EU triggers crisis fund to bail out farmers hit by Ukraine grain influx

The European Commission is proposing to mobilise €56 million from the EU budget to help Poland, Bulgaria, and Romania cope with increased imports of cereals and oilseeds coming from neighbouring Ukraine.

On Monday (20 March), Agriculture Commissioner Janusz Wojciechowski communicated to the EU-27 agriculture ministers the decision to activate the agricultural reserve in a bid to ease the burden for European farmers impacted by the recent increase in Ukraine’s grain imports.

The bulk of the EU aid – €30 million – is earmarked for Poland, while Bulgaria and Romania will get €17 million and €10 million, respectively.

According to an EU source contacted by EURACTIV, the calculation was done based on objective criteria such as pressure on local prices from the excessive supply of cereals and oilseeds, as well as tensions in the logistics chains from increased transit of products from Ukraine.

“This is support for the farmers affected by the increase of imports from Ukraine, not for the consequences of the war,” Wojciechowski explained in a press conference.

The total amount of the aid could be even doubled to €112 million as the Commission allows the three member states to co-finance the support measures using expenditures from their national budgets.

The issue was raised at the EU agriculture ministerial meeting in January by a group of six member states – Poland, Romania, Hungary, Slovakia, and Bulgaria – complaining about the impact of the EU’s so-called ‘solidarity lanes’ on EU countries neighbouring Ukraine.

The EU launched the solidarity lanes initiative at the end of May 2022 to help Ukraine export agricultural goods via all possible routes – including rail, road, and river transport – in the face of disruptions caused by Russia’s war.

One year after the start of the war, the measures have proven successful in boosting Ukraine’s exports but European farmers have repeatedly warned that large amounts of grain get stuck in border regions, where they crowd local producers out of the market.

In the past month, the Commission services have invited the six member states to provide a detailed assessment of the economic impact of these imports on farmers.

Based on information and other data available, the EU executive acknowledged the difficulties faced by the farmers located in these regions, agreeing to provide support to those who have clearly been impacted.

According to an EU source, Commissioner Wojciechowski told the EU ministers behind closed doors that limiting the support measures to three countries does not mean that farmers in other member states do not suffer from the current situation, but explained that their markets face much lower pressure from increased imports from Ukraine.

In particular, requests for support coming from Slovakia and Hungary have been dismissed after the Commission’s analysis, which took into account the changes in the supply situation of different grain and oilseed markets.

The EU farmers association Copa-Cogeca said the support measure was “too late, not enough, and not coherent”, calling on the Commission to support Ukrainian farmers without forgetting its own farmers.

To determine whether countries qualified for the extra support, the Commission used the average storage capacity in the 6 countries over 5 years as a baseline measurement. As per this calculation, the EU executive did not deem Romania impacted enough to justify the EU support measure.

An internal document seen by EURACTIV shows that the increased Ukrainian imports replace to a great extent the significantly low domestic production following the dry and hot conditions in the summer of 2022.

“In Romania, we cannot observe an oversupply,” said Wojciechowski.

However, the Commissioner stressed that Romania is in a very specific situation as the main solidarity lanes hub.

For this reason, the Commission decided to make an exception considering the increased pressure of being a transit hub which led to higher transport and storage costs for Romanian grain.

In a bilateral meeting with Romanian Agriculture Minister Petre Daea, Wojciechowski acknowledged that Romania’s logistics chains are strained, given its strategic location, and recognised the importance of Constanta port as an export hub to reach traditional clients of Ukrainian grains and oilseeds.

This is only the second time the Commission has triggered the agricultural reserve, included in the Common Agricultural Policy (CAP) scheme for the current programme period.

With a financial envelope of €450 million per year, the fund can be used to finance exceptional measures to counteract market disruptions affecting production or distribution.

The Commission opted to use only a limited part of the amounts available in the agriculture reserve for 2023, leaving most of the budget for other potential crises.

“We have ‘reserve’ for the crisis reserve and we used only €56 million euro for the specific situation,” Commissioner Wojciechowski told reporters, anticipating that there could soon be another decision to help the Italian farmers cope with avian influenza through the agriculture reserve.

The Commission’s proposal will formally be communicated to the capitals on Thursday (23 March) in a bid to get their go-ahead by 30 March in a specific technical committee dealing with the approval of secondary laws.

Tags: imports, Cereals, Ukraine, Bulgaria, grain, Romania, EU, Poland, oilseeds, European Commission