Will the small boat of the friendship between Poland and Ukraine be overturned?, Sigh at the grain! Ukrainian grain becomes hot potato in Central and Eastern Europe

The temporary restrictions imposed by the European Union on the export of some agricultural products from Ukraine expired on September 15th. On September 12th local time, the Polish government passed a resolution stating that regardless of whether the EU extends restrictions, Poland will extend restrictions on Ukrainian agricultural products. Polish Prime Minister Moravitsky stated that Poland will make every effort to stabilize the market, and the interests of Polish agriculture and farmers are an absolute priority. And EU countries have also held frequent meetings recently to discuss whether to continue extending the ban.

On September 14th local time, the Bulgarian parliament agreed to lift the import ban on Ukrainian agricultural products after September 15th. Therefore, Bulgaria will take a stance against extending the embargo in the European Union. Many Central and Eastern European countries, including Poland, are demanding that the ban be extended at least until the end of this year.

Polish Prime Minister Moravitsky

The conflict between Russia-Ukraine conflict severely impedes the export of Urumqi grain

The export problem of Ukrainian agricultural products can be traced back to last year. After the escalation of the conflict between Russia-Ukraine conflict, a large number of Ukrainian agricultural products, the "European granary", could not be transported out because of the blockade of the Black Sea ports. The European Union decided in May 2022 to establish a "solidarity channel" for the export of Ukrainian grain. Although the original intention was to open up new transportation channels to transport them to the destinations of the Middle East and Africa, due to the EU's suspension of tariffs on Ukrainian agricultural products and the lifting of import quota restrictions, as well as the logistics capacity of Central and Eastern European countries being unable to cope with the influx of a large number of Ukrainian agricultural products in a short period of time, most of the Ukrainian agricultural products were ultimately stranded in the Central and Eastern European region, causing an impact on the local market and triggering protests from farmers in multiple countries.

In this context, Poland took the lead in challenging and unilaterally announced on April 15th this year that it would ban the entry of some agricultural products from Ukraine. Hungary, Slovakia, Bulgaria, Romania and other countries followed suit. On the one hand, the EU condemns the five countries mentioned above for ignoring trade rules and disrupting the unified market, claiming that unilateral bans are unacceptable. On the other hand, it has to engage in intensive negotiations to resolve this issue.

On April 28th, the European Commission reached an agreement with five countries to restrict the import of Ukrainian agricultural products and food. On May 2nd, the European Commission announced special and temporary restrictions on Ukrainian wheat, corn, rapeseed, and sunflower seeds, prohibiting free trade of these four agricultural products in the aforementioned five countries, but allowing them to be transported to other EU member states or outside the EU. This measure was originally effective until June 5th, but was later extended to September 15th.

The bottleneck in transportation capacity has caught the EU off guard

Poland is Ukraine's largest EU neighbor and plays a crucial role in the export of Ukrainian food. However, facing the world's largest exporter of sunflower seeds, the third largest exporter of rapeseed and barley, the fourth largest exporter of corn, and the fifth largest exporter of wheat and barley, obstacles in infrastructure and logistics capabilities have made Poland only able to rely on "grain".

According to the official website of the Polish government, the total capacity of Poland's four major ports located in the Baltic Sea to transport grain is approximately 12 to 13 million tons per year. In addition to its own grain exports, it can provide 3.8 million tons of transportation capacity for Ukrainian grain. And this is obviously a drop in the bucket.

In terms of railway transportation, Ukraine generally uses 1520mm wide gauge, while most EU countries use 1435mm standard gauge. The problem of "different tracks for vehicles" greatly increases the difficulty and cost of transportation.

Victor Smollevich, Chairman of the Council of the Polish National Agricultural Chamber of Commerce: The biggest problem is the low throughput of Polish ports, which makes it impossible to reload more than 10 million tons of goods annually and send them to various parts of the world. In addition, using railways to transport grain to ports is also a problem. Due to different railway vehicle standards in Ukraine, trains traveling from Ukraine to Polish ports must be reloaded or replaced.

