Ukrainian agroholdings boom as EU trade decisions loom
Last year, Ukrainian agroholdings reported a fivefold increase in profits, mainly due to exports to the European Union. Meanwhile, Brussels plans to announce new trade rules with Ukraine before June 4, 2025. Ukrainians are concerned about a return to pre-Russian invasion rules.
In the first quarter of 2024, Ukrainian agroholdings achieved profits of approximately 37 billion hryvnias, a fivefold increase compared to the same period in 2023. The main market for Ukrainian agricultural products is the European Union, which accounted for 56.6% of Ukraine's agri-food exports, as reported by the industry portal latifundist.com and cited by topagrar.pl.
Ukraine increased grain exports by nearly 30%, significantly contributing to the growth in revenue for the Ukrainian agricultural sector. This increase was particularly noticeable in barley, wheat, and corn.
Since 2022, Ukraine has benefited from trade preferences allowing exports to the EU without duties. However, the rising imports of Ukrainian goods have sparked protests from farmers within the Union, leading to the European Commission's introduction of autonomous trade measures.
"The import of grain from Ukraine led to a surplus of goods on the market, which lowered the prices of key crops in the EU. Total grain imports in the EU increased from 24 million short tons in 2020 to 36 million short tons in 2023—a 50% increase. The price of wheat in France at the end of 2023 was approximately €209 ($232) per ton, compared to an average of €304 ($338) in 2020," wrote the head of the "Grains" group in Copa-Cogeca, Cédric Benoist, in an open letter to European Commission President Ursula von der Leyen.
"Meanwhile, the average production cost was around €1.414 ($1.575) per acre in 2020, rising to €2.065 ($2.300) per acre in 2023," he added.
The future of trade with the EU
The European Commission plans to announce new trade rules with Ukraine before June 4, 2025. Ukrainians worry that a return to previous trade rules could decrease exports to the EU by $1.5 billion annually.
On June 5, the EU's rules regarding duty-free imports of agricultural products from Ukraine will expire, with new rules proposing higher tariffs, according to reports from the "Financial Times" citing signals from Brussels.
Ukraine's Deputy Minister of Economy, Taras Kachka, announced that Kyiv will not accept the restrictions. In the absence of progress in negotiations, the country may introduce trade measures targeting countries blocking the talks.
