Agribusiness in Bulgaria is at a crossroads, strongly influenced by geopolitical events and the changing trade environment. In this complex situation, the sector must adapt, and what are the possible scenarios and economic prospects was the topic of the specialized discussion within the framework of the annual international agricultural exhibition AGRA 2025.
The war in Ukraine and the upcoming tariffs that the US administration plans to impose on agricultural production are the two factors that will have a significant impact on Bulgarian agribusiness. Nikolay Valkanov from “IntelliAgro“ and Petar Ganev from the “Institute for Market Economics“.
Over the past year, economic growth in Europe has increased slightly, reaching 1%, but still lags significantly behind the pace of the United States, which reported a growth of 2.5%. While Germany is on the verge of recession, some countries in Central and Eastern Europe are showing better results, including Bulgaria, which recorded economic growth of 3.1%. However, since September 2024, inflation in Europe has started to increase again, which poses serious challenges for the regional economy.
The impact of the war in Ukraine on inflation and agricultural markets
Historical data shows that shocks in the agricultural sector can lead to a significant increase in the price of goods, as happened in 2007-2008, when Bulgarian agricultural production fell by 43% in one year. Similar processes are currently being observed - the war in Ukraine led to a surge in fertilizer prices, which caused an increase in the price of basic grain raw materials. At the end of 2024, prices of these goods returned to the levels of 2016-2017, but this decrease is likely to be temporary.
Expectations for 2025 point to a possible upward trend in agricultural product prices, based on three key factors: reduced carryover stocks, stable but high oil and fuel prices, and a slight appreciation of the US dollar, which increases import costs.
If the war in Ukraine ends, this could stabilize markets, but it will also likely put an end to additional incentives for farmers in the region. The question arises whether the expected price increase will compensate for the lack of financial assistance.
EU-US trade relations - challenges and opportunities
Globally, relations between the European Union and the United States are facing new challenges. The potential imposition of tariffs by Washington could affect a significant part of European exports. Although there was a slight easing of tariff and non-tariff restrictions in 2024, the threat of new tariffs of 25% raises concerns among European manufacturers.
The United States is the second largest export destination for Europe, with a 12% share of the value of exported goods. Among the main products that the EU exports to the US market are wine, sports drinks, essential oils, dairy products, bakery products and canned fruits and vegetables. In recent months, exports of these goods to the US have accelerated, which is likely due to expectations of upcoming trade restrictions.
If the new tariffs remain within reasonable limits, the impact on European manufacturers could be manageable. But if it reaches 25%, as announced by US President Donald Trump, EU companies may be forced to look for alternative markets or even outsource some of their production to the US to avoid additional costs. Such a process would benefit the US economy, but would weaken European industrial competitiveness.
In 2025, the European Union will have to adapt to a complex economic environment marked by inflation risks, changes in trade policy and uncertainty surrounding the war in Ukraine. The EU's new 7-year financial framework will be key to shaping economic priorities, with agriculture likely to face reduced funding in favour of defence and infrastructure spending. In this context, companies and governments will have to seek balanced solutions that guarantee sustainable growth and economic stability.