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EU looks to cover transport costs for Ukraine grain exports by land

The European Union is ready to export almost all of Ukraine’s farm producevia “solidarity lanes” and help cover costs, EU agriculture commissioner Janusz Wojciechowski said on Tuesday, after Russia withdrew from a U.N.-backed Black Sea grain deal.

Solidarity lanes are rail and road transport connections through EU member states that border Ukraine such as Poland and Hungary while the most significant lane is through Romania.

Wojciechowski said that the EU was looking at several initiatives from member states to come up with a joint plan to cover the additional transport costs.

The Black Sea deal, brokered by the United Nations and Turkey last July, aimed to help prevent a global food crisis by allowing grain blocked by the war in Ukraine to be safely exported. Russia pulled out last week.

“Trade is not attractive enough…Russia will be a beneficiary of this situation because it will be cheaper to buy grain from Russia than Ukraine that is transported through Poland to the Baltic ports,” Wojciechowski said, without providing a cost estimate.

About 60% of Ukraine’s exports were shipped via solidarity lanes and 40% went via the Black Sea while the U.N. backed grain deal was in operation.

The collapse of the deal is expected to take a particularly heavy toll on countries in Africa that depended on deliveries by sea.

“It is not the first time Russia (has used)food as a weapon… The situation is similar to the beginning of the war,” Wojciechowski told reporters.

“We are ready to export almost everything. This is about four million tonnes per month of oilseeds and grains and we achieved this volume in November last year,” he added.

Expanding grain transit through the EU is sensitive for Poland and some other EU countries bordering Ukraine, where farmers have come under pressure from increased Ukrainian imports.

In May, the EU allowed five countries close to Ukraine – Bulgaria, Hungary, Poland, Romania and Slovakia – to ban domestic sales of Ukrainian wheat, maize and oilseeds while allowing transit through them for onward export.

The EU will review the ban after several countries pushed for extension beyond the Sept. 15 ban expiry.

“Now Ukraine has built up stocks again, more than before the war, and most likely this will increase pressure on frontline countries and we have to approach this seriously,” the Commissioner added.

EU member Lithuania has asked the European Commission to develop a route for Ukrainian grain through the ports in the Baltic states of Estonia, Latvia and Lithuania.

The move, proposed by three Lithuanianministers in a letter seen by Reuters, would create “a viable and trusted alternative route” for exporting Ukrainian produce, including grain, through the ports of Tallinn, Riga, Ventspils, Liepaja and Klaipeda, said the letter, signed by three Lithuanian ministers.

The five ports have a combined grain export capacity of 25 million tonnes, said the letter, dated July 21.

Its asked the European Commission for targeted action to create the route, such as “implementing measures to facilitate cargo handling between different railway gauges”, and moving customs and other controls of the produce from the Polish border to the Baltic ports.

Ukraine and the Baltic States railways are built on Russian-type gauge, which is incompatible with the railway gauge used in Poland, the only practical route between the countries.
Source: Reuters (Additional reporting by Andrius Sytas in Vilnius; Editing by Susan Fenton, Christina Fincher and Nick Macfie)

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