Over the last decade, Russia has become a major agriculture exporter and is striving to become a global agricultural superpower. However, it remains reliant on seed imports, primarily from Western countries.

In November, the Russian Agriculture Ministry said it planned to gradually decrease seed imports from Western countries.

The national food security strategy mandates that domestically produced seeds to constitute 75 per cent of total demand, and while figures vary depending on the seed type, they are significantly below this target. The lowest share if domestically produced sugar beet seeds, which stands at 8 per cent.

The watchdog attributed the ban on one company in each of the four countries to the discovery of pests such as sunflower phomopsis, corn leaf spot, and the brown marmorated stink bug in imported seeds.

The targeted companies are the Hungarian unit of the agrichemicals and seeds group Syngenta, which is Chinese-owned and integrated into Sinochem Holdings Corp, France’s Lidea, Turkey’s GLS Tohumculuk and Chile’s Pinto Piga Seeds.

In 2023, Russia introduced import quotas for sunflower and corn seeds, but these quotas were not fully enforced this year as Russian farmers have switched to domestically produced seeds.

— Reporting by Olga Popova and Gleb Bryanski

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Poland, Slovakia and Hungary announced restrictions on imports from Ukraine on Friday after the European Commission decided not to extend a ban on sales into Ukraine’s five EU neighbours, which also include Romania and Bulgaria.

The Polish, Slovak and Hungarian governments said their actions sought to protect farmers from a surge of grain and food imports from Ukraine since its invasion by Russia last year.

A World Trade Organization spokesperson confirmed that Ukraine had taken the first step in a trade dispute by filing a complaint to the global trade body.

“We can confirm that a request for consultations was received Monday evening. Further information will be provided once the request has been circulated to our members,” the spokesperson said in an email addressed to Reuters.

He did not name the countries although Kyiv had previously said the complaint targeted Poland, Slovakia and Hungary.

Ukrainian Prime Minister Denys Shmyhal later spelled out Kyiv’s position in comments on the Telegram messaging app.

He confirmed that Kyiv would impose retaliatory import restrictions on certain categories of goods from Poland and Hungary if they did not lift their unilateral bans. Ukraine, meanwhile, is conducting an investigation to show that the unilateral bans are discriminatory, he said.

Shmyhal said Kyiv had proposed to the European Commission, the EU executive, and neighbouring countries an export control plan on four groups of farm products to prevent market distortions — a plan he described as a compromise scenario.

“We once again call on our neighbours to abandon harmful and illegal restrictions, political populism and embark on the path of constructive dialogue, from which everyone will actually benefit,” he said.

‘Helping the world’

President Volodymyr Zelenskiy, who is attending U.N. meetings in New York, said he told the Sustainable Development Goals summit that Ukraine’s exports were “helping the world be more stable and stronger.”

Polish President Andrzej Duda, also in New York, told reporters: “It would be good for Ukraine to remember that it receives help from us and to remember that we are also a transit country to Ukraine.”

Ukraine’s Trade Representative, Taras Kachka, told national television that Kyiv strictly sought the removal of the bans.

“We want to see Polish farmers develop, we want to see Ukrainian farmers develop…Each has their own situation and a great many problems,” Kachka said.

“Poland banned imports. So you have to understand our actions are a reaction. We have been in talks with them for half a year in different situations.”

Signalling its intention to move forward with the compromise proposal on Tuesday, the Ukrainian government approved the introduction of export licences for a number of agricultural products for export to Ukraine’s five EU neighbours.

“The government of Ukraine approved a new procedure for exporting certain types of products to certain EU member states,” the agriculture ministry said in a statement.

“It stipulates that four crops — corn, rapeseed, sunflower seed, wheat, which are exported to five countries — must be licensed by the economy ministry in agreement with agriculture ministry.”

The ministry said Kyiv would agree on the list and volume of products with importing countries, which would determine whether they are ready to accept these goods.

“Only then do we issue permits to our companies to export certain products. Ukraine controls its exports and coordinates them with the receiving countries,” it added.

