Weekly Briefing, Vol. 70. No. 4 (LT) February 2024
Farmers Protests and the Battle Over Grain
Justas Karčiauskas
Summary
While protests of European farmers have swept across the continent, tensions have escalated over the imports and transit of Ukrainian and Russian grain within the EU. Since the Russian invasion, Ukraine’s key Black Sea trade routes for agricultural exports have been severely disrupted. This has also significantly affected Ukrainian grain exports. In addition to the Black Sea Grain Initiative, which allowed exports of Ukrainian grain via a safe maritime corridor, the EU decided in 2022 to lift tariffs on Ukrainian goods transiting the 27-nation bloc. Lithuania was among the countries that offered help with Ukraine’s grain transit via its port in Klaipėda. However, the imports and transit of Ukrainian grain in the EU have had some effect of pushing down the prices of locally grown grain threatening the livelihood of the EU farmers. This prompted Polish farmers blocking Polish-Ukrainian border, which has a potential of weakening Ukraine both economically as well as militarily. Polish farmers have also imposed a week-long partial blockade of Polish-Lithuanian border. In the meantime, Lithuanians see grain from Russia as the biggest threat to stability. Lithuania, together with other countries, has been putting pressure on the European Commission and demanding to curbing the imports of Russian grain. The full response from the EU regarding Russian grain is yet to be finalized.
Introduction
Farmers protests have swept across Europe. Farmers brought their powerful farming equipment – tractors, bulldozers, and other kit – along with them and went to the streets, in many cases completely blocking them, surrounding airports and towns and in some instances even shutting the border crossings from one country to another, for example, in Polish-Ukrainian border. There are many overlapping reasons that brought farmers onto the streets. Among them, are rising costs to make their produce. For example, the farmers were hit by increasing costs related to energy, fertilizers, fuel and transportation. At the same time, many farmers have experienced a decline in the prices of their agricultural products, partly due to influential retailers who dominate a significant portion of the market share by purchasing from farmers. Excessive bureaucracy and financial pressures are pushing farmers to protest for better conditions and fairer compensation. In January 2024, Lithuanian farmers organized themselves and converged in the capital city of Vilnius from various regions across the country. They presented their specific demands to the Lithuanian government.
Amidst the extensive farmer protests throughout the EU, a particular contentious issue has arisen: the import and transit of Ukrainian and Russian grain within the EU.
Help with Ukraine’s grain
Since attacking Ukraine, Russia has blocked key Black Sea trade routes Ukrainians used to export their agricultural products. Wheat, corn and barley is Ukraine’s biggest export, which brings a significant amount of money into a war-torn country. Before the war, Ukraine typically exported upward of 6 million tonnes per month of corn and wheat combined. However, due to the disruption caused by the Russian invasion, exports faced severe challenges. During the conflict, Russian military vessels blocked Ukrainian ports in the Black Sea, significantly affecting grain exports. Between July 2022 and July 2023, an agreement known as the Black Sea Grain Initiative allowed exports via a safe maritime corridor.
To help Kyiv economically, the EU decided in 2022 to lift tariffs on Ukrainian goods transiting the 27-nation bloc. Lithuania was among the countries that has offered help with Ukraine’s grain transit. Lithuania is able to help with Ukraine’s grain export outside of the EU because it has its own Klaipėda sea port, and a railway connection, via Poland, with Ukraine whereby can be transported in high volumes.
The Lithuanian port of Klaipėda would be ready to transport Ukrainian grain if it was possible to bring the product to the port, according to its manager and a head of the Klaipėda State Seaport Directorate Algis Latakas. He calculates that a total of up to 15 million tons of bulk cargo per year, including grain, could be transported through the main Lithuanian transport hub.[1]
Lithuania has agreed on specific steps that will accelerate the way how Ukrainian grain can reach Klaipėda sea port.
