The share of Ukrainian agro-products exports to the EU in 2023 increased by more than 50%. Therefore, the question of how Ukraine can retain its position in this market while integrating into the European community is relevant today.

The answers to these questions were sought by representatives of government, business and European partners during the discussion at the Large Farm Management Conference.

Trade. What to expect?

The European Union introduced autonomous trade measures (ATMs) for Ukraine from June 2022, removing all tariff restrictions on imports of Ukrainian agri-food products to the EU. In 2024, the ATMs underwent certain changes, resulting in restrictions for a certain category of EU-sensitive goods. For some items the quotas have already been exhausted or are about to expire, and the question of how Ukraine will trade with the EU from January 1, 2025 remains unresolved.

Deputy Minister of Economy of Ukraine – Trade Representative of Ukraine Taras Kachka notes that the introduction of ATMs in 2022 has become extremely important for Ukraine. And now, after difficult discussions, Ukraine has not the worst conditions of access to the markets of EU member states with the exception of 7 categories of goods under partial liberalization, but the conditions are better than in 2021.

“During these two years Ukraine has shown that it can be a reliable supplier of agricultural products to the EU. Sugar is the most vivid example, when we increased exports from 20,000 tons to 500,000 tons. However, usually, if there is a rapid increase in exports in trade, it leads to restrictive measures. However, in this story, many players in the EU sugar market realize that Ukraine can be a large and reliable supplier to Europe. The situation is the same for other products”, – Taras Kachka.

A further subject of discussion between Ukraine and the European Union will be how Ukraine will move from the current terms of trade to full liberalization. Following the introduction of the latest version of the  ATMs, the European Commission declared its intention to further liberalize trade with Ukraine within the framework of the Association Agreement. Negotiations should take place under a simplified procedure, not requiring ratification, to determine that we will have at least as good market access after the end of the current  ATMs regime as we have now, with the potential to reach full market liberalization. But the price of this may be the adaptation of European norms in Ukraine.

Europe realizes that Ukraine needs to increase its domestic income, and agriculture plays a key role in this, because increasing its profits is very important.

“We are aware that we need to support the Ukrainian economy, and that also means supporting the Ukrainian agricultural sector. And when it comes to export challenges, we are very happy that the maritime corridor is working well, because it is very much needed. At the same time, the EU is also helping Ukraine to export not only to Europe, but also beyond”, – said  Alberto Fernandez-Díez, Head of Trade and Economic Section in EU Delegation to Ukraine.

He reminded that from January 1 to June 6, 2025, new quota volumes will be available, which have already been determined by the European Commission. At the same time, negotiations are already underway with the Ukrainian side with the involvement of European stakeholders in order to achieve liberalization, which will be more predictable for all parties.

“We have a political context that also needs to be taken into account. This is Ukraine's adaptation process, and the more it adapts, the easier it will be for us in the European Commission and the EU to understand that Ukraine is playing fair, that there is a joint more equal system of cooperation between both sides”, – Alberto Fernandez-Díez.

Ultimately, the coherence between the parties will boost trade, which will be an incentive for Ukrainian producers to bring the country further closer to EU standards.

Ukraine has already understood the political reality of Europe, which is not easy. But the introduction of export licensing is a good tool to manage the flow of sensitive goods.

Alberto Fernandez-Diez emphasized that a trade committee would be set up and the issues would be discussed soon. According to him, agriculture is just one of the sectors in which the EU wants to give Ukraine more market access so that Ukraine gradually integrates into the EU internal market on its way to full accession to the European community.

Ukraine's future in the EU

Some countries of the European Union are not very eager to see Ukraine in the European community, that is why there are a lot of discussions about the Ukrainian agro-food sector.

Association “Ukrainian Agribusiness Club”, realizing all the challenges facing the state and agribusiness community in particular, takes a strictly pro-European position, so it plans to hold a number of events in European countries in order to start a more professional discussion, without unnecessary politics and emotions.

