The suspension of tariffs by the EU on goods from Ukraine since June 2022 effectively marks the beginning of the country’s integration into the European single market, with exceptions for several agricultural products. This poses significant challenges for Polish agriculture, particularly given that 73% of Poland’s food exports are directed to the EU market. Experts argue that Polish agriculture must respond to this competition by focusing more on quality and innovation rather than on low product prices.
âUkraine’s EU membership should be considered on two levels. One is the current situation, where Ukrainian goods essentially have duty-free access to the EU market, enabling Ukraine to export agri-food products to the EU,â explains Dr. Ćukasz Ambroziak, a professor at the Institute of Agricultural and Food Economics â National Research Institute, in an interview with Newseria.
Following Russia’s aggression against Ukraine in February 2022, EU trade with Ukraine was liberalized, removing quotas and VAT on wheat, rapeseed, sunflower seeds, and corn. The European Parliament has extended duty-free trade until June 5, 2025, while introducing protective mechanisms and import quotas for sensitive agricultural products such as poultry, eggs, sugar, oats, corn, groats, and honey.
âThis effectively represents a process of integrating Ukraine into the European single market. However, actual membership will mean acquiring the rights and responsibilities associated with EU membership, such as participation in various instruments of the Common Agricultural Policy, including direct subsidies and rural development funds,â notes Prof. Ambroziak.
The Challenges for Polish Agriculture
In late February 2022, Ukraine applied for EU membership. While the country’s accession offers opportunities to strengthen European agriculture, it also poses significant challenges for Poland. The suspension of tariffs, for instance, has already demonstrated the competitive pressure Ukrainian grain exports exert on the Polish market.
âSince June 2022, when the EU granted Ukraine unilateral tariff preferences, competition from Ukrainian producers has increased in both the Polish and EU markets,â the expert explains.
Data from Poland’s National Support Centre for Agriculture (KOWR) indicates a record âŹ51.8 billion in revenue from Polandâs agri-food exports in 2023. However, the growth was less dynamic than in 2022, primarily due to falling food prices on international markets, which translated into lower transaction prices in foreign trade. Additionally, the liberalization of trade with Ukraine increased the supply of Ukrainian agri-food products in the EU, creating price competition for domestic producers. As in previous years, Polish agri-food products were mainly exported to the EU market, generating âŹ38 billion in 2023, representing 73% of total exports. Including sales to the UK, this share exceeds 80%.
âThe interests of Polish producers depend heavily on this market. Increased competition from Ukrainian producers in the EU could harm Polish exporters, as seen previously with increased imports of Ukrainian poultry,â says Prof. Ambroziak.
Growing Competition from Ukrainian Exports
According to the European Commission, Ukrainian exports to the EU reached âŹ22.8 billion in 2023. Key export products included cereals (21.9% of total exports), animal or vegetable fats and oils (9.2%), and oilseeds (8.2%). Ukraine remains the third-largest source of EU imports of agri-food products by value.
Ukrainian Deputy Minister of Economy Taras Kachka recently reported that nearly 60% of Ukraine’s exports go to the EU. Despite disruptions in the agricultural sector and at borders, Ukrainian exports to the EU grew by $1.34 billion, or 5.9%, in 2023. The EU is a crucial market for Ukrainian corn (49.2% of exports) and wheat (34%). However, EU restrictions reduced sugar deliveries by 51% (303,000 tons), although overall sugar exports rose by 45%. About 40% of Ukraine’s poultry exports, valued at approximately $390 million, also went to the EU.
Research from the Institute of Agricultural and Food Economics highlights that competition is already intense in some product categories, such as poultry, confectionery, bakery products, cigarettes, eggs, and various dairy products. Increased imports of these products into the EU have created difficulties for Polish producers and exporters in selling their products within the Union.
The Need for Innovation and Sustainability
The Polish Institute of International Affairs notes that even amidst war, Ukraine remains a competitive agricultural producer due to favorable soil and climatic conditions, as well as large-scale export-oriented farms with low production costs. While integrating Ukrainian agricultural production into the EU could strengthen the Union’s position in the global market, EU producers are structurally less competitive than their Ukrainian counterparts in sectors such as cereals, oilseeds, sugar, and poultry. Consequently, the future of Polish agriculture depends largely on its ability to address various challenges, including climate change. Increasing the competitiveness of Polish products while adhering to sustainable development principles is essential.
âUkrainian exporters and producers compete on price in the EU market, as do Polish producers. To tackle this competition, Polish producers should focus on developing finished products that can compete on quality rather than price alone. Investments in innovative product development, environmental protection, and sustainability can differentiate Polish products from cheaper Ukrainian goods,â emphasizes Prof. Ambroziak.