May 16, 2011

 

Ukraine to remove grain export curbs

 

 

Ukraine will not impose curbs on grain exports in the coming market season if the harvest is satisfactory, Prime Minister Mykola Azarov said on Friday (May 13), adding that current forecasts are pointing to a good 2011 crop.

 

Azarov said that grain quotas introduced last year by Ukraine after severe drought have damaged its reputation as a reliable exporter to world grain markets.

 

Until last year, Ukraine held the spot of world's top barley exporter and is one of the top five for exporting wheat and corn, most of it to established markets in North Africa and the Middle East.

 

Ukraine's policy will continue to place a priority on meeting the food needs of its 46 million people, Azarov said. However, he said, "If reliable data appears of a good harvest, then, no restrictions on grain export will be brought in." He also added, "At the moment the forecast is for a good harvest."

 

Meteorologists say more than 90% of Ukrainian winter grains, mostly winter wheat, are in good or satisfactory condition, boosting forecasts of a solid crop. But a lack of rain in February and March and a cold spring has delayed spring grain sowing and this would affect the yield of this crop.

 

The Agriculture Ministry has raised its 2011 grain forecast to up to 45 million tonnes from 42-43 million tonnes. Ukraine is seeing a jump in exports for the new market season, which begins in July, for all three basic grain crops. Exports for the current trading season, which ends in June, totalled around 13.5 million tonnes, a figure depressed by the quotas introduced.

 

Ukraine cancelled the quotas imposed on corn. Azarov said wheat quotas were likely to be lifted soon. "We are now looking at a possible lifting of quotas on wheat," he said.

 

A 45 million tonne grain harvest would be the third biggest for Ukraine over the past 15 years, but the size of the crop is not the only factor that weighs on a government decision to impose quotas.

 

Ukraine harvested 39.2 million tonnes of grains in 2010 and 46 millions in 2009. Analysts say Ukrainian governments in the past have restricted exports to keep an overabundance of grain at home to hold down domestic bread prices and inflation.

 

Last year, following a total grain export ban from mid-August by big neighbour Russia, the Kiev government held back from imposing grain export quotas until October.

 

Many traders said that through August and September, customs officials in Ukraine's ports enforced de facto restrictions by boarding ships and finding bureaucratic reasons for holding up grain shipments. "At the start of the season (in July) there might be export quotas introduced for a set period under the pretext of waiting to see how the harvest works out. There might be duties imposed and unofficial restrictions," said Mykola Vernitsky of ProAgro consultancy.

 

The Parliament is due next week to discuss again a draft law to impose export duties on the three basic crops.