The agri-food sector plays a central role in the global economy, serving as a significant source of international trade and employment. The term "agri-food" encompasses a vast array of products, including agricultural raw materials and processed foods. Furthermore, economies in both developed and developing countries derive substantial benefits from trade in agri-food products, which have witnessed a notable surge in demand due to population growth, altering dietary preferences, and accelerated urbanisation.
It can be reasonably deduced that exports of agri-food products represent a particularly reliable source of export earnings for a multitude of countries, irrespective of their current level of economic development. The export of agri-food products offers a degree of resilience to the national economy against fluctuations in world markets, given the relatively stable demand for basic foods.
Ukraine's agricultural exports are primarily comprised of cereals, oils and fats, oilseeds, and meat products, constituting a substantial proportion of the country's total exports. In 2023, the value of agricultural and food products exported from Ukraine accounted for 62% of the country's total exports, which represented a significant increase from 53% in 2022 [2]. This marks the highest proportion of agricultural and food exports since 1991. Despite a decline in the export-import turnover of over USD 6 billion from 2021 to 2022, the decrease in 2023 was relatively modest at USD 0.7 billion compared to the previous year. In 2024, it is expected that Ukraine strengthens its positions in the agricultural market.
In the context of international trade relations between Ukraine and the European Union, the agri-food sector merits particular attention. As documented in the European Commission's report [4], in 2019, the European Union constituted Ukraine's primary trading partner. This is due, in part, to the conclusion of the Agreement between the European Union and Ukraine on a Deep and Comprehensive Free Trade Area, which entered into force in 2017. The DCFTA abolished trade restrictions and quotas, including those pertaining to certain agri-food products [3], thereby enhancing export relations between the EU and Ukraine. With this in mind, a comprehensive examination of the evolution of trade in agri-food products between Ukraine and the EU is imperative.
The report by the European Parliament's Research Service ‘Russia's war against Ukraine: EU-Ukraine agri-food trade’ provides a visualisation of the statistics on agri-food trade between Ukraine and the EU between 2010 and 2020. The graph can be found below.
Figure 1. Graph of the dynamics of agri-food trade between Ukraine and the European Union [1]
The data presented in Figure 1 allows for the following conclusions to be drawn. In 2010, the value of the EU's imports of agri-food products from Ukraine was less than €2 billion. In the subsequent years, there was a notable increase in EU imports from Ukraine, reaching a value of over €4 billion in 2012. Following a slight decline in exports from Ukraine to the EU in 2013 and a period of relative stagnation between 2014 and 2016, EU imports reached a point of stability. Since 2016, there has been a notable increase in this indicator, although there have been periods of declining trade relations, for example in 2019. In 2020, the EU's imports from Ukraine reached approximately €7 billion, which serves to illustrate the growing importance of Ukraine as a source of agricultural products for the EU in comparison to 2010.
In addition, Figure 1 presents data on exports from the EU to Ukraine. The graph demonstrates that the volume of agri-food products exported from the EU to Ukraine was considerably lower than the volume exported from Ukraine to the EU. Consequently, in 2012, the ratio of imports from Ukraine to the EU and exports from the EU to Ukraine was approximately twofold. In 2020, the ratio increased to approximately 2.2 times.
In terms of overall dynamics, exports have exhibited a gradual increase from approximately €1 billion in 2010, with a slight decline observed between 2012 and 2015. However, since 2015, there has been an upward trajectory in exports, reaching approximately €3 billion in 2020. This consistent growth suggests a sustained demand for EU agricultural products in Ukraine, albeit at a slower rate than that of imports.
The graph reveals a widening trade imbalance in Ukraine's favour, as evidenced by the ratio of Ukrainian agricultural exports to those of the EU and EU exports to Ukraine. This trend serves to illustrate the increasing significance of Ukraine as a principal supplier of agricultural commodities to the EU market. Furthermore, the data illustrates the EU's reliance on Ukrainian agricultural imports, particularly following 2016, while also demonstrating the consistent expansion of EU agricultural exports to Ukraine.
In light of the aforementioned data, the following can be posited as conclusions. Ukraine has become a principal supplier of agri-food products to the European Union, with exports reaching approximately €7 billion in 2020. This growth serves to reinforce the significance of Ukraine as a source of argi-food products for the EU. The imbalance in bilateral trade, whereby EU imports from Ukraine exceed exports to Ukraine, serves to illustrate the extent of the EU's dependence on Ukrainian agri-food products. The prospective evolution of bilateral relations between Ukraine and the EU in this sector is particularly encouraging. The partnership is poised for further expansion, underpinned by Ukraine's growing agricultural potential, which will contribute to the stability and resilience of both economies through mutually beneficial trade agreements.
References:
1. Дослідницька служба Європейського парламенту. Війна Росії проти України: торгівля агропродовольчою продукцією між Україною та ЄС. URL: https://ukraine.europarl.europa.eu/cmsdata/250410/0129_T_1258036_EPRS-AaG-729322-EU-Ukraine-agri-food-products-FINAL-ForTrad.pdf (reference date: 12.10.2024);
2. УНІАН. Частка експорту агропродукції України стала максимальною за незалежність. URL: https://www.unian.ua/economics/agro/chastka-eksportu-agroprodukciji-ukrajini-stala-maksimalnoyu-za-chasi-nezalezhnosti-12529116.html (reference date: 12.10.2024);
3. Представництво України при Європейському Союзі. Зона вільної торгівлі між Україною та ЄС. URL: https://ukraine-eu.mfa.gov.ua/posolstvo/torgovelno-ekonomichne-spivrobitnictvo-ukrayina-yes/zona-vilnoyi-torgivli-mizh-ukrayinoyu-ta-yes (reference date: 12.10.2024);
4. European Commission. Ukraine: EU Trade Relations with Ukraine: Facts, Figures, and Latest Developments: https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/ukraine_en (reference date: 12.10.2024).
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