The expiration date of the Autonomous Trade Measures (ATMs) — June 5 of this year — is rapidly approaching. Yet, the future terms of trade between Ukraine and the EU remain undefined.

Earlier statements from representatives of European institutions indicated a reluctance to extend trade preferences for Ukraine. But the question remains: can EU member states ensure their own agri-food self-sufficiency, or will they seek alternative external suppliers to maintain stability and competitiveness?

This topic was the focus of the 10th online discussion hosted by the Ukrainian Agribusiness Club (UCAB), titled "Disrupted Balance: Will the EU Be Better Off Without Ukrainian Agricultural Products?"

A Lack of Predictability

Ukraine’s agribusiness sector is disheartened by the approach adopted by the European Union. This level of uncertainty is problematic for many sectors and subsectors and could also pose challenges for the processing industry and, ultimately, for end consumers. This concern was emphasized in the opening remarks by President of UCAB Alex Lissitsa: “The EU is Ukraine’s strategic partner, and its market is now critical for Ukrainian agricultural producers. However, as of mid-May, we have no clarity on what will happen after June 5. For a country at war, some level of predictability from its main trading partner would be appreciated. Of course, we recognize that elections are underway in Poland and that there are issues with European farmers — but we are also waiting for a deeper understanding of our situation. For over three years, we have been defending our land and doing everything possible to preserve our agricultural production. Last year was the first successful one in the past three years, despite all the threats and challenges. Many companies were finally able to post positive results, given that the first two years of the war were far from profitable.”

Losses on Both Sides

Over the past two decades, Ukraine’s trade surplus with the EU has grown, with imports of Ukrainian agri-food products becoming increasingly significant over the last five years. The main exports to the EU include sugar, grains, and oilseeds — with wheat exports seeing notable growth recently, explained Prof. Dr. Martin Banse, Head of Thünen Institute of Market Analysis.

“Even with potential restrictions, imports from Ukraine to the EU will not come to a halt. If trade between Ukraine and the EU reverts to the terms of the Deep and Comprehensive Free Trade Area (DCFTA), tariffs will remain at zero for certain goods like grains and oilseeds,” Banse stated.

The Thünen Institute has modelled scenarios for what might happen if tariffs are reinstated on Ukrainian goods, taking into account current trade tensions with the United States.

If the EU imposes tariffs on Ukrainian products, a decline in imports is inevitable. This reduction may be partially offset by supplies from other countries, but overall imports — especially of wheat — are expected to decrease. In the case of poultry, the drop in Ukrainian imports would be met with only minimal substitution.

From the Ukrainian perspective, heightened EU trade barriers would significantly curb exports to the bloc. Some of this impact may be mitigated by redirecting trade elsewhere, but the overall volume would decline — with wheat exports alone potentially falling by around $240 million.

Olexandra Avramenko, Head of the European integration committee UCAB:

“Unlike wheat, redirection or compensation of poultry exports is not expected. Poultry is a more complex, less uniform product. While wheat is now shipped from the ports of Greater Odesa, poultry meat and other semi-finished goods cannot freely access their traditional markets due to the lack of container ships and refrigerated vessels in Odesa ports. This makes the EU market extremely important for poultry and other processed or packaged products.”

Taking GDP into account, protectionist measures harm not only Ukraine, but the European Union as well.

“The imposition of tariffs will lead to losses in European welfare. The EU stands to lose more in profits than Ukraine,” concluded Professor Martin Banse.

Not Just Agriculture

When assessing trade prospects between Ukraine and the EU, it is essential to look beyond agriculture itself and consider the interconnected sectors — finance, the environment, sustainable development, green investment, and digitalisation. This was the message from Dr. Alfons Balmann, Director and Head of Department Structural Change of the Leibniz Institute of Agricultural Development in Transition Economies (IAMO).

“In some respects, Ukrainian agriculture is ahead when it comes to digitalisation. The question is — what can European farmers learn from them?” he added.

According to Dr. Balmann, European farmers are still, in many ways, benefiting from the war, and real competition among them plays out at the local level. For instance, despite rising interest rates in the EU, farmland prices in Germany continue to climb, reaching record highs.

“It is not always accurate to speak of European farmers ‘suffering.’ If we look at family farms, those with high productivity remain highly profitable, especially in sectors like dairy and pig farming. Agriculture in the EU can be very profitable. In recent years, German farmers have enjoyed near-record profitability — largely due to inflation. That’s why the wave of protests seems odd, as average performance indicators do not support the narrative of widespread hardship, particularly not among German farmers,” Balmann observed.

He also warned that labour shortages in the EU’s agricultural sector are likely to intensify. This is already impacting investment decisions, and stakeholders should focus on using labour as efficiently as possible.

Trade Differentiation

The agricultural sector also plays a strategic role in Ukraine’s capacity to resist Russian aggression and reduce reliance on external assistance, said Oleg Nivyevskyi, Dean of the Faculty of the Graduate Economics Studies at the Kyiv School of Economics (KSE).

Agriculture and related industries account for more than 20% of Ukraine’s GDP, while agri-food products make up over 60% of total goods exports — with more than half of that volume heading to the EU. As such, free trade with the EU is crucial for Ukraine’s recovery and long-term development.