Russia’s war on Ukraine has disrupted Kyiv’s ability to export farm products through its ports, leading to a surge in shipments via road, rail and barge through its five neighbours.

— Reporting for Reuters by Pavel Polityuk and Yuliia Dysa; additional reporting by Emma Farge and Gabrielle Tetrault-Farber in Geneva, and by Anna Pruchnicka.

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Poland, Slovakia and Hungary announced restrictions on imports on Friday after the European Commission decided not to extend a ban on sales into Ukraine’s five EU neighbours, which also include Romania and Bulgaria.

Ukraine retaliated by filing complaints Monday with the World Trade Organization (WTO) against Poland, Slovakia and Hungary, while other EU members condemned the unilateral moves.

Spain’s agriculture minister on Monday said the bans seemed illegal while his French counterpart said they called European solidarity into question.

Poland, with a parliamentary election looming in October, distanced itself even further and withdrew from a co-ordination platform — a group including the five neighbours, Ukraine and the European Commission — that has been looking at solutions to boost Ukraine grain transit to global markets.

“We have to look forward, since Ukraine said it wants to sue Poland… every comment we would have made on this platform could be used against us,” Poland Agriculture Minister Robert Telus told reporters in Brussels.

For much of the last year, some 60 per cent of Ukrainian grain has transited through the five EU countries using so-called Solidarity Lanes as an alternative to the Black Sea due to Russian threats.

Like most countries in central and eastern Europe, Poland and Slovakia have been some of Kyiv’s strongest allies in its fight against Russia’s invasion that began in February 2022. Hungary’s stance has been more ambivalent, as the only member of the EU and NATO alliance to maintain close relations with Moscow, still the main source of its oil and natural gas.

But grain exports have been an area of friction throughout the region.

Exports disrupted

Ukraine’s war with Russia has disrupted its ability to export agricultural products through its Black Sea ports, leading to a surge in shipments via road, rail and barge through its five EU neighbours.

Farmers in those countries protested these shipments were distorting local markets, leading the EU to approve trade restrictions — while still allowing transit — until Sept. 15.

Spain’s agriculture minister Luis Planas Puchades said it was up to the European Commission to judge whether the unilateral bans have broken any laws, but said the measures seemed illegal.

France’s agriculture minister, Marc Fesneau, was also critical of the measures.

“For solidarity there needs to be unity… We must keep hold of the two elements, otherwise the European project is at risk. The single market is a fundamental element,” he said.

Romanian Prime Minister Marcel Ciolacu said on Monday his country would look to extend a trade ban on Ukrainian grain for 30 days if import requests rise.

Ciolacu said Romania had not seen requests to import grain from Ukraine since Friday and did not want a repeat of the situation earlier this year that impacted Romanian farmers.

“The Ukrainian prime minister promised to send the export licensing proposal today, which we will discuss,” Ciolacu said.

“If there will be export requests to Romania I will ask the agriculture and economy ministers to draft an order extending the ban for a period of 30 days until things are clarified.”

The Bulgarian parliament voted to lift its ban on Ukrainian grains last week.

— Reporting for Reuters by Julia Payne in Brussels and Yuliia Dysa in Kyiv; additional reporting by Luiza Illie in Bucharest, Tom Balmforth and Pavel Polityuk in Kyiv, Sybille de La Hamaide in Paris, and Marek Strzelecki; writing by Nigel Hunt.

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Restrictions imposed by the European Union in May allowed Poland, Bulgaria, Hungary, Romania and Slovakia to ban domestic sales of Ukrainian wheat, maize, rapeseed and sunflower seeds, while permitting transit of such cargoes for export elsewhere.

“We will extend this ban despite their disagreement, despite the European Commission’s disagreement,” Polish PM Mateusz Morawiecki told a rally in the northeastern town of Elk. “We will do it because it is in the interest of the Polish farmer.”

