Poland and Hungary ban Ukrainian grain imports to “protect local farming”

Trade and Economics - May 13, 2023

The Visegrad Group has received a lifeline after 3 of its members banned the transit of Ukrainian agricultural exports through their territories. On the 15th of April, Poland and Hungary both announced that they were unilaterally, albeit temporarily, suspending all agricultural imports from Ukraine until the 30th of June, including grains, fruits, vegetables, dairy, and meat. Slovakia followed suit on the 17th, as did Bulgaria on the 19th. This comes amid growing protests in many Central and Eastern European countries, that have stemmed from the EU’s move last May to remove tariffs and quotas on Ukrainian grain exports and establish ‘EU-Ukraine Solidarity Lanes’ to facilitate the transit of Ukraine’s agricultural exports, given Russia’s blockade of Black Sea ports.

Nonetheless, a significant part of the transiting Ukrainian produce has failed to continue to its final destination, in part due to bottlenecks and low global demand, and has instead flooded local markets, which has undercut local prices and fuelled resentment among produces in Central and Eastern European countries. In the case of Poland, farmers began to express concerns last September, and the protests boiled over in February. They accuse the government and the EU of ignoring their concerns. This culminated with the resignation of Agriculture Minister Henryk Kowalczyk at the start of April, forced out due to protesters’ accusations of neglect of their concerns.

Polish Prime Minister Mateusz Morawiecki announced the measure to ban Ukrainian agricultural exports in a tweet, stating that “we will never leave farmers without help. That is why we have specific measures [including] a ban on grain entry from Ukraine”. Furthermore, PiS leader and Deputy Prime Minister Jarosław Kaczyński stated that this move was necessary to “protect Polish agriculture” and prevent a “far-reaching crisis of Poland’s farming sector”. According to new Agriculture Minister Robert Telus, Poland was “forced to do this because the European Union had its eyes closed to the problem in Poland regarding the arrival of large amounts of grain from Ukraine”. In a similar vein, Hungarian Agriculture Minister István Nagy justified that “in the absence of meaningful EU measures, [Hungary] will temporarily ban the importation of grain and oilseeds originating from or coming from Ukraine, as well as several other agricultural products into Hungary”. But he also emphasised that during the suspension, “the government expects a permanent solution and the adoption of EU measures”.

The European Commission has forcefully condemned these actions, highlighting that “trade policy is of EU exclusive competence and, therefore, unilateral actions are not acceptable”. The EU’s Agriculture Commissioner Janusz Wojciechowski, himself a Pole, has branded the bans as “unacceptable”. The EU is concerned about the legality of this move, as well as the economic impact it could have on EU countries like Spain that are dependent on Ukrainian agricultural imports, as well as on embattled Ukraine itself. Nonetheless, the EU has simultaneously been mediating between the parties and attempting to find solutions to resolve the issue by addressing the concerns of the affected member states. In particular, it has announced that it is considering a further support package for farmers affected by the influx of Ukrainian grain, in addition to the 56 million euro package already approved in March.

This wedge into the western alliance of support for Ukraine has come as a surprise as far as Poland is concerned. Poland, along with the Baltic States, has been one of the most ardent supporters of Ukraine within the EU, in terms of military and economic support, as well as accommodating Ukrainian refugees. Precisely for this reason, a crack had emerged within the Visegrad Group, as Poland’s traditional ally, Hungary, has been lukewarm in its support for Ukraine and has been tacitly sympathetic towards Moscow. Therefore, this export ban seems to have brought respite to Visegrad and reinvigorated its purpose, as 3 of its members defend their actions and demand a solution from the European Commission. Indeed, last week the European Affairs Committees of the Visegrad Four parliaments adopted a joint declaration in Budapest highlighting the challenge posed by Ukrainian grain.

Nonetheless, we must keep in mind that Poland is still one of Ukraine’s staunchest allies in military and diplomatic terms. Kaczyński emphasised this point when discussing the ban, making it clear that “we remain, without even the slightest change, friends and allies of Ukraine”. Furthermore, this move by Poland must be understood in light of the domestic context. On the home hand, the protests have been disruptive and have shaken the country for months, with protesters even threatening to “ruin” President Zelenskyy’s visit to Warsaw at the start of April, and blocking border crossings and train connections. So the government has been keen to address the farmer’s demands and defuse the situation to prevent an escalation.

Furthermore, Poland’s ruling party PiS likely has the upcoming parliamentary elections of late 2023 in mind. The party’s strongholds are in rural regions near the Ukrainian border, such as the Subcarpathian, Lublin and Masovian voivodeships. Thus, Morawiecki’s move with the ban of agricultural imports probably responds to an electoral logic of appealing to its traditional base of rural voters who may have been hit by price undercutting. Slovakia is also heading into general elections later in 2023, while Bulgaria has a caretaker government and may have to hold snap elections in the near future.

Nonetheless, on Tuesday 18th, Poland and Ukraine reached a deal, which new Polish Agriculture Minister Robert Telus said would offer Poland “guarantee[s] grains would not be stuck in Poland”. Under the agreement, Poland will resume transit of Ukrainian grain, but this will have to be sealed and monitored to ensure it doesn’t stay in Poland. This deal came into effect on Friday 21st of April, and both Poland and Romania lifted the ban and resumed transit, pending final resolution by the European Commission.

However, this issue is very likely to resurface in the near future. This is because the Black Sea initiative brokered by Turkey, which allows Ukraine to export large amounts of grain through blockaded ports to be able to reach countries in the Global South, is due to expire in May, and prospects for renegotiation are not promising as Russia demands the lifting of Western sanctions as a precondition. Therefore, this could put even more pressure on the land-based Solidarity Lanes that run through the EU.