Halting of grain deal ‘no good news’ for Spanish presidency, EU executive

Russia's termination of the initiative to export Ukrainian grain via the Black Sea route is "no good news", according to a Spanish EU presidency representative, who echoed concerns of the EU executive, as European farmers sounded alarm bells over what could possibly be the worst arable crop harvest since 2007.

On Monday (17 July), Russia halted participation in the UN-brokered deal, which has allowed the safe passage of some 32 million tonnes of Ukrainian grain via the Black Sea over the past year, just hours after a blast knocked out Russia’s bridge to Crimea in what Moscow called a strike by Ukrainian sea drones.

European Commission President Ursula von der Leyen condemned Russia's move as "cynical" in a tweet on Monday, adding that the bloc "will continue bringing agrifood products out of Ukraine and to global markets" through their own Solidarity Lanes initiative, which establishes alternative logistics routes using all relevant transport modes.

Josep Borrell, the head of EU foreign policy, said in a statement the decision was "unjustified" and accused Russia of using food as a weapon in the war against Ukraine.

The first comment on Russia's termination of the grain deal from the rotating presidency of the EU, currently held by Spain, came in a closed preparatory meeting of EU national representatives ahead of the gathering of EU agriculture ministers on 25 July.

According to a source inside the meeting, the Spanish presidency representative described the expiry of the Black Sea initiative as "no good news".

The Spanish delegation also pointed out that the news comes as a third aid package for EU farmers was officially adopted by the Commission, meaning the resources of the agriculture reserve are "exhausted" for 2023 and no aid may be available in case further requests are made.

A Commission representative present at the preparatory meeting behind closed doors said the news was not favourable as "this development will add pressure on Ukraine and its ability to export to the world,” but it will also put pressure on the EU market, given its geographical proximity to the agricultural powerhouse.

As such, the EU executive called on all partners in the deal to continue the initiative, promising to continue exploring all possibilities, EURACTIV was informed.

“We hope Russia will change its attitude over the next days/weeks,” the Commission official added.

No safety net left

The agriculture reserve's depletion for this year is a source of concern for the EU farming sector.

According to the source from the meeting, most delegations raised unfavourable weather conditions, high input costs, and imports from Ukraine as the factors putting pressure on their markets. 

Some member states added that while the harvest volume is not expected to decrease, the quality will be less than average due to weather conditions.

On Monday, the EU farmers’ association COPA-COGECA rang the alarm over the "rapidly deteriorating" situation of the EU arable crop harvest for 2023.

“In the space of two months, forecasts for harvests which were initially positive have been turned on their head by poor weather conditions across Europe,” the association said in the statement, stressing that the situation for cereals is "extremely worrying".

With an expected production of 256 million tonnes, the farmers association warned that the EU could possibly be facing the “worst harvest since 2007” and 10% below the last five-year average. 

According to COPA-COGECA, this could leave many farmers unable to cover production costs.

However, as pointed out by the Spanish presidency, the Commission's emergency coffers are now empty.

The support packages are funded via the EU’s Common Agricultural Policy’s (CAP) €450 million agricultural reserve – a pot of money set aside that the Commission can exceptionally dip into in case of market disruptions.

The €300-million agricultural package - the third of this year - drained the fund for 2023.

Previously, Agriculture Commissioner Janusz Wojciechowski stressed that the EU executive can adopt further measures and finance them under the 2024 reserve as long as they are paid out after 16 October, when the new financial year starts.

[Edited by Alice Taylor/Zoran Radosavljevic]