After the completion of the AOP, Ukrainian agricultural producers may suffer financial losses.
Ukrainian farmers hope for an extension of trade preferences until the completion of the association agreement with the EU.
EastFruit writes about this.
The first scenario considered by the Ukrainian government and experts is the continuation of the autonomous trade arrangements (ATA) regime for Ukrainian agricultural products. ATA is a special trade regime under which Ukraine has the opportunity to export its agricultural products to the European Union duty-free and without quotas. This is a very important option because it will allow Ukrainian producers to plan their work and know exactly how much goods they can send to Europe without additional barriers.
With the continuation of the AOP, Ukrainian farmers will be able to accurately plan their production and sales volumes, which will help maintain stability in the market. The Ukrainian economy will experience less stress due to uncertainty, and farmers will be able to conclude contracts for supplies to the EU with greater confidence. This will also help avoid large losses and support exports, which is extremely important for the Ukrainian economy, which is heavily dependent on the agricultural sector.
Option 2: Maintaining supply volumes at 2021 levels
The second option is to leave the volume of Ukrainian agricultural products at the 2021 level. This means that the amount of goods that Ukraine can export to the EU will be limited to the amount that Ukraine exported in 2021. This option has its drawbacks: for Ukrainian producers, this will mean big losses. They will not be able to increase exports, which means they will suffer financial losses of about 3-3.5 billion dollars. This is a large amount, and it will be lost by those who produce food products, including grain, vegetables and fruits.
This situation could worsen the economic situation in Ukraine, reduce farmers' incomes, and also affect other industries related to the agricultural sector. Therefore, this option is less desirable for Ukraine, because it will lead to serious economic losses.
Third option: a combined compromise with continuation of the ATC to agree on all issues
The third option involves a combined compromise between Ukraine and the EU. According to this option, the European Commission could extend the APA for a certain period until a final decision is reached on all trade issues within the framework of the Association Agreement between Ukraine and the EU. This means that Ukraine and the EU will continue to discuss possible options for cooperation and agree on export conditions until all necessary agreements are reached.
As a result of such a compromise, Ukraine will be able to continue exporting its agricultural products to the EU on favorable terms, but new rules will be agreed upon. The European Commission has already stated that it is ready to consider new ways of cooperation and discuss the principles of importing sensitive Ukrainian agricultural products to the EU. Such an approach will preserve trade opportunities for Ukraine and will also give more time to agree on important aspects of trade agreements.
This option is the most realistic and beneficial for Ukraine, as it will give time to adjust the final terms of the agreements, without major losses for the economy. The European Commission's agreement to the possibility of extending the APO after June 5, 2025 is a positive sign for Ukrainian agricultural producers, as it means that the EU is ready to continue cooperation and consider all issues in favor of both parties.
Let us recall that we previously wrote that drought and unfavorable weather conditions led to a decrease in the harvest of vegetables and grains, in particular, vegetables for borscht. This led to an increase in prices on the market.
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