July 14, 2011

Ukrainian grain producers gain 25-30% profits

Ukrainian Ministry of Agrarian Policy and Food Supplies estimates the profit of agricultural producers' from grain crops output to be between 25% and 30% this year, according to the first deputy minister of agrarian policy and food supplies, Mykola Bezuhlyi.

He noted, over the last two weeks, when the Agrarian Fund was carrying out tender procurements of grain under spot contracts, prices were 10% higher than the average market by UAH100-150 (US$12.51-18.77) per tonne.

First deputy minister said that the current level prices is absolutely acceptable, it ensures 25-30% profitability of production of grain crops.

Bezuhlyi remembered the state budget assigned the Agrarian Fund with UAH3 billion (US$375.3 million) for procurement of grain, which is now as active as it was under forward contracts.

He underlined, such an Agrarian Fund activity is necessary because a rich enough harvest is forecast for this year, which may cause, as was the case previously, a slump of prices in July and August.

Now this is not happening, Bezuhlyi added.

The first deputy minister also remarked that the Agrarian Policy Ministry was also worried with the price situation at the grain market for its producers; he recalled the ministry challenging the introduction of customs duties on grain exports and abolition of the VAT refunds for grain exporters.

According to the media, as of July 11, the agrarians harvested 5.6 million tonnes of grain and leguminous crops.

The Agrarian Policy Ministry expects grain harvest this year at nearly 45 million tonnes, reckoning that weather conditions will not have negative impact on the gross yield.