May 10, 2022
Europe Plans to Boost Ukraine’s Food Exports Using Land Routes
(Bloomberg) -- The European Union is finalizing a plan to facilitate land exports of Ukraine’s stocks of food products with the Russian invasion blocking access to the country’s vital Black Sea ports.
The European Commission will consider a strategy on Wednesday that would address technical and bureaucratic initiatives to speed up the shipping of vegetable oils, corn and wheat, some of Ukraine’s key exports, people familiar with the discussions said.
The EU’s executive arm is concerned about logistical bottlenecks that could hamper efforts to utilize alternative land routes via neighboring countries, since infrastructure gaps could hinder exports despite recent moves to remove trade barriers with Kyiv.
Ukraine’s agricultural and food sector represents almost 10% of its GDP. Last year, the country exported food products totaling almost $28 billion to the world, including 7 billion euros ($7.4 billion) to the EU. Before the war, around 5 million tons were shipped each month through the Black Sea, which is currently blocked by Russian warships.
The EU and Ukraine are working against the clock to find a solution by summer, as the country needs to release at least 25 million tons stuck in the country in time for the beginning of the next harvest season.
But there are limits to what can be transported overland. The maximum export capacity by rail is estimated at 1.1 million tons of grain per month and 250,000 tons of sunflower oil per month, Roman Slaston, chief executive officer of the Ukrainian Agribusiness Club, said in April. There are challenges to reach that capacity, he said, which would be well below what could normally be exported by sea.
Read more: Ukraine’s Farmers Fight on the Front Line of Global Food Crisis
Ukraine’s products also face a myriad of phytosanitary measures and quotas for land transport that complicate their ability to pass through various member states to their final destination, the people, who asked for anonymity to discuss sensitive planning, said.
European officials said that finding a solution to Ukraine’s food exports should be a priority, not only to alleviate the ongoing global food crisis but also to secure revenues to cover Kyiv’s urgent financial needs.
“Ukraine is a rich country, it is the wheat basket of Europe,” the president of the European Investment Bank, Werner Hoyer, told reporters Tuesday. “It is sitting on 8 billion euros worth of wheat right now from last year’s harvest that they cannot export through the sea.”
The European Commission declined to comment on their plans.
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