Proteins: The Ukrainian Illusion

Protein plans are to agricultural policies what "chestnuts" are to the media; they come back periodically. The one that the European Commission announced on July 7 is no exception. After presenting all the data illustrating European dependence on imports, the Commission lists all the measures likely to encourage production, strengthen processing sectors, and diversify import sources. The mention of actions in the field of circularity, regarding biofuels or bioeconomy, appears as one of the new proposals, as do the prospects of achieving greater autonomy through cooperation with Ukraine, a candidate for EU membership.

But what is the reality of this last argument?

Indeed, the EU-27 is generally deficient in plant proteins, and while self-sufficiency is achieved for rapeseed, or nearly so for sunflower, peas, and fava beans, the Union is dependent on 90 or 95 percent, depending on the year, on imports of soybean seeds (14 to 15 million tons) and soybean meal (16 to 18 million tons). Brazil, the United States, and Argentina dominate the global market for these products and represent the majority of the origins of European imports. One must go back to the conclusion in 1962 of the Dillon Round agreements of the GATT to understand the causes of this dependence: the six countries of the nascent European Economic Community, by laying the foundations of the Common Agricultural Market, exchanged the tariff protection system for cereals for the application of zero duties on imports of oilseed seeds, their meals, and protein crops. These provisions have weighed and still weigh on the ability to develop European productions, hampered by their lack of competitiveness compared to competing third countries.

Is Ukraine's entry into the EU a solution for the expanded Europe to achieve autonomy in plant protein supply?

This is at least what proponents of a rapid accession of Ukraine emphasize to counterbalance the competitiveness shocks that European sectors of major crops or white meats would face. These competitiveness gaps were well demonstrated starting in June 2022, when, in solidarity with Ukraine attacked by Russia, Ukrainian exports benefited from free access to the Union market.

Is the Ukrainian argument solid when put to the test of facts?

The application of zero duties to imports from third countries of the various categories of plant proteins leads to no difference between the current situation and that of a member Ukraine participating in the Union's Single Market, as no tariff barrier currently applies to imports of Ukrainian soybean seeds and meals. Moreover, this crop occupies a secondary place in Ukrainian crop rotations with a production of about 6 million tons of soybeans, compared to 20 million tons of wheat, nearly 30 million tons of corn, and 12 million tons of sunflower. This allows Ukraine to export a total of 4 million tons of soybean seeds and 1.7 to 2.0 million tons of soybean meals, of which 1.3 million tons of seeds and 1 million tons of meals go to the EU.

Thus, Ukraine's ability to reduce European dependence is constrained both by the production levels of the soybean complex and the commercial and logistical interest in exporting to destinations other than the EU, notably Turkey and Egypt. Furthermore, the application of the European "protein" plan to Ukraine would not be likely to change the respective profitabilities of major crops.

The argument that Ukraine's accession to the Union could improve the protein autonomy of the new economic entity remains completely illusory. Already, the application of zero duties on imports for soybeans as well as for all Ukrainian oilseed products gives them free access to the Union market, a situation to which accession will bring no change.