It was reported back in October 2023 that Lithuanian officials had agreed with their partners from Poland and Ukraine that veterinary, sanitary and phytosanitary control will be transferred from the border of Ukraine and Poland to the port of Klaipėda for all agricultural products traveling from Ukraine to this port. The head of the port of Klaipėda says that this is another step to make Ukrainian grain exports through the Lithuanian port city commercially successful. The issue was discussed at a meeting between Ukrainian Minister of Agricultural Policy and Food Mykola Solski, Polish Minister of Agriculture and Rural Development Robert Telus and Lithuanian Minister of Agriculture Kęstutis Navickas, the Ministry of Agriculture of Ukraine reported. Control will be transferred already this week. This decision will speed up transit through Poland. M. Solskis said that it was Ukraine who proposed to transfer all the aforementioned controls from the Ukrainian-Polish border to the port of Lithuania. R. Telus and K. Navick noted that their governments support such a control mechanism and consider it a constructive step.[2]
Regardless of the aforementioned steps taken in order to ease the transit of Ukrainian grain to Lithuania, the transit of Ukrainian grain to Klaipėda‘s port involves a lot of problems.
Klaipėda port’s manager Algis Latakas says that for the third year in a row, the flow of Ukrainian cargo in Klaipėda is decreasing and the reason is one – it is very difficult to bring Ukrainian cargo to Klaipėda.[3]
Transporting Ukrainian grain to Klaipėda faces several logistical challenges. The primary issue is the lengthy route, which reduces profitability. While the shortest path from Ukraine to Lithuania passes through Belarus, geopolitical constraints prevent its use. The second-best route involves transit via Poland, but this presents another problem: the difference in railway track gauges. The old Soviet Union used a wider gauge (1520 mm), while most European countries adhere to the narrower gauge (1435 mm). Although Poland has upgraded many tracks to the European standard, Ukraine and Lithuania still predominantly use the wider gauge. Consequently, a trip from Ukraine to Lithuania via Poland requires changing trains. Currently, a one-way journey from Ukraine to Klaipėda involves not only grain loading at the start and unloading at the destination but also two additional changes of rolling stock during the trip. These complexities limit the efficiency of grain transportation and make it economically less appealing.
Polish farmers protests and blockade of Polish-Ukrainian border
Transiting Ukrainian grain via the EU countries face not only economic, bureaucratic but also significant political challenges. The initial move to help Ukraine’s economy by lifting tariffs on Ukrainian agricultural products, especially grain, transiting the EU, has subsequently contributed to growing discontent among some of European farmers. This discontent has been especially visible in Poland.
Polish farmers claim that some of the Ukrainian grain, which is meant to transit Poland’s territory, is instead finding its way into Polish market and sold here, pushing down the prices of locally produced grain. Ukraine is a well known breadbasket of Europe famous for its fertile soil, vast farming lands and relatively low costs of agricultural products. Ukraine, being not a member of the EU, is not affected by some of the EU requirements and restrictions that apply to EU farmers and increase the costs of their agricultural products. Therefore, some farmers think that Ukrainian grain sold unrestricted in the EU market undermines fair competition.
The tensions and discontent about the Ukrainian grain, coupled with recent widespread farmers protests all across the EU, have eventually led to Polish farmers blocking roads and checkpoints of Polish-Ukrainian border in order to block the trucks with Ukrainian grain from entering Poland.
This blockade, however, is not limited to trucks carrying grain and other agricultural products, but rather is a full and complete blockade of the border, effectively severely hampering and stopping all humanitarian and military aid for Ukraine sent by its allies. As a result, Ukraine’s ability to get military equipment, ammo, and other material to the fighting front in time has been significantly degraded. This led to suspicions that Russia may play a certain role in this blockade of the Polish-Ukrainian border by instigating Polish farmers to continue it and completely seal it, instead of only focusing on trucks withy Ukrainian grain. Further questions about motivations of Polish farmers arise since Polish farmers have been very vocal about the negative effects of Ukrainian grain but initially have been completely silent about the same effects of the Russian grain.
