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Hungary and Ukraine’s Neighbors win EU Import ban Concessions

Ukraine Crisis

Minister of Agriculture István Nagy, seen here at the handover of Hungary’s largest egg production facility on April 20, says Hungary and four other states have won EU approval for a ban on some Ukrainian agri-goods.

Photo by Zoltán Máthé / MTI.

The European Union has agreed to a temporary ban on importing specific agricultural products from Ukraine, Minister of Agriculture István Nagy reported in a post on his Facebook page on April 28.

“With the application of an extraordinary protection measure, the EU has allowed a ban on the import of a number of agricultural products from Ukraine to member states as long as the current extraordinary market situation remains in place,” Nagy said in the post.

The European Commission said it had “adopted exceptional and temporary preventive measures on imports of a limited number of products from Ukraine under the exceptional safeguard of the Autonomous Trade Measures Regulation,” in a press release on May 2.

It said these measures were necessary in order to help ease “serious logistical bottlenecks” in Bulgaria, Hungary, Poland, Romania and Slovakia of wheat, maize, rapeseed and sunflower seed originating in Ukraine. The statement emphasized that these products could continue to circulate freely in all other member states and could “continue to circulate in or transit via these five member states by means of a common customs transit procedure or go to a country or territory outside the EU.”

With the agreement, Nagy said the European Commission had finally acknowledged the severity of the issue in these countries. Earlier, the EU had exempted Ukrainian grain from customs duties and quotas in order to expedite deliveries to countries in the Middle East and Africa.

However, these so-called “Solidarity Lanes” subsequently flooded the markets in neighboring countries. In addition to agreeing to a temporary ban, Nagy said the EC was proposing EUR 100 million in extraordinary support for farmers in member states neighboring Ukraine.

Phase in, Phase Out

Hungary’s Minister of Agriculture added that its ban on Ukrainian grain imports would be phased out once Brussels has introduced its own measures. While Hungary’s ban is due to last until June 30, the statement from the European Commission said its steps would enter into force on May 2 and last until June 5.

During a break in a meeting with other EU farm ministers in Luxembourg on April 25, Nagy said that he had wanted guarantees allowing a ban on imports of Ukrainian grain to remain in force until the end of December. He added that further negotiations were necessary on expanding the bans to products in addition to those recommended by the EU.

Although these countries had introduced their bans on certain agricultural products from Ukraine in mid-April in an effort to protect their domestic producers, not all market participants were pleased by the actions.

Hungary’s grain lobby criticized the ban, for instance, saying it would lead to shortages and undermine efforts to curb the highest inflation rate in the EU.

“Our members are desperate and don’t support any import bans; in fact, we need imports,” Zsófia Pótsa, secretary general of the Hungarian Grain Association, which represents millers, grain processors and traders, told Bloomberg News on April 21.

She emphasized the need to import about 700,000 tonnes of feed corn following a poor harvest last year, highlighting that Ukraine would be the cheapest supplier. Pótsa added that stifling the influx would keep pressure on food prices in Hungary, where inflation still exceeds 25%.

This article was first published in the Budapest Business Journal print issue of May 5, 2023.

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