EU’s Withdrawal of Trade Preferences Threatens Ukrainian Agricultural Exports

The European Union’s imminent rollback of wartime trade preferences is expected to deal a significant blow to Ukraine’s agricultural exports, with poultry farmers likely to be among the hardest hit.

End of Preferential Trade Regime

According to Ukraine’s Ministry of Finance, the preferential trade regime accounted for roughly 10% of the country’s export revenues during the war.

If EU tariffs are reinstated as planned, Ukrainian farmers could face losses of up to €3.5 billion annually, warned Danylo Getmantsev, Chairman of the Parliamentary Committee on Finance, Tax, and Customs Policy, in a statement on Telegram.

The reintroduction of pre-war tariff quotas, effective after June 5, is expected to impact poultry farms and sugar producers the most, said Alexander Verjikhovskiy, CEO of IMK, one of Ukraine’s leading agricultural companies, quoted by UkrAgroConsult.

Verjikhovskiy noted that both sectors are highly dependent on exports to the EU.

MHP Sounds the Alarm

MHP, Ukraine’s largest poultry processor, has also voiced concerns over the EU’s decision. Reinstated tariffs would severely affect the company’s operations and profitability.

“The current free trade arrangement ensures a stable supply of high-quality Ukrainian-made products,” said Yuriy Melnyk, Deputy CEO for Sustainable Development at MHP.

He emphasized the mutual benefits of trade, noting that “for every euro of poultry exported, Ukrainian producers import about €1.38 worth of goods and equipment from the EU.” He warned that reversing the trade exemptions will undermine long-term contracts and industry investment.

EU Trade Success at Risk

The temporary trade regime allowed Ukraine to gain a significant foothold in the EU market. In 2023, Ukraine exported €13.1 billion worth of agricultural goods to the EU, representing 6.7% of the bloc’s agri-food imports.

By contrast, in 2020, Ukrainian agri-food exports to the EU totaled only €5.8 billion, or 4.8% of EU imports.

Shift Toward Alternative Markets

To mitigate the impact of losing EU market access, MHP plans to redirect its focus to alternative export destinations, Melnyk confirmed, though he did not provide further specifics.

Other major players in the sector are reportedly adopting similar strategies.