UKRAINE- The European Commission is “seriously considering” subsidizing the transport of Ukrainian grain through its member states after several countries banned imports, according to Poland’s public radio.
According to the report, the estimated cost of subsidies may be around 30 euros ($32.62) per ton of grain.
The report further indicated that the issue of subsidizing the transport cost for Ukrainian grain is currently under evaluation at meetings with representatives of Poland, Hungary, Slovakia, Romania, and Bulgaria, together with the EU’s executive arm and Ukraine.
Earlier this year, the five EU member states bordering Ukraine secured a temporary ban on the sale of Ukrainian grain until mid-September in the wake of rising complaints from local farmers about an impact on their business.
The five states are now seeking to ensure potential subsidies will be accompanied by a decision to extend the ban until end-2023. The current rules don’t apply to goods transiting their territory.
These alternative routes, dubbed Solidarity Lanes, are critical to Ukrainian exports as Russia continues to damage Ukraine’s export infrastructure after the Black Sea grain deal collapsed.
The Kremlin’s efforts to paralyze Ukrainian food shipments are succeeding, with a third of the country’s crop exports wiped out since its Black Sea ports were effectively blocked last month.
The reduction marks a significant setback for Ukraine’s economy and global food security, even with an approximate US$1 billion push by the European Union to build out alternative routes since the start of Russia’s invasion.
The US this week said it’s working with European partners to keep grain exports flowing, relying on rivers like the Danube and other avenues after sea passage became unsafe.
Ukrainian President Volodymyr Zelenskiy said that within a month after the grain deal broke down there have already been seven attacks on ports with drones and missiles, signaling how challenging it has been to find reliable workarounds.
According to Alex Lissitsa, a member of the board of the Ukrainian Agribusiness Club, there are also logistical hurdles as it takes four times as long for some cargoes to get to the Danube now compared to a month ago because of traffic jams.
The delays and smaller shipment volumes are also leading to higher transport costs. According to some traders, transport costs are up to 50% higher.
“In many regions, farmers will most likely think about reducing the sowing of winter cereals, because the prices offered by the market do not cover the costs. That would be a drag of 3% on Ukraine’s gross domestic product in the second half of the year,” said Lissitsa.