February 7, 2007

 

Ukraine calls for increase in wheat quota

 

 

The Ukrainian Grain Association, which unites Ukraine's grain trading companies, has called for an increase in the wheat export quota for the MY Jul 2006-June 2007 from 3,000 tonnes to 1.1 million tonnes.

 

The decision would help unblock the operation of port elevators, which are overloaded with grain, allow the resumption of trading on the grain market and allow farmers to attract assets necessary for spring field work, pointed out association president Volodymyr Klymenko to Ukraine General Newswire.

 

The association wants the quotas for barley and maize export to be cancelled.

 

Ukrainian government introduced a 1.106- million-tonne grain export quota until the end of the current marketing year, which will end in June 2007. Quotas for the export of wheat and rye are 3,000 tonnes each, those for barley and maize stand at 600,000 and 500,000 tonnes respectively.

 

Since the beginning of the year, grain export has been virtually suspended, as grain traders were denied export licenses. The Economy Ministry began issuing licenses only on Jan 26.

 

Meanwhile, the enduring standoff between the Ukrainian government and foreign grain traders has resulted in a loss of US$100 million, according to local media reports.

 

Problems arose in early autumn last year when in a hardline protectionist move the government of pro-Russia oriented Viktor Yanukovych imposed quotas on Ukrainian grain exports. The move was in retaliation to traders' refusal to sell grain at a discount to fill in the state strategic grain reserves.

 

As a result of the ongoing row in Ukraine which is the world's sixth largest grain exporter, world grain prices have moved up by US$20 a tonne in some categories.

 

Ukraine's deputy prime minister Andriy Kliuyev recently expressed a possibility to lift grain export quotas by the end of this month.

 

Incidentally, the World Bank recently noted that Ukraine has been gradually displaced by Kazakhstan as a major grain exporter. Besides, a number of grain traders have been planning legal action in a bid to stave off losses.

 

The World Bank has dubbed the restrictions "not justified" and upheld claims that the country's grain supply is more than adequate to cover domestic needs. The bank has also warned that the restrictions have opened a door to corruption.