September 9, 2011

 

Ukrainian farmers expected to face losses

 

 

The Ukrainian Agrarian Business Club (UABC) estimated that farmers will face a loss of US$1.06 billion in 2011 due to export duties on grains.

 

"Agricultural producers' losses for the year on the unannounced grain export of 24 million tonnes could reach US$1.06 billion, the association said.

 

The association estimates by farmers have lost US$66 million on the 1.5 million tonnes of grain that has already been exported, noting that the total amount of state support for agricultural enterprises amounted to UAH4.56 billion (US$571 million) in 2010.

 

The association also said that the grain procurement price in Ukraine is US$200 per tonne, compared with the world price of US$305 per tonne.

 

According to experts with the association, the domestic price should be US$244 per tonne if there are no export duties and if value-added tax is reimbursed to exporters.

 

In addition, according to the association, Ukraine has essentially lost its foreign markets.

 

The association estimates that Ukraine has generally given Russia at least 2.35 million tonnes of grain on foreign markets (Russia exported about five million tonnes of grain in July-August this year while Ukraine exported 1.8-2.1 million tonnes, according to various estimates).

 

According to the association, the national economy's foreign-exchange earnings reduced by US$658 million in the period of July-August and the losses this year could reach US$3.9 billion if this trend continues.

 

In connection with this, the association noted that the capitalisation of the 14 Ukrainian agro-industrial companies that are listed on international stock exchanges reduced by US$1.4 billion during the period of July-August this year, which limits their ability to attract financial resources and, consequently, their ability to invest in grain production.

 

As Ukrainian News earlier reported, the Ukrainian Agrarian Business Club considers it necessary for the parliament to cancel export duties on grain during its ninth session.

 

The Ministry of Agrarian Policy and Food estimates the volume of grain exports in the period of July-August at 2.1 million tonnes while the Ukrainian Agrarian Confederation estimates it at 1.8 million tonnes.

 

Budget revenues from exports duties amounted to about US$0.18 in the period of July-August, according to the Ukrainian Agrarian Confederation

 

Customs duties on grain exports were introduced in Ukraine from July 1 until January 1, 2012.

 

The rates of the export duties are 9% for wheat, 14% for barley, and 12% for corn.