In addition, the shortage of grain funnel trucks in Europe, as well as inadequate or inefficient storage and transportation infrastructure in Central and Eastern European countries, have caught the EU off guard. In this context, Ukrainian food has accumulated in large quantities in neighboring countries such as Poland and ultimately flowed into the market, causing a significant drop in food prices in Central and Eastern Europe and huge losses for farmers. Even in the midst of a bountiful harvest, farmers still struggle to raise their wallets.

Polish farmer Tadeush: Taking the situation of our farm as an example, last year the purchase price of corn was 1500 zloty per ton. However, this year the first contract I signed was 250 tons, with a price of only 960 zloty per ton. The second contract has been reduced to 800 zloty, almost half of last year's price.

Severe inflation and soaring production costs have added insult to injury for farmers

While food prices have dropped significantly, inflation is extremely severe in Europe, especially in Central and Eastern European countries. According to World Bank data, the average annual inflation rate in Poland last year was as high as 14.4%, and prices of fuel, natural gas, fertilizers, agricultural equipment, and other items have significantly increased, leading to a surge in food production costs.

Monthly inflation rate in Poland

Polish farmer Tadeush: The current significant increase in agricultural production costs has led to a completely unprofitable Polish grain cultivation industry, as sales revenue cannot cover costs and workload. This will actually destroy the entire agriculture and farmers of Poland.

As a result, there has been a decline in the production enthusiasm of farmers. This year, many parts of Poland have experienced severe drought, and the village where Tadeush is located has not received rainfall for about 40 days. He said that last year, there were 11 to 12 tons of corn per hectare of land, but this year it may only be around 10 tons. The dilemma he is facing now is that the more he grows, the greater the loss, so local farmers are no longer willing to increase investment to increase production.

△ Communication between CCTV reporters and local farmers

The parliamentary elections are approaching, and the Polish government has made a strong statement to extend the ban

Furthermore, it is particularly noteworthy that Poland will hold parliamentary elections on October 15th of this year. The large number of farmers in the economically underdeveloped areas of the eastern region are the most important vote holders of the current ruling Law and Justice Party. Due to the large-scale protests by farmers that have already endangered the ruling party's voting power, it can be foreseen that the Polish government will not make any concessions to the European Union on agricultural issues in Ukraine before the elections.

The reporter learned during the interview that the issue of Ukrainian agricultural products is not only a test of unity among member states at the EU level, but also gradually evolved into a tool for seeking political party interests within Poland. How to consolidate the support rate in rural areas before this year's parliamentary elections is currently one of the most important issues for the Polish ruling party.

Under the influence of domestic politics, the Polish ruling party will not take the risk of supporting Ukraine and losing power. The priority of elections far exceeds Ukraine's agricultural exports, and the resulting conflict between Poland and Ukraine is unlikely to be resolved in the short term.

Will agricultural product issues overturn the small boat of friendship between Poland and Ukraine?

"You can always trust Poland," said Polish President Duda when welcoming Ukrainian President Zelensky in Warsaw in February this year. According to local media reports, the two heads of state have established sincere friendship and outlined a beautiful vision for a new era of bilateral relations.

In February 2023, Ukrainian President Zelensky visited Warsaw

No one could have imagined that the friendship between Poland and Ukraine began to flourish and decline from that moment on. Almost on the same day, the Polish government publicly complained about the influx of Ukrainian food into Poland, and since then, the small ship of friendship has begun to crack and expand at a visible speed to the naked eye. Within six months, the two countries went from openly expressing brotherhood to summoning each other's ambassadors and receiving reprimands from their respective foreign ministries.

For more than a year since the outbreak of the Russia-Ukraine conflict, Poland has spared no effort in supporting Ukraine, whether in terms of political solidarity, humanitarian support or military material assistance. However, the issue of Ukrainian agricultural products not only creates discord between Ukraine and its eastern neighbors, but also breaks the "political correctness" within the EU regarding unconditional support for Ukraine, further widening the differences among member states.

Polish ruling party leader Kaczynski firmly stated that Poland will never sacrifice its agriculture, and "our Ukrainian friends should be aware of this.".