Polish development minister Waldemar Buda said in a post on social media platform X, formerly known as Twitter, that he had signed the Polish ban regulation, which would run for an indefinite period of time from midnight.

Hungary imposed a national import ban on 24 Ukrainian agricultural products, including grains, vegetables, several meat products and honey, according to a government decree published on Friday.

Slovakia’s agriculture minister followed suit announcing its own grain ban. All three bans only apply to domestic imports and do not affect transit to onward markets.

EU plea

EU Trade Commissioner Valdis Dombrovskis said on Friday countries should refrain from unilateral measures against imports of Ukrainian grain. Ukraine’s President Volodymyr Zelenskiy said it would respond in a “civilized fashion” if EU members break the rules.

The EU created alternative land routes, so-called Solidarity Lanes, for Ukraine to use to export its grains and oilseeds after Russia, which invaded in 2022, backed out of a U.N.-brokered Black Sea grain deal in July that allowed safe passage for the cargo ships.

The EU Commission said existing measures would expire as originally planned on Friday after Ukraine agreed to introduce any legal measures (including, for example, an export licensing system) within 30 days to avoid grain surges.

“It has concluded that thanks to the work of the Coordination Platform and to the temporary measures introduced on 2 May 2023, the market distortions in the five Member States bordering Ukraine have disappeared,” the European Commission said in a statement.

The EU said it will refrain from imposing any restrictions as long as the effective measures by Ukraine are in place and fully working.

Product glut

Farmers in the five countries neighbouring Ukraine have repeatedly complained about a product glut hitting their domestic prices and pushing them toward bankruptcy.

The countries, except Bulgaria, had been pushing for an extension of the ban passed its Sept. 15 expiry.

Poland, Hungary and Slovakia previously said they may extend the restrictions unilaterally while Bulgaria on Thursday voted to scrap the curbs.

Romania’s government, which unlike its peers did not unilaterally enforce a ban before May, said on Friday it “regretted that a European solution to extend the ban could not be found.”

It added it was waiting for Ukraine to present its action plan of measures to prevent an import surge by Sept. 18 before deciding how to protect Romanian farmers.

Romania sees over 60 per cent of the alternate flows pass through its territory mainly via the Danube river and its farmers have threatened protests if the ban is not extended.

For the last year, Ukraine had been moving 60 per cent of its exports through the Solidarity Lanes and 40 per cent via the Black Sea thanks to the deal.

In August, about four million tonnes of Ukraine grains passed through the Solidarity Lanes of which close to 2.7 million tonnes were through the Danube. The Commission wants to increase exports through Romania further but the plan has been complicated by Russian drone attacks on Ukraine’s grain infrastructure along the Danube and near the Romanian border.

— Reporting for Reuters by Julia Payne and Alan Charlish; additional reporting by Jan Lopatka in Prague and Karol Badohal in Warsaw, Boldizsar Gyori and Krisztina Than in Budapest; and Luiza Ilie in Bucharest; writing by Nina Chestney.

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Bulgaria, Hungary, Poland, Romania and Slovakia cited concerns that grain from Ukraine meant to be exported to other countries had ended up in their local markets, which was pushing down prices for local farmers.

European Commission Vice-President Valdis Dombrovskis tweeted that the EU executive had reached “an agreement in principle” with the five “to address concerns of both farmers in neighbouring EU countries and Ukraine.”

He said the deal included “safeguard measures” for four products: wheat, maize, rapeseed and sunflower seed. He did not provide any further details.

The deal also includes a support package worth 100 million euros (C$149.25 million) for local farmers, Dombrovskis said.

Ukrainian President Volodymyr Zelenskiy said he had spoken on Friday to Charles Michel, president of the European Council, to raise concerns over what he called a destructive ban on exports of agricultural products.

“This gives the Kremlin dangerous hope, the hope that in our common European home someone’s wrong decisions can prevail over common interests,” he said in a video address.

The five countries became transit routes for Ukrainian grain that could not be exported through the country’s Black Sea ports because of Russia’s invasion.

