December 5, 2022

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Grain is cheaper, but not because of grain exports from Ukraine.  The reason is different

Grain is cheaper, but not because of grain exports from Ukraine. The reason is different

According to the Ministry of Agriculture, the fact that grain in the country is cheaper should not be combined with the export of grain from Ukraine, which is carried out through the so-called solidarity corridors. The reason is different. What?

Let’s remember, literally a few days after the entry into force of the new regulations on trade between the EU and Ukraine (tariff suspension), the National Council of Agricultural Chambers sent a complaint to the Ministry of Agriculture that Polish farmers had no place to sell their 2021 grain stocks.

– As a representative of the National Council of Chambers of Agriculture, I am concerned about the discrepancy in grain prices between international prices for Metiv and local markets. In world exchanges, grain prices are rising, but in Poland there is a stagnation due to the lack of interest of buyers in Polish grain – Wiktor Szmulewicz, head of the KRIR, wrote in a letter to Deputy Prime Minister Henryk Kowalczyk, calling for the effectiveness of measures that should be taken in the interests of Polish farmers.

– What we are currently observing in the Polish grain market when it comes to the level of domestic grain prices in the context of the abolition of export tariffs from Ukraine is only temporary disruptions caused by speculation – and reassured in the meantime, the so-called Deputy Prime Minister Henrik Kowalczyk. In his opinion, it is necessary to maintain composure and continue to help Ukraine.

Norbert Kachmarczyk, foreign minister in the Ministry of Agriculture and Rural Development, gave a broader response to agricultural self-government.

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The situation in the grain market

In the beginning, he presented the current situation in the grain market, according to the assessment of the Ministry of Agriculture.

Grain prices in mid-June this year. Either in the world or in PolandAfter historically high increases, first due to the outbreak of the Covid-19 epidemic and then the war in Ukraine, It remains very high, although it has shown a downtrend latelyą – Reports to Norbert Kachmarczyk.

Data from the Integrated Agricultural Market Information System of the Ministry of Agriculture and Rural Development show that in the third week of June, the average cost of wheat consumption was PLN 1,710 and was cheaper than the price in the previous week and a month before. 0.1%, but it is 36% more expensive than the February 20, 2022 price, 76% more than the price of the previous year and 107% more than the price two years ago.

The consumption price of rye reached 1,376 PLN, it was 3.2% lower than last week’s price, 4.3% higher than the price of the previous month, 26% higher than the pre-war price in Ukraine, and 72% higher than last year’s price. And 106% more than the price two years ago.

The price of corn in the third week of June was PLN 1,426 and was 2% lower than the price of the previous week and 3.9% lower than the price of the previous month, but 30% higher than the price before the outbreak of the war, 36% higher than the price a year ago and 90% above the price two years ago.

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Grain is cheaper, but not because of grain exports from Ukraine

It should be noted that recently cereals have slightly decreased not only in Poland, but also throughout the European Union and world markets, including due to the upcoming harvest and rainfall predict a better harvest than previously expected. Efforts to increase Ukrainian grain exports are also of great importance in price formation – Norbert Kachmarczyk thought.

As I reported in a letter to KRiR, the Ministry of Agriculture and Rural Development recently noted an increase in the import of grain from Ukraine, in particular maize. There is also an increase in the transit of grain through Poland from the Ukrainian direction. National Revenue Administration data states that transit is from the beginning of the war until May 15. Passed, among others 421 m. tons of corn (Increase in transit by 44776% compared to the same period last year); 52.3 thousand tons of soybeans (6159% increase); 4.9 kg tons of sunflowers (2,496% increase); 396 tons of wheat (a decrease of 68%).

Farmers who from March this year. They prevented the sale of grain to buy in anticipation of higher prices, and now they are selling more grain due to a slight decrease in their prices during the past week. In addition, they have to prepare warehouses for the new harvest and raise funds to fund planting costs this year. Until recently, the supply of grain from Polish farmers was so small that grain manufacturers (millers and feeders) reported significant problems with the supply of raw materials. – says the Deputy Minister of Agriculture.

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He also admits that the Ministry of Agriculture has recently received signals about farmers’ concerns about changes in grain prices in the context of the increased supply of Ukrainian corn on the domestic market. – Therefore, we are constantly analyzing the situation in this market – Norbert Kachmarczyk adds.

There will be buyers of Polish grain

In his opinion, this season, no more than 20 million tons of grain of the 2021 season were exported from Ukraine to world markets, while this year’s grain harvest in Ukraine may be even half of last year’s. – At the moment, there is no fear that Polish or Ukrainian grain will not find buyers on the markets of third countries – confirms Deputy Minister Kachmarczyk in a letter to Viktor Shmolevich.

– Regardless of the above, I would like to inform you that as part of the measures taken to increase grain exports from Ukraine by road through the Solidarity Corridors, the Ministry of Agriculture and Rural Development will raise the issues raised by the President in order to avoid destabilizing this market – adds the Deputy Head of the Ministry of Agriculture.

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