July 4, 2011

Ukraine introduces grain export duties

Ukraine has started taxing its grain exports Thursday (Jun 29) after ending a seven-month period of quotas.

Duties of 9% for wheat, 12% for corn. and 14% for barley will apply until December 31. In addition, a zero rate of VAT on grain export operations ended Thursday.

Maria Kolesnik, an expert with Analytical Agricultural Agency, believes the measure will hurt farmers.

"Grain prices in the domestic market will fall to the fee for each culture. Traders will not incur additional costs because they suffered losses last year due to the introduction of quotas on grain exports," the expert said.

However, imposing a tax on Ukraine's grain exports was unlikely to affect the international grain market, Kolesnik said.

"Traders will build the duty rates into the grain purchasing price. And on the international market they will sell grain at the regular price," she said.

Ukraine introduced grain export quotas after drought curbed production. The harvest was 39 million tonnes, or million tonnes less than initially expected.