Agricultural sector products represented about 45% of total Ukrainian exports by the end of 2021. (Reuters)

Kiev -

After the industrial sector, agriculture ranks second in importance to the economy of Ukraine, as it generates about 10% of the annual domestic product, and achieves the country’s sufficiency enhanced by the local food industries.

Agricultural sector products represented about 45% of total Ukrainian exports by the end of 2021, bringing about $22.5 billion to the country, the most prominent of which were grain exports (wheat, barley, and corn), then oil crops (sunflower seeds and oils).

As for the world, the cultivation of Ukrainian grains and oil crops ranked sixth in terms of volume in 2021, which was represented by exports amounting to 48.3 million tons of grains, including wheat, barley and corn.

The share of Asian countries at that time was close to half of the total Ukrainian agricultural exports (48.7%), and the European Union’s share was about 29%, while Africa got a percentage of approximately 12.9%, and 5.8% was in favor of the Commonwealth of Independent States, according to government statistics.

War disrupts agriculture

At its beginning, the war paralyzed the activity of the agricultural sector by more than 70% in Ukraine, then it declined to 30% after the Russians withdrew from the northern provinces and some eastern and southern provinces.

But the problem was not limited to the occupation of lands and the issue of security, but rather to the export operations that were suspended due to the blockade imposed by Russia on Ukrainian ports in the Sea of ​​Azov and the Black Sea, especially since the ports were the window for 90% of Ukrainian grain exports to the world.

Thus, the volume of grain exports declined from the 70 million tons expected in 2022 to no more than 41 million tons, then to about 12 million tons in 2023 only. Because of that, the Ukrainian economy has lost about 31.5 billion dollars since the beginning of the war, including 8.72 billion dollars per year. the past.

Governmental and international support

All of this reflected a rise in grain prices and threatened a global food crisis, which prompted Kiev and several international parties to take measures to limit the repercussions.

After the beginning of the war on February 24, 2022, the European Union announced “solidarity corridors” to export Ukrainian grains through its territory, and in July of the same year, an agreement was reached on a “grain corridor” in the Black Sea with Turkish-UN mediation, and then Kiev announced A corridor it will secure on its own in August 2023.

During the past two years, the government encouraged farmers to work, by granting interest-free loans, and exempting them from export duties, and the Europeans also exempted Ukrainian farmers from duties, on the basis of the economic partnership agreement between Ukraine and the European Union.

The picture is not rosy

But the picture was not rosy after all these measures. At the local level, many agricultural companies refrained from working in wartime conditions for many reasons, primarily security, and others related to the increase in seed and fuel prices and the bombing of silos. Then came the incident of the destruction of the Kakhovka Dam in June 2023. Its waters flooded 600 hectares of agricultural land in the south of the country.

A few weeks later, exports declined to almost zero as soon as Russia announced its withdrawal from the grain agreement, and the corridor that Kiev announced on its part did not succeed in compensating them.

Disagreements with the Europeans

However, what was worse for Ukraine was the dispute created by the advantages of grain exports to Europe, which came out into the open in 2023, causing many protests and controversy.

The apparent dispute was the dumping of European markets with relatively cheap Ukrainian grain products, which harmed European farmers, especially in Poland, which is considered one of Kiev’s most prominent political, military and financial supporters, as well as in Bulgaria, Hungary, Romania and Slovakia.

But the essence of the dispute is broader than that. Ukrainian economic analyst Ihor Burakovsky explained it to Al Jazeera Net. He said: “Most of our exports of grains and oilseeds through Europe were originally intended for export to Asia, Africa, and the Middle East, but they ended up being purchased in the European Union.”

Burakovsky continued: "This is due to logistical problems at the border, which caused trucks and trains to congestion for long periods, as well as due to the high prices for transport outside the European Union, and the decline in the desire of original buyers due to pressure from Russia and price fluctuations."

Burakovsky also pointed out the existence of “suspicious practices” within some European Union countries, which “allowed some local actors to benefit from the sale of Ukrainian grain in local markets, from traders and others,” he said.

Ukraine complains to the Europeans

Regardless of the reasons and who was behind it, the governments of the affected countries imposed a temporary embargo on Ukrainian grains in April 2023, and then the European Union was forced to adopt it at the European level until September 2023.

While the Ukrainian government responded by filing a complaint with the World Trade Organization against Hungary, Poland and Slovakia, which renewed the ban on grain imports from Ukraine, despite the lifting of European Union restrictions.

Burakovsky points out, “The solution may seem simple, by preventing exports through the EU countries, for example, but the Europeans realize that stifling Ukraine’s exports will result in them bearing the burdens as supportive partners,” as Kiev calls them.

He said: “After the war, agriculture became a major source of income instead of industry, and reality has proven that its sector can work effectively no matter how much it declines. Without agricultural exports, the country will be unable to secure a third of its budget amounting to about 94 billion dollars, and the deficit is already about 50%.” .

He added: "Ukrainians and Europeans are between two fires. Export in its current form is tiring them, but stopping it will be more difficult. I believe that the solution lies in controlling the methods and mechanism of export, something that Kiev has repeatedly called for," he said.

Source: Al Jazeera