Ukrainian farmers may lose over $1 b this MY because of grain export duties - expert

Kyiv, September 8 (Interfax-Ukraine) – Ukrainian farmers' losses in the current marketing year (July 2011 through June 2012) with the export of grain projected at 24 million tonnes could exceed $1 billion because of the effect of duties on grain exports, according to President of the Ukrainian Agribusiness Club Alex Lissitsa.

The introduction of the duties translated into the situation when farmers fall short of UAH 300-400 per tonne of exported grain, he said at a press conference at Interfax-Ukraine on Thursday.

According to the Club's experts, when the world price of grain is $305 per tonne, the price in Ukraine is $200 per tonne. They estimated that the domestic price should be at least $244 per tonne when there are no export duties and value added tax (VAT) is reimbursed to grain exporters.

Lissitsa noted that Ukraine had virtually lost sales markets abroad because of the duties. In his words, the key importer of Ukrainian wheat in the previous marketing year – Egypt – has become the major importer of Russian wheat during the current marketing year. No tonne of wheat was shipped from Ukraine to Egypt in July 2011.

He also claims that foreign currency receipts are on the decline in the country because of a decrease in grain exports. What is more, he added, the capitalization of 14 Ukrainian agribusinesses, which are listed on international stock exchanges, shrank by $1.4 billion July through August 2011.

Lissitsa stressed that the reduction in the companies' capitalization limits their opportunities to raise assets and, consequently, their possibilities to invest funds in grain production.

As reported, Ukraine exported about 12 million tonnes of grain in the 2010/2011 marketing year with a yield of 39.3 million tonnes in 2010. The export had been limited administratively since the end of August 2010, and the government introduced grain export quotas in October 2010 upon the pretext of ensuring food security. The quotas were finally cancelled only early in June 2011.

However, Ukraine introduced grain export duties for the period of July 1, 2011 through January 1, 2012: 9% on the export of wheat, but not less than EUR 17 per tonne of wheat, 12% on the export of maize, but not less than EUR 20 per tonne of maize, and 14% on the export of barley, but not less than EUR 23 per tonne.

The Ukrainian Agricultural Policy and Food Ministry has recently initiated the cancellation of the duties, however, the government has not supported the motion.