Polish farmers’ protests at the Polish-Lithuanian border
Towards the end of February it became known that Polish farmers are planning to start protesting, and potentially blocking, one of the state border crossings along the Polish-Lithuanian border. The reason for the blockade was that Polish farmers started suspecting that some Russian or Ukrainian grains come to Poland from the territory of Lithuania. Hence, Polish farmers want to inspect whether there is any Ukrainian grain being transported to Poland from Lithuania.
Minister of Agriculture Kęstutis Navickas rejected the farmers’ accusations regarding the transportation of Ukrainian grain. Lithuanian officials communicated quite intensively both with the Polish Ministry of Agriculture, with the help of the Lithuanian Chamber of Agriculture, and with the protesters themselves. Nevertheless, Lithuanians did not manage to avoid a partial blockade carried out by the Polish farmers. The partial blockade of Kalvarija border crossing point at the Lithuanian-Polish border began on the 1st of March, and last for about a week. According to the minister Navickas, the Ministry of Agriculture did not receive the specific demands of the Polish protesters.[4]
The head of the National Crisis Management Center Vilmantas Vitkauskas explained that the situation is not easy, but the Polish authorities have assured that part of the heavy transport will be able to be directed to another – the Lazdijai – border control post.
Lithuanians, however, are not afraid of this blockade and do not believe that it will be serious or long-lasting exercise. Part of the reason is that Poland exports more grain to Lithuania than it imports from Lithuania, and therefore, by blocking the trade flow, Polish farmers would economically hurt themselves more than Lithuanian farmers. The minister Kęstutis Navickas said: “we have data on how much grain of Ukrainian origin entered Lithuania. We have statistics on the trade balance between Lithuania and Poland – it is still such that Poland imports more of its production to Lithuania than we export to it.”[5]
Regarding a possibility that it is Russia who is instigating Polish farmers’ blockade of the Lithuanian-Polish border, the head of Lithuania’s National Crisis Management Center Vilmantas Vitkauskas confirmed that there was no data on the instigation of the situation from the Russian side, but he admitted that Moscow could find some ways to exploit this situation.
Overall, Lithuanian officials are happy to have been able to avoid a complete blockade of the Lithuanian-Polish border and only get a week-long partial blocade. According to a polish farmer Karol Pieczyński, who is organising the blockade at the Lithuanian border, Polish farmers will stop and physically inspect all vehicles likely to be carrying Ukrainian grain or other agricultural products. According to him, the blockade does not apply to private vehicles, fuel tankers, etc. “If we see grain and other agricultural products on the road, we would like to know where they are coming from, why and how they are being transported to get a sense of the volume of traffic,” the Polish farmer added.[6]
On the 7th of March the Polish farmers have ended the partial blockade of the Lithuanian-Polish border.
The issue of the Russian grain
While Polish farmers were initially complaining about Ukrainian grain and ignoring the fact that Russian grain is also reaching Poland, Lithuanian farmers and politicians focus on the crops from Russia. The Lithuanian grain growers say their biggest problem is not Ukrainian but Russian grain, which enters the EU in huge quantities. “These are impressive figures, with over 3 million tonnes of Russian grain having passed through Latvia and Lithuania combined in 2023. In total, 12 million tonnes of Russian grain were imported into the EU market last year,” said Aušrys Macijauskas, head of the Lithuania Association of Grain Growers.[7]
Russian grain is driving down prices across the EU, he said, adding that the Russians are deliberately dumping prices to create chaos in the agricultural sector. But the European Commission has instruments to put a stop to this.
“There is a regulation that allows the EU to intervene in the market in an emergency situation and start buying food products the prices of which are falling drastically. In this case, it could buy Ukrainian grain on the territory of Ukraine and thus stabilise the market,” Macijauskas said.
