Ukrainian grain crisis. EU prepares compensation for farmers worth 100 million euros

Pressure has been mounting on Brussels to work out a European Union-wide solution after Warsaw and Budapest announced bans on some imports from Ukraine at the weekend, with other countries in eastern Europe saying they are also considering action.

Under EU rules, the European Union can limit the import of products into the whole or part of the bloc, while still allowing transit.

The EU executive, prepared the initial 56-million-euro ($61 million) package agreed for Bulgaria, Poland, Romania at the end of March.

Also in March, prime ministers of Poland, Hungary, Romania, Bulgaria, and Slovakia wrote a letter to EU Commission President Ursula von der Leyen. The leaders demanded an intervention on the part of the EU regarding the Ukrainian grain crisis. The initiative was put forward by Poland's PM Mateusz Morawiecki.

"l am fully aware of the concerns you express as regards the increased imports of certain Ukrainian agricultural products," von der Leyen said in a response to the letter.

"In view of our single market and our customs union, a common European approach is needed to address these concerns that arise from an interplay of various factors. Unilateral measures can only play into the hands of the adversaries of Ukraine and should not erode our unwavering support for Ukraine," she added.

Von der Leyen added the Commission "has reacted immediately by providing a rapid financial support package of EUR 56.3 million for the most affected farmers, which is already being implemented". "We are now preparing to present a second financial support package of EUR 100 million and a 200% co-financing rate, for affected farmers, as part of a common European approach."

The Commission, which oversees trade policy in the 27-nation European Union, will take what it described as "preventative measures" for certain categories of grain and oil seeds - particularly, wheat, maize, sunflower seeds and rapeseed.

"In parallel with the safeguard investigation, we should work to adopt the pending legislative proposal for the renewal of the autonomous trade measures for another year beyond their current expiry on 5 June 2023. Extending these exceptional measures will strengthen our commercial lifeline to Ukraine," we read," EU Commissio chief wrote.

"It should be noted that our extension proposal already includes an expedited safeguard mechanism with stronger provisions, tighter monitoring and reporting to Member States, a lower trigger threshold and a shorter assessment deadline. This responds specifically to the concerns of frontline Member States and stakeholders, including farmers, and will allow us to react even quicker in the future to protect the EU market as necessary," she added.

"Beyond the use of safeguards, we will work even more intensely to facilitate the transit of the agricultural goods in question, both to other Member States and third partners, thus alleviating the short-term pressure on the countries adjacent to Ukraine and at the same time helping the liquidity of global agri-food markets. This includes continued work on lowering overall logistics costs, better coordinating transit and enhancing infrastructure in ports, border interconnections and other conduits under the EU Solidarity Lanes, as well as supporting the Black Sea Grain Initiative, we read in the response letter.

Von der Leyen also stressed that farmers "play a vital role in Europe". "They provide our food, sustain rural communities, protect the natural environment and preserve our cultural heritage. They deserve our support. Please rest assured that the Commission will continue to support them by giving utmost priority to this sensitive issue," she stressed.

Inspections of ships carrying Ukrainian grain from the Black Sea resumed on Wednesday under a U.N.-brokered deal, but Kyiv said more time was needed to secure an extension of the initiative.

Ukraine, which depends heavily on revenue from grain sales as it battles Russia's invasion, and its allies blamed the latest halt to ship inspections in the Bosphorus on Moscow, which in turn has blamed Ukraine and the United Nations.

Ukrainian Deputy Prime Minister Oleksandr Kubrakov wrote on Facebook that "ship inspections are being resumed, despite the RF's (Russian Federation's) attempts to disrupt the agreement".

The Joint Coordination Centre in Istanbul that oversees operations said "inspections are already at work".

Talks on extending the Black Sea grain deal beyond a May 18 deadline have not produced a breakthrough, and Kyiv's grain exports are also restricted by import bans imposed by three eastern European countries.

The Black Sea Grain Initiative, reached with U.N. and Turkish mediation last July, unblocked three Ukrainian Black Sea ports five months after Russia's invasion.

It was designed to alleviate a global food crisis as well as to support Ukraine whose economy relies heavily on agricultural exports.

Russia's Foreign Ministry, without offering documentary evidence, accused Kyiv of sabotaging the deal by demanding bribes from ship owners to register vessels and carry out inspections. Kyiv did not immediately comment on the allegation.

Russia says it has committed to the initiative only until May 18, and complains a separate deal meant to ease its own agricultural and fertiliser exports has not been upheld.

Ukrainian Agriculture Minister Mykola Solsky told reporters talks were taking place to get the deal extended next month. But making clear no immediate breakthrough was expected, Solsky said: "Let's give them time."

He gave no details of the talks. Russian Foreign Minister Sergei Lavrov is due to discuss the grain export deal with U.N. Secretary-General Antonio Guterres in New York next week.

Kyiv is also trying to secure agreement from three European Union members states in eastern Europe to lift bans on Ukrainian grain and food products.

Hungary, Poland and Slovakia have imposed bans to protect their markets from an influx of cheaper supply following the Russian invasion of Ukraine, and Bulgaria and Romania have said they could also take action.

Poland went further by banning not just imports, but also the transit of Ukrainian grain through its territory. It agreed on Tuesday to lift the transit ban after talks with Kyiv.

Large quantities of Ukrainian grain have been trapped in eastern and central Europe as low global prices and demand meant grain cannot easily be sold on.

The bottlenecks reduced prices and sales by local farmers, putting political pressure on governments in the region.