March 28, 2012

Ukraine's Agrarian Fund eyes 1.3 million tonnes grain purchase

Ukraine's Agrarian Fund is seeking to purchase 1.294 million tonnes of grain of the 2012 crop under forward contracts, beginning purchases from March 30, said Deputy Director General of the Agrarian Fund Ihor Yakubovych.

"The mechanism of mortgage purchases concerns actually low-interest lending at a rate of the National Bank of Ukraine, which will be significantly lower than the rate of commercial banks and will not exceed 8%. In addition, the procedure for obtaining loans is much easier than in commercial banks," he said.

He said that the procedure for the formation of prices for bread grain was currently being agreed and that preliminary applications from agricultural producers for the purchase of 500,000 tonnes of grain have currently been received.

The Agrarian Fund said that it would purchase second-, third- and fourth-class wheat and first-, second- and third-class rye and that UAH7.2 billion (US$0.9 billion) was envisaged for this purpose.

Purchases will be conducted under the mechanism of payment in two stages: an advance payment of 50% if a forward exchange contract is signed, and 50% if an agricultural enterprise fulfils a forward exchange contract.

Agricultural producers must deliver grain to certain grain warehouses no later than November 1, 2012. The final payment to agricultural producers, on the basis of the decision of the Agrarian Fund's commission, should be made no later than December 1, 2012.