In beginning of March Lithuanian Seimas has submitted a request to European Commission (the EC) to ban Russian and Belarusian grain imports into the European Union. Earlier, Viktoras Pranckietis, chairman of the parliamentary Committee on Rural Affairs, said that with this resolution, Lithuanian parliamentarians aimed to consolidate the parliaments of all EU countries so that a common European decision is made and individual countries do not have to impose bans on Russian and Belarusian grains separately. The document also asks the EC to ensure cooperation and coordination among EU member states to effectively and uniformly implement the ban throughout the bloc. Lithuanian MPs also call on the commission to examine the possibility of banning the import of food products of Russian and Belarusian origin into the EU and using products supplied by Ukrainian agricultural entities if there is a need to regulate agricultural product flows.[8]
Lithuanian president Gitanas Nausėda has also backed the proposal to ban Russian and Belarusian grain imports. President Gitanas Nausėda said that the Russian grain imports „is certainly a problem, and our farmers see the problem as Russian grain is entering Lithuania, including the so-called black grain, which is not accounted for and is simply smuggled.“[9]
“Without doubt, we have to fight against this, and it is quite logical given the role this country plays in destabilising the geopolitical situation in Europe,” he added. “Therefore, I would welcome proposals [to ban Russian grain imports], but of course, we should look into their specific content.”
Some Lithuanian MPs are proposing a temporary ban on imports of Russian or Belarusian agricultural products. The Agriculture Ministry said last week it would tighten controls on grain imports from Russia and other high-risk countries from mid-March but will not seek to ban them completely.[10]
In February 2024, the Latvian parliament passed a temporary ban on imports of agricultural products from Russia and Belarus until at least July 2025.
The European Commission response and shaping of the EU-wide policy
After starting feeling pressure from Lithuania and other countries regarding the Russian grain, on 15 March the European Commission announced that it will unveil measures to deal with the surge in imports of Russian agricultural products, particularly cereals, into the EU.
According to a statement released by Commission President Ursula von der Leyen and Polish Prime Minister Donald Tusk, they engaged in an “in-depth discussion” on a highly anticipated set of agricultural proposals aimed at addressing the demands of protesting farmers across Europe by easing the environmental requirements of the Common Agricultural Policy (CAP). The discussion between the two leaders also covered the state of the bloc’s grain markets and the impact of cereal imports from Russia.
The joint statement reads that “the European Commission is evaluating the possibility of introducing restrictions on imports of agricultural products from Russia to the European Union. On this basis the Commission will come forward with a proposal shortly.”
Possible ban or restrictions on imports of Russian agricultural products is also supported by the EU Agriculture Commissioner Janusz Wojciechowski, who wants the adoption of the European-wide measures in his native Poland. Janusz Wojciechowski addressed the issue of Russian grain and its impact on EU markets in a conference in March, and said that “when Russia uses food as a weapon, we must react. Russia will export over 50 million tons of wheat. When one country has a quarter of all wheat exports, it can destabilise the situation.”[11]
While imports of food and fertilisers have been exempt from the EU’s wartime sanctions on Moscow, since the conflict began in 2022, to preserve global food security, the Commission has faced increasing pressure from EU leaders and lawmakers to impose trade restrictions. In February, Latvia introduced a unilateral trade ban on Russian agricultural imports, and Tusk suggested similar measures could be taken in Poland. Members of the European Parliament (MEPs) across the political spectrum endorsed the idea of restrictions on Russian agri-food products. During a debate in Strasbourg on Tuesday, they highlighted the potential role of such trade in financing the war against Ukraine. However, EU Home Affairs Commissioner Ylva Johansson cautioned against potential distortions resulting from sanctions on Russian food, leading to market distortions and resulting in higher food prices for countries in the Global South that rely on Russian imports.[12]
The final response from the EU regarding Russian grain will take some time. In the meantime, an increasing number of EU countries urge the EC to take faster and tougher decisions. Lithuania is among those countries which make their case for the ban of the Russian grain very clear. On the 21st of March, Lithuanian President Gitanas Nausėda was adamant, saying that “Russian grain should be blocked from free flowing into the EU. It’s scandalous that Russia is currently among the top grain suppliers in Europe. This must stop.”[13]
Conclusion
The war in Ukraine has led to numerous unexpected consequences. Among these is the battle over grain between Ukraine and Russia. While it’s understandable that European farmers have faced challenges in recent years and are motivated to protect their markets from cheaper Ukrainian grain, the complete closure of the Polish-Ukrainian border is unacceptable as this closure also hampers the flow of military aid from the West to Ukraine. Lithuania has been actively seeking ways to assist in the transit of Ukrainian grain and is now rallying EU-wide support to ban Russian grain from entering the EU.
