Romania's proposed import restrictions create uncertainty in oilseeds and grains market

October 4, 2023

2 mins read

Romania's proposed import restrictions create uncertainty in oilseeds and grains market

 

Romania has recently proposed import restrictions on various agricultural products, such as wheat, corn, sunflower seeds, and rapeseed, originating from Ukraine and Moldova. According to these proposed restrictions, Romanian economic operators would be required to establish import contracts with licensed operators in Ukraine or Moldova to procure the desired quantity of products. Additionally, the import operations would need to be conducted under the supervision of Romanian customs authorities.

The motivation behind these potential restrictions is rooted in concerns raised by several countries, including Romania, regarding the high volume of Ukrainian products flooding domestic markets. This surge in imports has made Ukrainian goods more attractive to certain buyers than locally produced items, resulting in downward price pressure within the domestic market. This intense competition has reportedly squeezed profit margins, sometimes even pushing them into negative territory for local producers.

Although these restrictions are currently in the draft stage, market players have voiced their concerns to Mintec. They argue that even if exports are technically permitted, establishing the necessary contracts with licensed operators could prove to be extremely challenging. This, in essence, could create what one trader described as a "ban by other means."

This situation is expected to have a significant impact on exporters attempting to access these markets. At this stage, it remains unclear how transit would be affected by these restrictions. To secure an export license, exporters seem to need a confirmed contract in hand, which typically specifies penalties for the non-delivery of goods. Market players familiar with the situation have indicated that the application process for obtaining a license can take up to 30 days. Furthermore, once a contract is signed, there are deep concerns among market players that if a player fails to obtain a license, but the deal has already been contracted, it would typically trigger penalties due to non-delivery of goods. Additionally, logistics and transportation arrangements must be made in advance, further complicating the process.

These factors are likely to discourage many potential sellers from entering into export contracts with these countries. Consequently, Ukrainian sellers may be forced to explore alternative export routes, which are currently limited due to the closure of the grain corridor deal and alleged bans imposed by neighbouring countries.

Kyle Holland
Kyle Holland

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