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A free trade agreement between Ukraine and the European Union: potential effects on agricultural markets and farmers' revenues

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  • Olexandr Nekhay
  • Thomas Fellmann
  • Stephan Hubertus Gay

Abstract

Ukraine and the EU are currently negotiating a deep and comprehensive free trade agreement (FTA). Such a FTA can be expected to comprise opportunities as well as challenges for both the EU and Ukraine and to have an impact on agricultural markets. This article provides a model-based quantitative assessment of the potential impact of a FTA on agricultural commodity markets and farmers' revenues in the EU and Ukraine. For the quantitative analysis the dynamic, partial equilibrium model AGLINK--COSIMO has been adapted and applied. The analysis focuses on the bilateral trade positions and not on the effect on other countries. The simulation of a FTA between the EU and Ukraine was done through the elimination of import tariffs for the main agricultural commodities. The results of the simulation indicate a positive change in producer revenue of EUR 393 million (+2.6%) in Ukraine and EUR 860 million (+0.4%) in the EU. So this FTA entails benefits for the agricultural sectors of both trading partners. However, gains from a FTA are not distributed homogeneously and vary significantly among commodities. Ukrainian agricultural producers should also be prepared to meet the challenges involved in the necessity to comply with the quality and sanitary standards of the EU.

Suggested Citation

  • Olexandr Nekhay & Thomas Fellmann & Stephan Hubertus Gay, 2012. "A free trade agreement between Ukraine and the European Union: potential effects on agricultural markets and farmers' revenues," Post-Communist Economies, Taylor & Francis Journals, vol. 24(3), pages 351-363, November.
    • Handle: RePEc:taf:pocoec:v:24:y:2012:i:3:p:351-363
    DOI: 10.1080/14631377.2012.705469
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    References listed on IDEAS

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    1. World Bank, 2004. "Achieving Ukraine's Agricultural Potential : Stimulating Agricultural Growth and Improving Rural Life," World Bank Publications - Reports 14377, The World Bank Group.
    2. von Cramon-Taubadel, Stephan & Hess, Sebastian & Brummer, Bernhard, 2010. "A preliminary analysis of the impact of a Ukraine-EU free trade agreement on agriculture," Policy Research Working Paper Series 5264, The World Bank.
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    Cited by:

    1. Sergio René Araujo‐Enciso & Thomas Fellmann, 2020. "Yield Variability and Harvest Failures in Russia, Ukraine and Kazakhstan and Their Possible Impact on Food Security in the Middle East and North Africa," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 493-516, June.
    2. Hans Jensen & Ignacio Pérez Domínguez & Thomas Fellmann & Paul Lirette & Jordan Hristov & George Philippidis, 2019. "Economic Impacts of a Low Carbon Economy on Global Agriculture: The Bumpy Road to Paris," Sustainability, MDPI, vol. 11(8), pages 1-17, April.

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