“Ukraine’s exports to the EU are dominated by agricultural commodities and raw materials, while the EU supplies Ukraine with non-agricultural goods that have high added value — this is trade differentiation,” Nivyevskyi explained. “The introduction of tariffs would be a blow to Ukraine in terms of income, GDP, and overall welfare. In contrast, free trade with Ukraine wouldn’t hurt the EU economy — in fact, it could bring in an additional $2 billion.”

Another benefit of liberalised trade is the stabilisation of domestic prices. Imports help enhance the competitiveness of processors and finished goods manufacturers, ultimately helping to balance prices for consumers. Free trade — not only with Ukraine but also with other suppliers — serves as a hedge against supply shocks and price spikes. Nivyevskyi cited sugar and dairy products as key examples.

“Since 2022, sugar imports to the EU have increased significantly thanks to market liberalisation and the functioning of the ‘Solidarity Lanes.’ Ukrainian sugar helped ease pressure on consumer prices. As for dairy, we export some categories to the EU and import others from there. No one is forcing the EU to buy Ukrainian dairy — it’s demand-driven, and that demand is growing,” he noted.

The Illusion of Self-Sufficiency

Indeed, Europeans have felt the impact of rising food prices — driven both by the war and by inflation. According to the European Central Bank, since 2021, food prices have been rising faster than those for other goods, including energy, noted Dr. Alfons Balmann.

This reinforces the importance of Ukrainian agricultural exports for the resilience and economic security of the EU as a whole.

“Europe may appear self-sufficient in terms of agricultural supply, but the reality is much more complex,” stressed Dr. Martin Banse, Head of Thünen Institute of Market Analysis. “There are significant differences between sectors and countries. Take poultry, for example — Poland produces 240% of its domestic consumption. But that’s not the case across the bloc. Likewise, grain and oilseed imports from Ukraine are particularly important for countries like Spain. For some EU member states, Ukrainian imports are becoming increasingly critical.”

Giving with one hand, taking away with the other

The EU's agricultural sector can become stronger and more competitive together with Ukraine, says Dr. Heinz Strubenhoff, an independent consultant of the European Commission and the European Investment Bank.

According to him, in 2024, exports of goods and services from the EU to Ukraine amounted to 42.88 billion euros, while Ukrainian exports to the EU amounted to 24.5 billion euros, so the growth of the trade deficit is very large, by 24%, and should be covered by capital trade.

Dr. Heinz Strubenhoff: “At the moment, there is no capital inflow to Ukraine, investors are not lining up. On the one hand, the EU is lending a helping hand financially and in the form of weapons, and on the other hand, it is taking it away. After all, if we return to the DCFTA terms of trade, it will take money away from Ukraine, and this is wrong from a political standpoint, as Ukraine is fighting not only for its freedom, but for the whole of Europe. However, nothing is known about the European Commission's plans, and insiders are talking about future stronger safeguards than now”.

Mr. Strubenhoff also drew attention to the problems of competitiveness of European agricultural producers and the poorly developed structure of the industry, especially in the south, facts that politicians do not dare to admit.

"In the new budget cycle, it will be necessary to change agricultural policies and take Ukraine into account. Ukrainian farmers are not interested in subsidies, but in market access. Whereas for farmers in Lower Saxony, in particular, subsidies amount to 30-40% of their profits," he added.

However, even if you calculate the potential payments to Ukrainian farmers, it is still less expensive than the war, he continues: "If we take the entire Ukrainian land bank and 200 euros of direct subsidies per hectare, it will be about 12 billion euros, plus payments to the structural funds, we get 15 billion euros, that's the real cost of Ukraine's accession to the EU. This is much lower than the actual costs during the war (about 20 billion euros per year). By that time, there will be a transition period, which in the case of Poland and Romania was 7 years."

Therefore, agriculture is not an obstacle to Ukraine's accession to the EU, and the abolition of liberal trade terms is a purely political decision.

"European governments often repeat rather abstract narratives like: Ukraine is too big, it has too big an agricultural sector, it is a country of oligarchs and without the rule of law... We should support Ukraine to adopt the necessary standards as soon as possible, because it is important for both sides," Hans Strubenhoff emphasized.

Why the EU Processing Sector Is Silent

Since European processing companies are most dependent on the supply of raw materials currently coming from Ukraine, especially when it comes to grains, oil, sugar, and poultry products, the panelists believe that it is necessary to appeal to representatives of these industries and establish ties with the processing sector.

Unlike farmers, the voice of processors is quieter in the European arena because they are not as organized. Whereas farmers need a thousand tractors to put pressure on Brussels.

"We all benefit from the current situation. It should be extended for the sake of EU security. Since 2020, the German food processing industry has increased the number of jobs by 100 thousand thanks to the growth of food trade within the EU," Dr. Balmann said.

In addition, despite the war, Ukraine is one of the key buyers of agricultural machinery produced in the EU.

Therefore, support from the EU should be sought among stakeholders. First of all, it is the processing industry and food companies, which also have their own lobbying groups. It is with them, as well as with the national governments of the member states, that a rational discussion should be held, since, unfortunately, narratives are now more important than economic arguments, the panelists noted.

"Ukraine's accession to the EU is not a problem, but a chance, and it's not just about food, but about complex solutions that stimulate the agricultural sector, such as IT, which is more efficient in Ukraine than in the EU. It is an exchange of knowledge and experience," Alex Lissitsa summarized.

 The original material was taken from the AgroPortal.ua