EU allows countries to block Ukraine grain at £160m cost

The European Union on Tuesday allowed five member states to ban imports of Ukrainian grains as domestic concerns outmuscled the bloc’s support for its war-torn neighbour.

The emergency blockade, the first major challenge to Brussels' unwavering support for Ukraine, could cost Kyiv’s agricultural industry up to $200 million (£160m), according to analysis by its national bank.

Bowing to pressure from the likes of Poland and Hungary, the European Commission announced the countries could block imports of wheat, maize, rapeseed and sunflower seed from Ukraine.

Vladimir Putin, the Russian president, has long hoped his war of attrition in Ukraine would eventually see support from Kyiv’s western allies splinter as the cost of conflict becomes too great.

In 2024, Ukraine faces a series of diplomatic challenges in maintaining support while a number of its partners, including the UK and US, hold national elections.

The ban on grains will apply to exports to Poland, Romania, Bulgaria, Slovakia and Hungary, all of which, except for Sofia, are Ukraine’s immediate neighbours. It will remain in place until June 5.

The eastern capitals had demanded action from Brussels amid fears the glut of cheap Ukrainian produce had undercut domestic producers, sparking uproar among their farmers.

Staunchest allies

The countries, except for Hungary, are considered among Ukraine’s staunchest allies within the EU, raising questions over the plausibility of future support for Kyiv.

While they will be able to block the sale of Ukrainian grains domestically, Brussels warned that they are expected to re-export to other parts of the bloc to avoid further damage to Ukraine’s farmers.

Serhiy Nikolaichuk, the institution’s deputy governor, said it had cut its second quarter exports forecast because of the risk of such measures.

The National Bank of Ukraine also warned that even minor curbs would cause wider issues because of a need to reorient trade to other destinations. The Commission enforced the ban after demands from Warsaw, Bucharest, Sofia, Bratislava and Budapest, demanded protection for their agricultural industries.

In return for the temporary blockade, Bulgaria, Hungary, Poland and Slovakia agreed to lift their unilateral bans on wheat, maize, rapeseed and sunflower seed coming from Ukraine, which stopped grains transiting through their countries.

“These measures are necessary given the exceptional circumstances of serious logistical bottlenecks experienced in five member states,” the Commission said.

“While addressing concerns of farmers in those Member States neighbouring Ukraine, the measures uphold the EU's strong commitment to support Ukraine and preserve its capabilities to export its grains which are critical to feed the world and keep food prices down, in the face of the huge challenges posed by the unprovoked Russian aggression.”

Compensation to five EU states

The five countries will also receive €100m to compensate farmers impacted by cheap imports. Brussels officials are organising convoys of trains, trucks and barges to help transport surplus Ukrainian grains away from its neighbouring countries, sources said.

Most commercial traders have refused to pay for the transport of grains via land because it costs more than the traditional Black Sea route.

The single-sided measures by the eastern states challenged the EU’s support for Kyiv in the wake of Russia’s invasion, as well as creating a bottleneck for overland exports.

Russia said on Tuesday the window was closing to extend a deal brokered by the United Nations in July last year, which reopened sea routes for grain shipments out of Ukraine’s southern ports.

Moscow has repeatedly threatened to walk away from the Black Sea Grain Initiative claiming the West had broken promises to ease sanctions on its own agricultural industry.

“Russia's position is well known - the deal was extended for two months,” Dmitry Peskov, the Kremlin’s spokesman, said. "The terms of the deal that concern Russia's agricultural sector are not being fulfilled."

Brussels last month dropped tariffs and quotas on Ukrainian food trade to protect Kyiv’s position as one of the world’s agricultural powerhouses, as well as to counter fears the war could cause global food shortages.