Ukrainian wheat in European ports. How can the EU export grain and farmers earn money?

Ukraińska pszenica w europejskich portach. Jak UE ma eksportować zboże a rolnicy zarabiać?

Why are grain prices in the EU still under pressure, when in many member states this year's harvest was very poor – wonders Agrarheute. And he lists several reasons for this state of affairs. However, he considers the increased and unjustified import of grain from Ukraine to be the main one.

Competition from the big ones and a strong euro

As we read, prices in Europe are shaped by fierce competition on international markets, and here the prices are set by Russia and Ukraine, which are also at war. Meanwhile, recently there has been a significant increase in the value of the euro, which makes European exports expensive. EU exporters must therefore lower prices at ports in order to sell grain on the world market.

Import despite self-sufficiency

Price pressure on the EU grain market would not be so strong, however, if it were not for cheap imports – mainly from Ukraine – which are still growing. This is happening despite the fact that the EU is practically self-sufficient in the production of the main grains – notes Agrarheute. In the case of common wheat, the self-sufficiency of Europeans was 123% last year, and this year it is estimated that despite the poor harvest it will be almost 119%. So there is no reason to import wheat and it cannot be done without disturbing the market balance.

Wheat and barley from Ukraine

However, grain imports have increased rapidly over the past few years: in the 2021/22 marketing year, we imported 4.2 million tonnes of common and durum wheat, while last year, these imports rose to 12 million tonnes. Of the 9.3 million tonnes of total common wheat imports in the past marketing year, 6.5 million tonnes, or 70%, came from Ukraine.

The situation is similar for barley. According to data from the European Commission, self-sufficiency in barley production this year will be 128%. The EU imported 1.9 million tonnes of barley in the last marketing year. 45% of barley supplies came from Ukraine – around 860 thousand tonnes.

EU grain is losing in ports

Grain from Ukraine is much cheaper than goods from Europe and is driving domestic goods out of the market, especially in countries bordering Ukraine – we read on the German portal. In order to maintain market balance and stabilize prices, large quantities of wheat and barley should be exported, but this forces markdowns that affect the profitability of EU farmers.

The cheapest European wheat in French ports currently costs the equivalent of $230 per ton (fob). At the same time, Ukraine sells wheat for 202 euros per ton, which is about $30 cheaper.

Import exceptions

The only exceptions to the EU's self-sufficiency are maize and durum wheat. The EU has been dependent on imports for years, and self-sufficiency is currently at 82% and 64%. Here, too, the vast majority of necessary imports came from Ukraine. Ukraine's dominance in maize imports is even more pronounced than in the case of food grains and barley. The EU imported a total of 19.4 million tonnes last season, of which 13.3 million tonnes came from Ukraine.

Who buys from Ukraine?

In the case of grains, grain imports from Moldova, Russia, Serbia, and Canada are also growing. Supplies from Moldova, which borders Ukraine, have more than doubled, notes the German author. In the case of wheat and barley, Spain bought the most last marketing year – 5.6 million tons, followed by Italy – 1.2 million tons, Ireland, and… Romania, which borders Ukraine and Moldova.

In the case of corn, important suppliers of corn to the EU, apart from Ukraine, are Brazil and Canada. The main recipients of Ukrainian corn in Europe are Spain, Italy and the Netherlands. Larger quantities also go to Portugal, Ireland and Slovenia.