EU plans €100m to farmers to ease Ukraine grain price worries

EU Commission vice-president Valdis Dombrovskis was scheduled to discuss the proposal with Ukraine, and with Bulgaria, Hungary, Poland, Romania and Slovakia that all urged the EU in a letter last month to act to protect their farmers from cheap Ukrainian grain imports.

The EU executive lifted tariffs for Ukrainian grain to help the war-torn country after the invasion by Russia in February 2022. However, the exports have created an overflow and pushed down prices in neighbouring countries.

"There is a problem of oversupply in these [neighbouring] countries. And there is a problem of getting the Ukrainian exports to other parts of the EU, and also into the rest of the world," another official said.

The measures on limiting Ukraine imports, which would include wheat, maize, rapeseed and sunflower seeds, to transit and export only, will be in place until the end of June, with officials hoping to reduce stocks in the neighbouring countries.

These EU-level measures, the commission argues, would replace the unilateral measures adopted by the four central European member states.

The EU executive said earlier this week that the unilateral moves were "not possible" under EU trade rules, but the commission stopped short of launching probes against the central and eastern European countries.

Commission officials said there has been a "very steep increase" of exports from Ukraine to the neighbouring countries.

In recent months the situation has been exacerbated by the lack of Ukrainian exports through the Black Sea ports, which Russia has mostly blocked this year, despite a a UN-brokered agreement.

"Since the beginning of the year, [the Black Sea corridor] is not functioning and that's why in particularly in February, March and April we've seen surges in exports of grain via the solidarity lanes," an EU official told reporters on Wednesday.

The commission said the proposed measures could create "breathing space" to deal with the structural issues that the executive hopes will bring down logistical costs, making Ukrainian grain more attractive.

Logistical costs are about 40 percent of the total costs and but shouldn't be more than 10 percent, an EU official argued, adding that four million tonnes of Ukrainian grains needs to be exported before the new harvest comes in.

The EU set up the so-called solidarity lanes last year to expedite Ukrainian goods towards EU states, via rail, road and inland waterways.

The EU plans a €25m investment to install navigation equipment on the Danube so that night-time navigation could become possible, speeding up transportation.

In parallel, Polish and Ukrainian officials agreed on Tuesday that convoys of Ukrainian grain transiting Poland for export abroad will be sealed, guarded and monitored to ensure the produce stops flooding the Polish market.

The agreement came after two days of intensive talks following protests by Polish farmers.