This grain crisis underscores the economic significance of grain for both Ukraine and the EU. The EU’s response to a potential ban on Russian grain will determine whether Russia loses yet another revenue stream. Additionally, the crisis provides EU countries with insights into the possible economic effects of Ukraine—often referred to as the breadbasket of Europe—joining the EU and integrating its agricultural markets.
[1] DELFI: Trąšų tranzito netekęs Klaipėdos uostas galėtų vežti ir Ukrainos grūdus, bet yra neatsakytų klausimų, at: https://www.delfi.lt/verslas/verslas/trasu-tranzito-netekes-klaipedos-uostas-galetu-vezti-ir-ukrainos-grudus-bet-yra-neatsakytu-klausimu-95667473
[2] VAKARŲ EKSPRESAS: Spartina Ukrainos grūdų kelią į Klaipėdos uostą, at: https://ve.lt/aktualijos/klaipedos-pulsas/spartina-ukrainos-grudu-kelia-i-klaipedos-uosta
[3] DELFI: Trąšų tranzito netekęs Klaipėdos uostas galėtų vežti ir Ukrainos grūdus, bet yra neatsakytų klausimų, at: https://www.delfi.lt/verslas/verslas/trasu-tranzito-netekes-klaipedos-uostas-galetu-vezti-ir-ukrainos-grudus-bet-yra-neatsakytu-klausimu-95667473
[4] DELFI: Navickas: tenka konstatuoti, kad dalinė blokada Lietuvos ir Lenkijos pasienyje rytoj įvyks, at: https://www.delfi.lt/agro/agroverslo-naujienos/navickas-tenka-konstatuoti-kad-daline-blokada-lietuvos-ir-lenkijos-pasienyje-rytoj-ivyks-96001749
[5] Ibid.
[6] LRT: Polish farmers plan blockade on Lithuania border over Ukrainian grain: ‘We want to check trucks’, at: https://www.lrt.lt/en/news-in-english/19/2206573/polish-farmers-plan-blockade-on-lithuania-border-over-ukrainian-grain-we-want-to-check-trucks
[7] DELFI: Lithuanian farmers say they have problems with Russian grain, not Ukrainian, at: https://www.lrt.lt/en/news-in-english/19/2213985/lithuanian-farmers-say-they-have-problems-with-russian-grain-not-ukrainian
[8] LRT: Lithuanian parliament ask EC to ban Russian, Belarusian grain imports, at: https://www.lrt.lt/en/news-in-english/19/2222518/lithuanian-parliament-ask-ec-to-ban-russian-belarusian-grain-imports#:~:text=The%20Lithuanian%20parliament%20on%20Thursday,none%20against%2C%20and%20no%20abstentions.
[9] LRT: Lithuanian president backs proposals to ban Russian grain imports, at: https://www.lrt.lt/en/news-in-english/19/2213741/lithuanian-president-backs-proposals-to-ban-russian-grain-imports
[10] Ibid.
[11] EURACTIVE: EU to introduce measures to tackle surge in Russian grain imports, at: https://www.euractiv.com/section/agriculture-food/news/eu-measures-to-tackle-surge-in-russian-grain-imports/
[12] Ibid.
[13] X: @GitanasNauseda, at: https://twitter.com/GitanasNauseda/status/1770820160695243195?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet