June 19, 2009

 

The EU has threatened Ukraine with problems at free-trade zone talks if Kiev joins in the Black Sea grain pool.

 

The EU may freeze negotiations on the creation of a free trade zone and apply economic sanctions to Ukraine, experts said. The EU had said Ukraine should not join the grain pool because it is a WTO member while Russia and Kazakhstan are not.

 

Ukraine, which has so far been supportive of the grain pool plans, appeared to have backed off.

 

Heinz-Wilhem Strubenhoff, the head of German-Ukrainian Agrarian Dialogue, believes that the EU's unhappiness with Ukraine is understandable and justified.

By taking a joint decision or confirming it at government level, the participants of the grain pool may suspend exports for sometime, but Ukraine as a WTO member, should reach agreement on the decision in Geneva rather than unilaterally, said Strubenhoff.

 

The grain pool, or grain OPEC, is a planned organisation for conducting joint policy on the grain market with the participation of Ukraine, Russia and Kazakhstan, and its creation is expected to conduct a single pricing policy on the world market.

 

Russian agriculture minister, Yelena Skrynnik, said the creation of the organisation would make it possible to reduce price volatility on the world grain market and dependence on speculative factors.

 

But some experts believe that setting up a grain pool is in the interests only of Russia, with Ukraine not being able to dictate prices.

 

It is mainly Russia that is interesting in setting up a grain pool, and Russia does not have a developed port infrastructure for exports, said director of AAA analytical agency, Serhiy Nalyvka.

 

The President of the Ukrainian grain association, Volodymyr Klymenko, agreed with Nalyvka.

 

While farmers worldwide will get income from the creation of the grain pool, but those dictating the prices will get the most benefits, according to Klymenko.