How can Ukraine integrate agriculture into the EU internal market?

Ukraine accounts for about a quarter of all European agricultural land. Accordingly, Ukraine is ahead of the EU in terms of the contribution of the agricultural sector to GDP and the share of workers engaged in agriculture. Since the beginning of 2022, the share of agricultural goods in Ukrainian exports to the EU has increased significantly and is currently around 50%. This raises questions about the possibility of full integration of the Ukrainian agricultural industry into the EU internal market without a significant shock to the European markets of agricultural products.

However, these barriers can be successfully leveled.

1. Agriculture in Ukraine is indeed less diversified compared to most EU member states. In Ukraine, crop production significantly prevails over livestock production. The lion’s share of agricultural land belongs to grain and technical crops – the area is quite comparable to the total amount of land allocated to these crops in the EU. However, Ukraine also creates a significant demand for ready-made food products in the EU – full liberalization of trade between Ukraine and the EU will most likely only increase its volume.
2. A high level of concentration is one of the reasons for the competitiveness of Ukrainian products. However, modern SAP policy limits payments to large enterprises, so the direct financial benefit for most Ukrainian agricultural holdings will be quite modest. In our opinion, it is small Ukrainian producers who will be able to get the most benefits from participation in the EU CAP. However, they will need significant technical assistance during the first years of Ukraine’s membership in the EU.
3. Ukraine should decide on a model of agricultural development, and this model should be consistent with the regional development strategy. For example, as part of the “fairer and economically sustainable agricultural policy” criterion, Poland prefers to invest in the competitiveness of small farms, the Netherlands will spend additional money on technical assistance to farmers in the development of business plans and digitalization, and Romania will increase payments for small and medium producers. Ukraine must decide on a vision for the future of the agricultural sector – and this vision must also be consistent with the strategies for the development of agricultural regions.

More details – in the study.