EU, Confagricoltura: missed the opportunity to restore balance between support for Ukraine’s agricultural economy and safeguarding the market

According to Confagricoltura’s analysis, barring any dramatic and unlikely developments, during the session that will mark the end of the legislative term at the end of April, the European Parliament will vote in favor of the agreement reached on extending for one year the autonomous tariff measures in favor of Ukraine. In other words, the suspension of customs duties and quotas on the export of agri-food products to the EU market.

Compared to the current legislation, which will expire in early June, the agreement introduces significant innovations. Specifically, an “emergency brake” has been planned—effectively, the reinstatement of ordinary duties—that will be activated if the flow of products arriving from Ukraine exceeds the average levels in place during a period from the second half of 2021 to the end of 2023. However, the “emergency brake” covers only a list of sensitive products that does not include wheat.

For Confagricoltura, this choice is incomprehensible. The opportunity to restore a condition of balance between the support that must certainly be provided to Ukraine’s agricultural economy and the wheat market trends in EU member states has been missed.

Let the data speak. The latest FAO bulletin on the evolution of international prices for major raw materials for food has shown that grain prices settled, last March, at a level twenty percentage points lower than the same month in 2022. Specifically, the bulletin noted “a collapse in global wheat export prices.”

According to figures released by the USDA, the US Department of Agriculture, in the first seven months of the 2023-2024 campaign, EU wheat exports to North African countries were reduced by 25% compared to the same period of the previous year. The reduction even reached 60% for shipments to the Middle Eastern area. The competition from Russian wheat has reached unprecedented levels.

European Commission’s latest report on the performance of trade with foreign countries in agri-food products highlighted that wheat imports from Ukraine last year amounted to 6.2 million tons. Practically, they have doubled in volume since 2022. Since 2021, they have increased twentyfold. Hence, there is pressure to lower the origin prices in the EU member states.

The agreement on the extension of the suspension of duties on imports from Ukraine also includes the introduction of corrective measures by the European Commission in the presence of serious imbalances in the markets of one or more member states. Confagricoltura points out that there are all the conditions for the corrective measures to be adopted immediately after the agreement comes into effect.