Five EU nations announce a ban on Ukrainian grain

In 2014, tensions between Ukraine and Russia led to disruptions in grain exports. This caused prices to sore as buyers scrambled to find alternative sources. As the situation stabilized, the country regained its position as a major exporter and in 2020/21, Ukraine's grain exports reached a record high of 57.2 million metric tons, driven in part by strong demand from China.

Following the Russian invasion of Ukraine, the grain market was one of the sectors hardest hit as ports in the Black Sea were closed.

In July 2022, three of Ukraine's ports were re-opened under a United Nations backed pact to create a safe corridor for grain exports and to help tackle the global food crisis.​ Now, however, farmers in eastern European countries have complained of the influx of Ukrainian products in the market and the subsequent lowering of prices and reduced sales.

The Prime Ministers of five eastern EU countries - Bulgaria, Hungary, Poland, Romania and Slovakia - wrote to European Commission President, Ursula von der Leyen, last month explaining that the increase in shipments from Ukraine had been unprecedented and tariffs may need to be re-introduced unless the influx could be stopped by other means.

In response to individual country bans, the EU’s Executive has maintained that such unilateral action is unacceptable and has requested information from Hungary and Poland on their import bans. All this as the EU considers a second package of farmer compensation after an initial 56 million euros was agreed upon in March.

In addition, there is a war-time deal to export millions of tonnes of Ukrainian grain via the Black Sea. However, as the deal's mid-May deadline looms, prospects of an extension are uncertain.

The collapse of this deal coupled with bans would mean that millions of tonnes of grain would be stranded inside Ukraine. In the coming years, it could lead to a large reduction in the planting area and harvest as well as the closure of farms and processing plants.​

With no end to the war and ongoing threats of further escalation, uncertainty continues to hang over agricultural markets in Ukraine.

Prerna Bhalla, Investment Analyst