In particular, at the end of November, UCAB will hold Agro Week of Ukraine in Brussels. Discussions will also take place in Poland and Germany, and a mission to the Netherlands is planned. A mission to Ireland will also be carried out with USAID support.

Alex Lissitsa, President of UCAB, emphasized: “We are convinced that our future is to be in the EU, and we are moving in that direction. The European agricultural policy after the war was aimed at providing farmers with income. This worked for a long time, at some stage other support instruments were introduced in addition to subsidies. As a result, there is a huge number of distortions, in particular in Poland, where an average farm of 11 hectares even with subsidies cannot provide decent conditions”.

Alex Lissitsa adds that 50% of German farmers have hobby enterprises, i.e. the main income is not received from the agricultural sector. Therefore, in his opinion, Ukraine needs to move away from discussions about who is to blame and why, and should speak and act professionally.

“I am more than convinced that Ukraine's membership in the EU is a salvation for European agricultural policy and a chance to change it, and together we will definitely be stronger”, – Alex Lissitsa.

Claims against Ukraine. Are they fair?

The EU imposes additional market requirements on Ukraine, apart from those imposed on third countries. Are the conditions fair in terms of production in Ukraine and the European Union?

The Ministry of Agrarian Policy and Food of Ukraine has calculated that, for example, pesticide restrictions are a matter of losing tens of $/ha, while subsidies are hundreds of $/ha. As for the requirements for improvement of the livestock industry, again the calculations show that the costs are not comparable with subsidies.

Taras Vysotskyi, First Deputy Minister of Agrarian Policy and Food of Ukraine: “Ukraine has competitive advantages, but it will definitely not amount to €350 or €400 per hectare, they are much lower. Therefore, the idea that there are preferential conditions here is incorrect. On the other hand, we are grateful to the European Union for helping small farmers, as European funds are allocated at €100/ha to Ukrainian farmers”. 

Now farmers receive 4 thousand UAH/ha and must fulfill the conditions specified in the contracts. If they fail to fulfill the conditions, they have to return the funds. According to Taras Vysotskyy, working under this scheme, an absolutely normal, friendly dialog on cooperation with the EU will be built. Yes, gradually the real situation of the agrarian sector in Ukraine can be better communicated to the European farmer, and our agrarians will be able to gradually transform, but not without financial assistance.

Standards to which Ukraine should move

Ukraine lived quite successfully from 2008 to 2022 in the WTO paradigm, despite all the problems. And now in relations with the European Union, the key issue is not only the regulations, but their changes, differences from what was declared 15 years ago. For example, back in the 2000s, the EU assumed that only those things that are really harmful should be banned. Now the concept of harmfulness in the EU is somewhat different, it is politicized. And by entering into a political alliance with the European Union, Ukraine must accept all the requirements on animal welfare, the European program on plant protection products, climate agendas, etc.

“There is also a discussion going on inside the EU: maybe we need to take a step back somewhere, maybe we have gone too overboard in this idealized perception of agriculture with bans, with requirements... This is something that will happen in Brussels, including a strategic dialog between European institutions and farmers. That is, it is quite possible that there will be a certain correction. And this, accordingly, puts before us the technical task for the negotiations: to agree on how much time and financial assistance we need, how we can enter this political alliance”, – Taras Kachka comments.

According to him, it is not just a formula based on Ukraine's upcoming accession to the EU and unconditional acceptance of all the rules. It is about defining a formula when two agrarian powerful jurisdictions, the EU and Ukraine, enter into a super-political alliance and become important players in global agriculture. But this requires greater access to the EU market, clear transition periods for Ukraine to adapt and EU support for small farmers.

Negotiations. One year of time

The European Union officially opened negotiations with Ukraine in June 2024, allowing the EU to start the first screening meetings in July 2024. These meetings were on cluster number one. The three sections on agriculture and rural development were under cluster number five. Screening meetings for these three sections will take place in September 2025.

