Members' Research Service By / March 18, 2022

Russia’s war on Ukraine: EU-Ukraine trade in agri-food products

The EU accounted for more than 40 % of Ukrainian trade in 2019, making it Ukraine’s main trading partner.

© globeds / Adobe stock

Written by Claudia Vinci.

Up until the 2022 Russian invasion, Ukraine was exporting more than 40 % of its goods to the EU, making the EU the country’s leading trading partner. The principal goods imported by the EU were raw materials, chemical products and machinery. With regard to the agri-food sector, Ukraine supplied almost half of the cereals and vegetable oils and a quarter of the poultry meat consumed in Europe. While the full impact of the Russian invasion on Ukraine’s agri-food trade has still to be assessed, some possible scenarios have already emerged.

Background

The EU accounted for more than 40 % of Ukrainian trade in 2019, making it Ukraine’s main trading partner. Ukraine, on the other hand, represented only around 1.1 % of EU total trade, importing machinery and transport equipment, chemicals and manufactured goods. Ukraine exports mostly raw materials, chemical products and machinery to the EU. These exports rose by 48.5 % between 2016 and 2019, amounting to €24.2 billion in 2019, with total trade worth €43.3 billion in the same year.

EU trade in goods with the world and Ukraine (2020)
Figure 1 – EU trade in goods with the world and Ukraine (2020)

Ukraine has been a member of the World Trade Organization (WTO) since 2008. In 2014, the EU and Ukraine signed an association agreement, including a deep and comprehensive free trade area (DCFTA). The agreement formally entered into force in 2017, after a one-year provisional application period. The pandemic led to a significant drop in both exports and imports between the EU and Ukraine in 2020.

Agricultural sector

In 2019, the agricultural sector contributed almost 10 % to Ukraine’s gross domestic product (GDP), accounting for 18 % of the country’s jobs and 44 % of its export value.

The specific soil composition (chernozem) and landscape in Ukraine are optimal for agricultural production, in particular for crops. Around 80 % of the total utilised agricultural area in Ukraine is used for to grow cereals, oilseeds, vegetables and other annual crops. Ukraine’s agricultural producers benefit from a value added tax exemption or reduction on exported goods, used as leverage to encourage production and trade. In the period between 2000 and 2019, production of cereals rose from 23.8 million tonnes to 74.1 million tonnes, and oilseed production rose from 3.7 million tonnes to 22.2 million tonnes.

EU trade with Ukraine: Agricultural products (2020)
Figure 2 – EU trade with Ukraine: Agricultural products (2020)

Agri-food trade figures

Of the 1.0 % of EU goods originating in Ukraine, 35.7 % are agricultural products. Agricultural products imported from Ukraine represent 4.6 % of all agri-food imports into the EU. When it comes to exports, the EU sells 1.2 % of its commodities to Ukraine, 12.4 % of which are agricultural products.

The main products imported from Ukraine are cereals, animal and vegetable fats and oils, oilseeds, food industry residues and waste, edible fruits and nuts, and meat and edible meat offal. The main exports from the EU to Ukraine are beverages, tobacco, dairy products, cocoa, edible preparations, food industry residues and waste, and oilseeds.

EU trade with Ukraine: Agricultural trade by product (2020)
Figure 3 – EU trade with Ukraine: Agricultural trade by product (2020)

Read this ‘at a glance’ on ‘Russia’s war on Ukraine: EU-Ukraine trade in agri-food products‘ in the Think Tank pages of the European Parliament.


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Comments
  • At the end of 1990s Putin became the leader of Russia by staging his first KGB style military operation – bombing Moscow apartment buildings to gain popularity and re-start the war in Chechnya. Putin killed his own innocent civilians, hundreds of Russians in order to boost his popularity and gather more war support. The US, EU and NATO should have seen his true face then, but decided to ignore Putin’s Chechnya war crimes and welcomed Putin to red carpet meetings and Bush even declared his trust in Putin. This further emboldened Putin who had suppressed all democratic processes internally in Russia and has successfully become a dictator and tyrant.
    Putin’s first test run to settle his political goals with military adventures and military operations was in Georgia in 2008. In August 2008 Putin attacked Georgia’s Samachablo and Abkhazian regions and successfully annexed territories of a sovereign country. What did the US and EU do? Obama administration decided to do reset policy with Russia – greatest mistake of President Obama and Angela Merkel, who kept closest relations with Putin and did not want to upset Putin. Russia was not even hit with bare minimum of sanctions for conquering Georgia’s two regions.
    This further encouraged Putin to find more military solutions to his political issues and goals. As Georgia’s President Mikheil Saakashvili said “Ukraine, Crimea will be the next!” the EU leaders laughed at him. In 2014 the new reality sets in – Putin did order and conquered Crimea and Eastern Ukrainian regions. At that time the Obama administration and Angela Merkel received first reality check from Putin, but they made the second greatest mistake with Putin: They set bare minimum of sanctions, did not punish Putin for violating the international laws and let him get away again!
    This has turned Putin into a strong dictator backed by US dollars and EU Euros for the Russian energy exports and every time barrel of oil went above $100, Putin fired rockets and ordered military adventures. In Syria Putin had committed number of atrocities against civilians and used chemical weapons. What consequences did he face? Absolutely nothing, verbal condemnation by the international community.
    And now we are in 2022. As the barrel of oil shot above $100 and Putin ordered massive invasion of Ukraine, suddenly the world woke up to new reality. However, the reality was established during the 1990s when Putin planned and executed the Moscow apartment bombings, the US/EU/NATO decided to ignore the warning signs and tried to welcome Putin into the international community.
    What is happening now in Ukraine should be the wake up call to the entire world. The post World War 2 international system & the world order has been shattered to pieces and international law had been completely ignored without any consequences by Putin again and again.
    What Ukraine needs is the world to come to terms with reality: Putin has to be defeated and the establishment/elite power structure of the Kremlin has to change. Before this happens, the Ukrainian military MUST receive all necessary lethal defensive and offensive weapons as well.
    The Ukrainians need to have anti-air capability to shoot down incoming missiles and airplanes from much higher altitudes, so the S-300/S-400 systems will be much welcome, however this is not enough. The Ukrainian army needs those MIG29s to enforce its own No Fly Zone, since the western powers are too scared to face Putin over even a limited No Fly Zone over humanitarian corridor. So lets give this power to the Ukrainians?
    What the Ukrainian side needs is Patriot missile systems as well and anti-artillery systems: radars, locators and smart artillery systems from the US.
    The above-mentioned weapons systems would have an immediate impact on the ground and will change the formula on the ground by giving Ukrainians much needed upper hand to control the air and protect the civilians from the #1 major killers: incoming artillery shells and missiles.

    Slava Ukraini! Glory to Ukraine!

    David Dzidzikashvili
    Ph.D. Candidate
    Business & Technology University – BTU
    Tbilisi, Georgia

  • To say Ukraine supplied “almost half of the cereals” consumed in Europe is rather disingenuous as the figure actually EXCLUDES wheat and rice. It would be interesting to know what the figures are when wheat and rice are included. Also, how much of that consumption is as “food” for humans, rather than “feed” for livestock.

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