Bottlenecks then trapped millions of tonnes of grains in countries bordering Ukraine, forcing local farmers to compete with an influx of cheap Ukrainian imports that they said distorted prices and demand.

European Commission President Ursula von der Leyen said the deal “preserves both Ukraine’s exports capacity so it continues feeding the world, and our farmers’ livelihoods.”

— Reporting for Reuters by Andrew Gray, Sudip Kar-Gupta and David Ljunggren.

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The heat is mounting on Brussels to work out a European Union wide solution after Warsaw and Budapest announced bans on some imports from Ukraine at the weekend, with other countries in eastern Europe saying they are also considering action.

Farmers say imports from Ukraine have lowered prices and reduced their sales. In Poland, the issue has created a problem in an election year for the ruling nationalist Law and Justice (PiS) party that relies on rural areas for much of its support.

“Ukraine needs help, but the costs of this help should be spread over all European countries, not just the frontline countries, especially Poland. We do not agree to this, because it harms our farmers,” Polish agriculture minister Robert Telus said after talks that began in Warsaw on Monday.

Kyiv said it aims to re-open food and grain transit via Poland as “a first step” to ending import bans, but Telus said that no solution had so far been found to guarantee that the grain in transit would not end up on the local market.

Some Black Sea ports were blocked after Russia’s invasion of Ukraine began last year and logistical bottlenecks trapped large quantities of Ukrainian grain, which is cheaper than that produced in the EU, in central European countries.

The Polish, Hungarian and Slovakian export and transit bans come as a deal to allow the export of millions of tonnes of Ukrainian grain via the Black Sea, despite the Ukraine war, nears its May 18 expiry. Meanwhile, Russian demands have left the prospect of an extension of this deal uncertain.

The combined impact of the bans and failure to agree an extension would strand millions of tonnes of grain inside Ukraine, a major agricultural producer that makes a substantial part of its gross domestic product from food sales.

“The first step … should be the opening of transit, because it is quite important and it is the thing that should be done unconditionally and after that we will talk about other things,” Ukrainian Agriculture Minister Mykola Solsky said before the talks in Warsaw.

To prevent any grain entering its market, Poland’s ban also covered transit through the country, which imported 2.45 million tonnes of grain, or three quarters of total imports, from Ukraine in 2022, Polish agriculture ministry data showed.

The bans have left truck drivers stranded for several days in long traffic jams on the border baffled.

“We can’t go in either direction. Yes, the Poles reached out to us, I’m very thankful to them. I’m immensely grateful, the whole of Ukraine is, the whole world even. But now, Poland doesn’t let (us) in for some reason,” Mykola Bervin, a driver from Zhytomyr in Ukraine, told Reuters.

Bervin said he had been stuck for three days and the tailback was more than 25 kilometres long.

EU action ‘inevitable’

Slovakia approved halting imports indefinitely following Poland’s move, although it maintained transit, while the BTA news agency reported that Bulgaria’s agriculture minister also said the country could limit imports.

Istvan Nagy, Hungary’s farm minister, said a solution was needed beyond the national level, calling eventual EU measures inevitable. The Czech Republic also urged an EU-wide solution while saying it would not introduce a ban itself for now.

Bulgaria, Hungary, Poland, Romania and Slovakia raised the issue with the European Commission last month, saying tariffs on Ukrainian imports should be considered, while states have also pushed for an EU purchase mechanism to buy up cheap grain.

Telus said that six countries would like to meet with the EU commissioner responsible for trade to find a solution.

A senior EU official said EU envoys would discuss Poland and Hungary’s bans on Wednesday – after the bloc’s executive said on Sunday that unilateral action was unacceptable.

The official said low global prices and demand meant grain was staying in the bloc rather than being sold on.

— Reporting by Pavel Polityuk in Kyiv, Andriy Perun in Rava-Ruska and Pawel Florkiewicz and Anna Koper in Warsaw, Gabriela Baczynska in Brussels, Boldizsar Gyori in Budapest, and Jan Lopatka in Prague; writing by Tom Balmforth, Jason Hovet and Anna Wlodarczak-Semczuk.

