October 4, 2011

 

Ukraine's high export duties impact on grain exports

 

 

Feeling the impact of high export duties which might be extended through 2012, Ukraine's grain exports stayed subdued in September, said traders and top government officials Monday (Oct 3).

 

The director of Ukrainian Agrarian Confederation (UAC) Serhiy Stoyanov said that Ukraine's grain exports rose to about 1.48 million tonnes in September from 1.4 million in August which includes 800,000 tonnes of wheat.

 

Stoyanov said Ukraine had exported about 3.3 million tonnes of grain in the first three months of the current 2011/12 season against 3.5 million in the same period in 2010/11.

 

Ukraine, which plans to harvest 50-53 million tonnes of grain in 2011, could export about 24 million tonnes in the 2011/12 season, but the existing export duties have raised doubts shipments could reach those levels.

 

The country exported a total of 12.7 million tonnes of grain in 2010/11. Ukraine allowed free exports in the first three months of last season but in October imposed export quotas to defend local market from a sharp jump in prices as drought hit harvests in the Black Sea grain growing areas.

 

Grain traders' union UZA last month said that the exports could have been at six million tonnes in the first two months of the 2011/12 season but export duties had reduced shipments to about two million tonnes.

 

Grain export duties were introduced in July to replace last year's export quotas, instituted to protect home markets after the severe drought.

 

The Agriculture Ministry has asked the government to cancel the restrictions while the economy ministry proposed the cabinet extend the duty until 2013 and impose export duties for sunflower oil, rapeseed and soy.

 

Ukrainian UNIAN news agency on Monday quoted the First Deputy Prime Minister Andriy Klyuev as saying the government would decide on Tuesday whether to extend grain export duties in a bid to earn more money for the cash-hungry budget.

 

Ukrainian Agriculture Minister Mykola Prysyazhnyuk said that the duties were the main reason for the small exports.

 

He said grain exports would be unlikely to exceed 1.5 million tonnes in September.

 

Stoyanov said that Ukraine exported 1.5 million tonnes of wheat in July-September 2011 while it sold abroad 1.26 million tonnes of the commodity in July-September 2010.

 

But the former Soviet republic could find more takers for its harvest, looking for opportunities to supply grain to Egypt and to Asian states.

 

UAC said that Egypt's state-owned General Authority for Supply Commodities (GASC) could allow Ukraine to participate in its import tenders.

 

Ukraine, a traditional supplier of wheat to the Middle East and North Africa, had been excluded from tenders last season due to quality problems.

 

UAC said that GASC is ready to return Ukraine in the list of its official suppliers if a state-run body guarantees quality of Ukrainian grain.

 

According to UkrAgroConsult agriculture consultancy, Ukraine exports its wheat to Egypt outside of the GASC mechanism and supplied to the country a total of 626,209 tonnes of wheat in the 2010/11 season. In 2009/10 Ukraine exported to Egypt 718,012 tonnes of wheat.

 

Last week Ukraine also said it planned to export about one million tonnes of its wheat to Bangladesh under an intergovernmental agreement.

 

Bangladesh, which buys 3.0-3.5 million tonnes of wheat annually to meet domestic demand, switched to cheaper Black Sea suppliers after India banned exports in 2007 amid a global shortage.

 

This month India allowed unrestricted exports of two million tonnes each of wheat and common rice, as the unmanageable level of the country's stocks forced the authorities to allow overseas sales.

 

That prompted Bangladesh to shift away from Black sea supplies on competitive prices for grains from its neighbour.

 

Ukraine harvested 22.2 million tonnes of wheat in 2011 and the Agriculture Ministry says the wheat exports could total about 10 million tonnes in 2011/12 season.

 

It said milling wheat dominated the harvest.