Christian Ben Hell, Agricultural Attaché, Sector Manager for Agriculture, Fisheries, Forestry and Food Safety at the EU Delegation to Ukraine: “Europe is well aware of the difficult situation in which Ukraine finds itself, while at the same time facing the challenge of preparing to join the EU. And this, of course, is taken into account by the European Union. What is important for Ukraine in the screening process is to prepare an assessment of the situation in the agricultural sector and rural development. And this is not only an assessment of legislation and institutions, but also of production in general”.

This is a must for agricultural producers. They should work on creating new value chains, developing markets, and building a roadmap for full EU accession.

“The European Union recently supported the Ministry of Agrarian Policy and Food to develop the first strategy for the development of agriculture and rural areas until 2030. The strategy has been developed for the first time following the model document as in EU member states and countries preparing for accession. It is an important document, and its first sections are especially important”, – Christian Ben Hell.

The first chapter deals not only with the development of institutions for the implementation of the overall agricultural policy, but also with the development of institutions to ensure the quality and product safety standards that Ukraine will have to achieve. Food safety, sustainability of the economy, markets - all this has been taken into account in this policy document, which was reviewed in Brussels, was highly appreciated and will serve as a reference point for the international community in supporting Ukraine.

Attracting investments. Will Ukraine get access to additional financing?

The Ukraine Facility program consists of three components. The first stage is state support for the government to implement reforms.

Christian Ben Hell, Agricultural Attaché, Sector Manager for Agriculture, Fisheries, Forestry and Food Safety at the EU Delegation to Ukraine: “Within this program, there is also stage number two, specifically dedicated to attracting investment. This is the Ukrainian Investment Fund, which has 8-9 billion euros, some of which are loans, grants and guarantees, and we have made significant progress over the past year. The fund, already provided to our colleagues in international financial institutions working with Ukraine, was replenished in order to provide further financing for various sectors of the economy, including the agricultural sector”.

The EU Delegation in Ukraine has generated several requests to international financial institutions to provide access to financing for the economic community, including the agribusiness sector. But agrarians should make efforts and move towards implementation of some requirements of the European Union. That is, certain conditions are put forward, which should be gradually applied depending on the size of the entity. The bigger the enterprise, the more requirements it has to fulfill. So far, taking into account the military situation.

“In addition, the multi-year financial program expires in 2027. The new EU budget period starts in 2028. What will happen next, it is too early to say. But undoubtedly, if Ukraine wants to access EU structural funds aimed at preparing for EU accession, it will require efforts to establish an accredited payment agency”, – Christian Ben Hell.

What should businesses prepare for next year?

Agrarian business should develop strategies not for a year, but for the next 10 years, Ukrainian Deputy Economy Minister Taras Kachka has said. If the first bilateral meeting is held next fall, it means that the processes of Ukraine's accession to the EU in terms of agricultural policy will not begin before 2026.

“We have several restrictions, for example on oats, corn, honey, which do not make sense at all. This is a political decision within the European Union. Therefore, in the short term, we need to maximize trade, and this is our priority No. 1. Also, we need to prepare ourselves to the maximum extent possible for the requirements that the EU puts forward, and actively participate in the discussion within the European Union”, – Deputy Minister of Economy of Ukraine – Trade Representative of Ukraine Taras Kachka.

The agro-policy of the European Union will change significantly. And it would be wrong to adopt the model that is currently operating in the EU agricultural policy. Ukraine, as an efficient agricultural state, should critically reassess the developments within the European Union and, based on this, build medium and long-term strategies.

The Chairman of the Verkhovna Rada Committee on Agrarian and Land Policy Oleksandr Haidu: “Today, our main task is to conduct a dialog with European partners regarding duty-free trade regime and reduction of quotas on goods. And also to enter other international markets - Asian and African markets. The quality of our products allows us to move forward”.

“I wish Ukrainian agricultural producers to continue to produce at the level they have now, to invest and believe in victory, because the international community has pledged to support Ukraine and will continue to do so. The role of Ukrainian producers is to use all opportunities to attract investment”, , – Christian Ben Hell.

Original material taken from the platform AgroPortal.ua