April 14, 2011

Ukrainian government to regulate local grain market

The Ukrainian government has decided to strengthen own role through the regulation of the grain market, and will impose export limitations and increase  the market share for the State market operator, said Aleksey Gavrilov, President of the Grain and Feed Trade Association (GAFTA) in Ukraine.

Such investments in agricultural production in Ukraine are unexpected, said the Gavrilov. Currently many companies review their own plans of business development in the country.

Gavrilov said that Ukraine has the right to make measures such as the imposition of grain export quotas and licenses, which are necessary in supporting the food security of the country.

He said that the limitations on export volumes, especially for wheat are necessary, because there is a risk that traders will export entire grain volumes from Ukraine.

At the beginning of the season, the State customs service had limited grain exports, and many traders met with losses due to demurrage of vessels in the ports and badly timed closure of the contracts. This has led to the increase in the number of arbitrages in GAFTA, said Gavrilov. He said that imposing export duty is a better choice compared to export quotas.