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Ukraine’s state-run railway operator said this week it was ready to organize agricultural exports by rail as a matter of urgency after closure of the country’s Black Sea ports because of the military invasion by Russia.

A major global agricultural producer and exporter, Ukraine has historically exported its grain, vegetable oils and other food products by ship.

APK-Inform said that Ukraine, which exports around five million tonnes of grain per month before the war, could send abroad around 600,000 tonnes a month by train, or about 20,000 tonnes a day.

“In addition, there are questions about the ability of customs and checkpoints to quickly adapt to work in conditions of increased workload,” the consultancy said.

Ukrainian Railways has said that it might deliver grain to borders with Romania, Hungary, Slovakia and Poland, from where the grain can be delivered to the ports and logistics hubs of European countries.

The rail operator can deliver 150 grain carriages per day to Romania, 45 to Poland, 17 to Hungary and 60 to Slovakia, with up to 70 tonnes of grain loaded on each carriage, it added.

The agriculture ministry said Ukraine had exported 43 million tonnes of various grains in the 2021-22 season as of Feb. 23.

— Reporting for Reuters by Pavel Polityuk.

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Guelph-based Linamar Corp., which markets the Harvestec brand of corn harvesting headers in North America, on Thursday announced a “definitive” agreement to buy 100 per cent of Winnipeg-based MacDon and its group of companies for $1.2 billion.

The deal, to be financed mainly through a new term loan facility also announced Thursday, is expected to close in the first quarter of 2018 pending the usual regulatory approvals.

The purchase price is near what MacDon was reported to be seeking as far back as 2013, when other media outlets quoted unnamed sources as saying the Winnipeg company had enlisted Goldman Sachs to find a buyer.

Given its own “highly complementary” stake in harvesting equipment — which also includes the Oros brand of corn and sunflower headers it markets in Europe — Linamar said it expects to see “modest synergies” from the deal.

Once the deal closes, MacDon, which makes windrowers, draper headers, pull-type mowers and pickup headers, will merge with Linamar’s existing agriculture harvesting business, which is based in Hungary.

MacDon, which also operates offices in the U.S., Australia, Russia and Brazil, set up its own European sales and distribution office in Wiesbaden, Germany in October and opened a major new parts distribution centre in Winnipeg last year.

Linamar said the MacDon deal will allow it to offer a full lineup of grain and hay harvesting equipment and to expand its ag platform in “new and underserviced markets” worldwide.

“As it expands, MacDon will benefit from Linamar’s established manufacturing footprint in Asia and Europe, along with employing best practices from both Linamar and MacDon,” Linamar said in a release.

MacDon’s sales network of about 1,400 dealers and distributors worldwide gives it a “major competitive advantage in the industry,” Linamar said.

Linamar CEO Linda Hasenfratz described the deal Thursday as “a truly once-in-a-lifetime opportunity to move our agriculture business into a market-leading position while providing meaningful diversification to the end markets we serve.”

Linamar, she said, sees the long-term growth fundamentals for the ag industry as “very strong given the growing and developing global population” with the market in its “early stages of cyclical recovery.”

MacDon, she said, “will be the centrepiece of our agriculture business, which includes our existing European corn header business, highly complementary to MacDon products. We get diversification, innovation, growth and a solid deal; we couldn’t be happier.”

Linamar’s businesses also include machining, assembly and forging, focused mainly on engine, transmission and driveline components, plus its Skyjack brand of scissor lifts, booms and telehandlers.

MacDon started in 1949 as Killbery Industries, which made sprayers, grain augers, discer seeders, cultivators and manure spreaders. The company then launched one of the first self-propelled windrowers, in 1951.

The company was renamed MacDon following its acquisition by the MacDonald family in 1971, and expanded into the U.S. market in 1986 through its own dealer network.

