August 6, 2012

Global grain prices may double with export restrictions

World grain prices in foreign markets may double because it is in the region of Ukraine and Russia where the main global reserve of food grains is concentrated.

This opinion was expressed by President of the Ukrainian Agrarian Confederation Leonid Kozachenko, who commented on the address of the French President to the leaders of G20, the Confederation reported.

"The appeal of the French President to the leaders of the G20 countries for holding this month an emergency meeting to discuss the situation on the world grain market is a very important event. This is due to the fact that the world prices have already risen by 40% and continue to increase," the expert said.

He said the continuing rise in the prices could create a difficult situation not only for countries that suffer from hunger, but also for developed countries. "This could become a basis for the revision of the Ukrainian government's decisions. But one of the conditions on which France insists is that neither Russia nor Ukraine should impose restrictions on the export of grain," he said.

As reported, during a government meeting on July 31, the Cabinet of Ministers and specialised non-governmental organisations agreed to coordinate the grain export volumes for the 2012-13 marketing year (July 2012-June 2013).

This is referred to in the Annex to the Memorandum of Understanding between the Ministry of Agricultural Policy and Food of Ukraine and business entities - exporters of wheat, dated October 11, 2011.

The document provides for continuation of the memorandum between the government and grain market members for the current marketing year - until July 1, 2013. It is also envisaged to jointly define and agree on the export of grain on the basis of a preliminary cereal balance. In the case of a possible introduction of grain export restrictions, the agriculture ministry must inform the market participants two months ahead of it.

As reported, the Minister of Agricultural Policy and Food of Ukraine, Mykola Prysiazhniuk, said that, if more than 80% of the declared amount of grain is exported, the agriculture ministry and grain market participants will meet and decide on further action.

At the same time, the minister said that at present there are no preconditions to restrict the export of grain - grain yield and transitional reserves will be sufficient to ensure the domestic market and export potential.