Sun. Jun 23rd, 2024

Brussels wants to charge Russian wheat to please European farmers.

By knl9j Mar23,2024
News

European Commission President Ursula von der Leyen proposes levies on Russian grain. France’s grain growers are right to worry about Russia’s impact on world pricing and trade balances. However, this policy may be more political than effective.

Is penalizing Russia the EU’s response to farmer anger? On Thursday, European Commission President Ursula von der Leyen suggested that. The latter proposed customs taxes on wartime cereals. Despite Western sanctions, Russian agricultural goods remain exempt.

We propose raising customs taxes on Russian and Belarusian grain, oilseeds, and related products. At a press conference after the first day of a summit of heads of state and EU government in Brussels, Ursula von der Leyen said this would prevent Russian cereals from upsetting the European market.

Poland, the Czech Republic, and the three Baltic states demanded a ban on Russian and Belarusian grain imports. The Commission President said that this step will deprive Russia of export income and “will ensure that illegal exports of Ukrainian grain stolen by Russia do not enter the EU market”.

The Commissioner for Trade, Valdis Dombrovskis, said these “prohibitive” customs fees will “dry up” a stream of cash allowing Moscow to pay its war against Ukraine. However, these levies “would not affect Russian grain transiting to third countries”.

Russian imports “rose sharply in 2023. The European Commissioner stated that these high customs taxes will make them commercially unviable, stopping them from “destabilizing” the European market.

A wonderful ambition…to be qualified given Europe’s imports. Arthur Portier, argus media consultant (Agritel), notes that Russia’s main market is beyond Europe. Since the campaign began on July 1, 2023, Europe has imported 290,000 tons of Russian soft wheat, 4.5% of its total imports. Corn from Russia accounts for 2% of imports.

Arthur Portier says the main topic is durum wheat, used to create pasta. Europe imported 1.9 million tons, 23% of which were from Russia (420,000 tonnes). From a global perspective, the European Commission’s move will not impact the European agricultural landscape save for some sectors like durum wheat, he says, calling it a political decision.

This move is intended to boost EU farmers’ exports as grain prices decline worldwide. Again, Russia and others are to blame because they have lower production costs than the Old Continent and can sell their food cheaper.

Especially considering it leads the globe in exports and has record soft wheat harvests, overwhelming the market. Analysts estimate Russian soft wheat exports to reach record levels of 49 to 50 million tonnes in 2023–2024, despite a fall in production to 85 million tonnes.

La Tribune’s Marc Zribi noted in September that Russia’s export presence is unprecedented. He continued, “And it seems to have the capacity to weigh on the markets throughout the campaign.”

Arthur Portier says Moscow has gained market share, especially in Algeria, a market previously occupied by France, because to its high production and lower pricing than Europeans. Moscow has delivered to six African nations, including Somalia and Burkina Faso, since war and Western sanctions began. Free Faso cereal deliveries.

On Friday, Russia warned that “if these decisions (on assets) are implemented, they will have very serious consequences for those who took them” in response to Europe’s measure. Per Kremlin spokesman Dmitri Peskov. He calculated that “European consumers will suffer” if the EU levies Russian agricultural imports, which are duty-free.

The Europeans have avoided targeting agriculture or fertilizers in their sanctions against Moscow after the invasion of Ukraine in February 2022. They worried about upsetting grain commerce and compromising the food security of third nations in Asia and Africa, heavily dependent on Russian agriculture.

According to Arthur Portier, there has been no short-term international agricultural conflict since then.

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