Exemptions on Ukrainian wheat: unfair competition?

From the first days of the war in February 2022, Ukraine under bombs was simultaneously the victim of a blockade by the Russian navy in the Black Sea. No more ships leave Odessa, one of the country’s largest grain ports, supplying the Middle East and Africa in particular. In order to avoid a global food crisis, we must then unblock another route: three months later, the European Union exempted Ukraine from customs fees and quotas to allow it to transit its wheat, particularly by road, via Poland and Romania.

As a result, Ukrainian wheat exports to the European Union increased almost 17-fold. Going from three hundred and fifty-one thousand tonnes before the war, to more than 6 million in 2023, according to the latest figures from the European Commission.

This explosion in supply caused the price of wheat to plummet, to the great dismay of French cereal growers, like Pierre Bot, at the head of a farm in Saclay, in Essone. From 430 euros per tonne two years ago, it has reached less than 200 euros today.

At this price, he says he has barely covered his production costs, and fears selling at a loss during the next harvest. “We have products that arrive on the market and which do not have the same specifications as us, the costs of production or labor have nothing to do… I have nothing against support the war effort, but it is necessarily experienced as a form of unfair competition” says the farmer.

Who benefits from the crisis?

Thanks to this temporary free movement agreement, certain member countries of the European Union are taking the opportunity to stock up on Ukrainian wheat. To see this, we went to Spain, to Barcelona. Cargo deliveries from Ukraine have become ordinary, as we saw that day, with the arrival of a ship, loaded with wheat.

Spain has become the largest European buyer of Ukrainian wheat. Before the war, the country obtained up to 350,000 tonnes per year. It is now more than 2.8 million tonnes.

At the port, a Spanish importer admits to preferring Ukrainian wheat, the price of which he believes is unbeatable. To those who accuse him of being a crisis profiteer, José Luis Esteban tempers.

“There are always people who profit from crises. I’m not saying it’s dishonest. There are people who know how to take advantage of complicated situations”

José Luis Esteban, importer and president of the Barcelona Grain Exchange

Would Spain, faced with repeated droughts, take advantage of the Ukrainian crisis to fill its granary at a lower cost? We contacted several manufacturers by telephone, all of them refused to answer our questions, claiming that it was a “sensitive subject”.

If these exemptions put in place by the European Union are increasingly criticized. This is because the Black Sea route is usable again. For several months now, boats leaving from Ukraine have been able to use the Bosphorus Strait again, as before the war, and thus reach ports in the Middle East, North Africa and Europe.

We joined a French cereal producer based in Ukraine. According to him, the reopening of maritime routes would no longer justify preferential treatment for Ukrainian wheat: “this is something that is not necessary. Knowing that it is better for Europe to spend money securing a maritime canal to be sure that Russia cannot bomb Odessa, to make the existing passages serviceable.”