Integration of Ukraine’s agricultural sector will pose a serious challenge for the EU — expert

Ukraine’s agricultural sector could become one of the major economic challenges on the country’s path to full EU membership. The European market is not yet ready to fully open up to Ukrainian agricultural products due to strong competition and the existing system of farmer support, according to Oleh Pendzin, a member of the Economic Discussion Club.

According to him, the EU agricultural model relies heavily on substantial government support for producers. Pendzin cited figures showing that France receives around €9.5 billion in agricultural subsidies annually, while Poland receives €6.5 billion. Integrating Ukraine’s large agricultural sector therefore raises questions both about competition within the single market and the future distribution of support among farmers.

Another major challenge will be adapting Ukrainian agriculture to EU requirements. According to the expert, Ukraine will have to significantly revise the use of agrochemicals and pesticides, livestock farming practices and a number of other production standards. Ukrainian agricultural products already have established markets in the Middle East, but the European market remains considerably more attractive in terms of purchasing power.

Pendzin therefore believes that economic issues, rather than political or historical disputes, could become the biggest obstacles to Ukraine’s further European integration. Ukraine’s agricultural sector is a large and competitive producer, while European farmers have an interest in protecting their domestic markets and maintaining the existing support system.

At the same time, agriculture remains one of the main pillars of Ukraine’s exports. According to the figures cited by the expert, Ukraine produces around 62 mln tons of grain annually while domestic demand is approximately 18 mln tons. Of around 4 mln tons of vegetable oil produced, only about 350 thsd tons is consumed domestically. A significant share of Ukraine’s agricultural production is therefore structurally dependent on export markets.

Pendzin also pointed to the relatively low added value of a significant share of Ukraine’s agricultural exports as a weakness. Ukraine remains primarily a major supplier of agricultural commodities, while developing deeper processing could increase export revenues and strengthen its position in international markets. In his view, agriculture will remain one of Ukraine’s key competitive advantages.

Tags: Ukraine, EU, agricultural sector