Poland, Slovakia and Hungary announced restrictions on Ukrainian grain imports on September 15, following the European Commission's decision not to extend import bans on Ukraine's five EU neighbors.

Ukraine was one of the world's largest grain exporters before Russia's 2022 invasion crippled Ukraine's ability to deliver agricultural products to global markets. Since the start of the conflict, Ukrainian farmers have relied on exporting grain through neighboring countries because it cannot use the preferred route through Black Sea ports.

But a massive influx of grains and oilseeds into neighboring countries caused prices to fall, affecting local farmers' incomes and leading the government to ban agricultural imports from Ukraine. The European Union stepped in in May to prevent individual countries from imposing unilateral bans and imposed its own import bans on neighboring countries. Under the EU ban, Ukraine can export through these countries provided the products are sold elsewhere.

The EU allowed the ban to expire on September 15 after Ukraine promised to take steps to tighten controls on exports from neighboring countries. The issue is now becoming particularly sensitive as farmers harvest their crops and prepare to sell them.

EU Trade Commissioner Valdis Dombrovskis said Sept. 15 that countries should refrain from taking unilateral measures against Ukrainian grain imports, but Poland, Slovakia and Hungary immediately responded by reimposing restrictions on Ukrainian grain imports. They will continue to allow transit of Ukrainian products.

"As long as Ukraine can prove that the grain will reach the destination country by truck and train, the domestic use ban will not really diminish Ukraine's export capacity," he said. Terry Reilly, senior agricultural strategist at Marex. He noted that Black Sea export disruptions are a bigger issue.

It's unclear how much Ukraine has committed to restricting exports or how the new ban will affect the flow of agricultural products from Ukraine. The issue highlights the EU's divisions over the impact of the war in Ukraine on the economies of member states, which themselves have strong agricultural and farming lobbies.

Ukrainian President Leonid Zelensky welcomed the EU's decision not to further extend the ban on Kiev's grain exports, but said his government would react "in a civilized way" if EU member states violated EU rules.

But the three countries argued that they were acting in their own economic interests.

"The ban covered four cereals, but at my request, at the request of farmers, the ban has been extended to include meals from these cereals: maize, wheat, rapeseed, so that these products also do not affect the Polish market." Polish Agriculture Minister Robert Telles said in a statement posted on Facebook.

Polish Prime Minister Mateusz Morawiecki added: "Despite their disagreement, despite the disagreement of the European Commission, we will extend this ban." "We will do so because it is in the interests of Polish farmers."

Under a government decree issued on Sept. 15, Hungary imposed a national import ban on 24 Ukrainian agricultural products, including grains, vegetables, a wide range of meat products and honey.

Slovakia's agriculture minister followed suit, announcing his country's own ban on grains. All three bans apply only to domestic imports and do not affect transshipment to subsequent markets.

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Solidarity lane

Following Russia's withdrawal from the UN-brokered Black Sea grain deal in July, the EU opened an alternative land route for Ukraine, the so-called "solidarity lane", for exports of grains and oilseeds. The agreement allows for the safe passage of cargo ships.

The European Commission said the existing measures will expire on Sept. 15 as originally planned after Ukraine agreed to introduce measures such as an export licensing system within 30 days.

The EU said there was no reason to extend the ban as the supply distortions that led to the May ban had disappeared from the market.

The EU has said it will not impose restrictions as long as Ukraine has effective export controls in place.

Farmers in five of Ukraine's neighboring countries have repeatedly complained that a glut of products has affected their domestic prices and driven them out of business.

Those countries, with the exception of Bulgaria, have been pushing for an extension of the EU ban. Bulgaria voted Sept. 14 to lift the restrictions.

Unlike the other countries, the Romanian government did not issue a unilateral ban until May, and the government said on Sept. 15 that it "regrets that it has not been possible to find a European solution to extend the ban."

Romania said it would wait for Ukraine to present a plan to prevent a surge in exports before deciding how to protect Romanian farmers.

More than 60 percent of Romania's alternative water flows through its territory, mainly through the Danube, and its farmers have threatened to protest if the ban is not extended.

Last year, a U.N.-brokered deal to ship 60 percent of Ukraine's exports through the Unity Passage and 40 percent through the Black Sea collapsed in July.

In August, about 4 million tons of Ukrainian grain passed through the Solidarity Passage, with nearly 2.7 million tons of that passing through the Danube. The European Commission wants to further increase exports through Romania, but the plan has been complicated by Russian drone attacks on Ukrainian grain infrastructure along the Danube and near the Romanian border.

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