June 6, 2007

 

Ukraine preparing to ban grain exports

 

 

The government of Ukraine is preparing to ban exports of grain amid reports that crops have been badly affected by drought throughout the country.

 

Analysts said this move by Ukraine, one of the world's biggest grain exporters, would probably send shockwaves through grain markets by pushing grain prices upwards.

 

Ukraine's similar move last year months incurred financial losses on farmers and major grain trading companies. The United States and the European Union have been persistently urging Ukraine to lift the ban.

 

Meanwhile, the government on Monday instructed the Agriculture Ministry and the Economy Ministry to draft regulations that would temporarily ban the exports of grain, the sources said.

 

The government also instructed the same ministries to make an estimate of crop losses due to the drought, which has badly affected at least 10 regions of the country. The worst-hit regions include Ukraine's major grain producing regions, such as Kherson, Mykolayiv, Odessa, Zaporizhia, Donetsk, Luhansk, Dnipropetrovsk, Cherkasy and Crimea.

 

President Viktor Yushchenko on Monday (June 4) urged Prime Minister Viktor Yanukovych to address the farmers' dilemma with drought, including funding to offset their losses.

 

Meanwhile, Yushchenko's Our Ukraine party issued a statement on Monday criticizing the government's plans to ban the grain exports as an anti-market move.

 

Others said the impact of the drought may not be as bad as had been feared.

 

Ksenia Liapina of Our Ukraine said the impact of drought on crops is yet to be figured out but it is seen to possibly reduce grain output by 10 to 15 percent. Liapina added the situation is not as "catastrophic so at to require banning exports."

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