Bulgarian vegetable oil producers: Ban on Ukrainian imports will cause bankruptcies, higher prices

The Bulgarian caretaker government’s temporary ban on the import of grains and oil seed crops from Ukraine will lead to the bankruptcy of vegetable oil processing companies in Bulgaria, as well as higher consumer prices and job losses, the Oilseed Oil Producers Association in Bulgaria said.

As The Sofia Glob reported, at a meeting on April 19, Bulgaria’s caretaker government appointed by President Roumen decided to impose a ban on imports of numerous foodstuffs from Ukraine, to be in effect from April 24 to June 30 2023.

The ban applies to more than 20 goods. Among them are wheat; wheat flour; sunflower seeds; sunflower oil; corn; honey and bee products; raw milk; powdered milk; milk concentrate; walnuts; hazelnuts; eggs; chicken meat; pork; sheep and goat meat; rye; barley; oat flakes; sorghum; buckwheat; starches, inulin, wheat gluten; soy; linseed; rape; wine; wine vinegar; and ethyl alcohol.

The association said that the processing industry could not on its provide the necessary sunflower for the Bulgarian market, and the ban would result in a reduced contribution by the sector to GDP, shutting down of businesses, reduced production and job losses.

Association head Yani Yanev said: “If these restrictive measures are applied for a longer period, we are exposed to a serious risk of stopping production and non-fulfillment of commercial contracts, due to a lack of raw materials and the impossibility of planning in the industry standard three-month period to ensure production”.

Yanev said that the situation would lead to a chronic shortage of sunflower oil for domestic consumption, as a result of the inability of producers to work with a shortage of sunflowers and, in turn, an increase in prices for consumers, as well as a new rise in inflation.

The sunflower import ban will redirect Ukrainian sunflower to Western European countries and Bulgaria will lose traditional export markets there, while the production of Bulgarian processors will go to third countries, which are the most price sensitive.

The association said that the restrictions imposed by the caretaker government were unacceptable.

“We propose that processing of 100 per cent of Ukrainian sunflower products produced under full responsibility, accountability and ongoing control of the export processing enterprises be allowed within the permitted transit of sunflower for export.”

The statement said that the association and its members were ready for immediate participation in a working group with representatives of the state administration to develop rules for this, which would be fed into Bulgaria’s position in the negotiations with the European Commission on the individual preventive measures valid for Bulgaria.

The association describes itself as the only nationally representative organization of processors in the sector.

More than 100 small, medium and large processing enterprises operate in the industry, with over 10 000 employees, and revenue for 2022 of more than seven billion leva.

Companies have invested hundreds of millions of leva in Bulgaria’s processing capacity, and as a result, Bulgaria is now the largest exporter of sunflower oil, meal and bleached sunflower in the EU.

Given the already insufficient domestic production of sunflower, a large part of this processing relies on foreign imports, which in the past two years have been from Ukraine and other countries.

“Also, it should be noted that domestic production of sunflower processed products exceeds domestic consumption eight times, so this processing industry is highly export-oriented and one of the largest and most reliable generators of GDP and tax revenue for Bulgaria.”

(Photo: teteria sonnna, via Wikimedia Commons)

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