border with Ukraine to Lithuanian ports.

"It would be more efficient if customs clearance took place in European ports," he said.

Responding to a question about Lithuania's proposal, Mr Wojciechowski said that it was "possible" but also needed EU funding.

"It’s a long way from Ukraine to Ukraine’s natural markets, Europe, Indonesia, Bangladesh, Turkey," he said. "I think we should provide some support to this route."

Updated: July 25, 2023, 4:49 PM