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Ukraine grain export restrictions sow uncertainty

Ukraine grain export restrictions sow uncertainty

What Ukraine will do going forward is the subject of intense speculation.

Like Russia, Ukraine imposed restrictions on grain exports last year and has now extended its export quota system at least through the end of June.

“Unlike the United States, which keeps the door to its grain market open for all customers, Ukraine requires grain traders to have a quota if they want to export wheat, corn or barley,” explains Cary Sifferath, U.S. Grains Council regional director for the Mediterranean and Africa. “There’s definitely not a free flow of grain out of Ukraine, and there’s very little transparency about how quotas are awarded.”

Trade sources currently indicate that large international grain companies are getting very little access to export quotas, despite their investments in Ukraine in recent years, and that the uncertainty is curtailing international interest in further investments.

Quotas appear to be going to Ukrainian state trading companies or companies in which Ukraine holds a significant ownership position.

What Ukraine will do going forward is the subject of intense speculation.

Iryna Akimova, first deputy chief of staff for President Viktor Yanukovych, said on March 29 that Ukraine intends to replace export quotas with tariff regulation measures, but legislation introduced in Ukraine’s parliament would set up an auction system for selling quotas.

Meanwhile, Ukrainian grain producers have asked Yanukovych to remove export limits, which they say present a significant risk for the 2011 harvest. The Ukrainian Grain Association also charges that the government owes producers $310 million for value-added tax credits from before the quotas.

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