MacDon, which also has a deal to manufacture John Deere-branded windrowers for the U.S. ag equipment giant, maintains a major manufacturing plant in Winnipeg with one of the largest powdercoat paint systems in North America. — AGCanada.com Network

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The 150-year old company, one of the world’s largest privately held corporations, is in the middle of a restructuring aimed at improving the way it responds to market swings.

Cargill will immediately start winding down its crop input business in countries including Russia, Ukraine, Romania and Hungary, and completely exit the business in the region by the end of May, according to a statement on Wednesday.

The company “has been unable to realize many of the expected synergies” between selling crop inputs and buying grain, the statement said.

Exiting the business will probably impact about 180 employees, according to Cargill. The company had about 25,000 employees in Europe, the Middle East and Africa last year and 150,000 worldwide, according to a 2015 corporate fact sheet.

As the company pulls out of inputs, it will aim to increase the volume of grain it buys in the region.

“The company will refocus its attention on its grain and oilseeds origination, merchandising and trading activities in these markets,” the statement said.

Last year, Cargill began a restructuring as global agricultural companies came under pressure from slumping commodity prices, slowing demand in China and weakness in emerging markets.

A global glut of grains and oilseeds has sparked a sharp drop in crop prices that has prompted farmers worldwide to review their expenses, including spending on fertilizer, seeds and chemicals.

In Romania, Cargill entered the crop inputs market in 2001 and has distributed a wide variety of seeds, pesticides and fertilizers since 2008, according to a company website. At one point, it dedicated three warehouses in the country to the distribution of inputs.

The Black Sea is a major producer and exporter of crops including corn and wheat.

Cargill will continue to sell crop inputs in other countries, including the U.S. and Canada, where Cargill AgHorizons operates a network of facilities that buy grain from farmers and sell inputs.

The company said in December that it would sell its crop insurance unit and in January that it would close its London shipping office.

— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago.

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Russia banned foods from the 28-nation EU last year in response to Western sanctions imposed on it for its role in the Ukraine crisis, shutting out a vast range of goods from French and Irish cheese to Spanish fruit and ham.

But Sergei Dankvert, head of the federal veterinary service, said Moscow could let 15 Hungarian and a handful of Greek and Cypriot producers back into its market, Interfax reported, suggesting that the list could be expanded.

“The inspections are continuing and this number could be increased,” he said.

The Russian ban, which affects some US$9 billion worth of food imports from the EU, the U.S., Canada and some other countries, is due to run out on Aug. 7, a year after it was imposed.

Dankvert did not comment on the timeframe for lifting the ban and made no mention of other EU member states, according to the Interfax report. But he made clear the return of any EU food producers to the Russian market would not be easy or automatic even after the formal lifting of the embargo.

Hungary, Cyprus and Greece, while taking part in the EU sanctions, have tried to maintain good ties with Russia and have avoided criticism of Moscow’s annexation of Crimea and its support for pro-Russian rebels in eastern Ukraine.

EU firms supplanted

Interfax quoted Dankvert as saying his service was not currently conducting negotiations with the EU on lifting the wider ban on food imports, adding that Brussels had effectively torpedoed previous bilateral talks with Poland and Lithuania.

But the EU has suggested it might extend its sanctions, saying Russia is not doing enough to help implement a fragile peace deal for eastern Ukraine agreed in February in Belarus.

President Vladimir Putin has said the food import embargo provides an opportunity to boost domestic production. The ban helped spur Russian inflation in the winter months when the rouble plunged, but the currency has since stabilized.

Around 6,000 European firms were exporting food products to Russia before the embargo and they are steadily being supplanted by suppliers from Latin America, Africa and Asia as well as non-EU countries in Europe such as Serbia, Dankvert said.

“In our shops now you can find cheese from Uruguay and Paraguay, dairy products from Chile, and a range of African countries, notably Tunisia and Morocco, have increased their deliveries of oysters,” he said.

— Reporting for Reuters by Gareth Jones in Moscow.

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