October 18, 2011

 

Ukrainian export taxes affect winter grain plantings

 

 

Besides poor weather, Ukraine's grain export levies have held back winter grain sowing, according to a leading analyst.

 

Ukraine's official weather group, the Hydrometeorological Centre, estimated on October 17 (Mon) that farmers failed to sow one metre hectares of winter grains because of "unfavourable conditions", with many regions suffering an overly dry autumn.

 

The figure follows a caution from the organisation last week that, of winter grains which have been sown, some 25-30% "may not survive winter" thanks to drought hampered development.

 

However, financial uncertainties have also played a part, with Ukraine's president, Viktor Yanukovych because he have yet to sign off on legislation passed by parliament to lift duties on corn and wheat exports, and merchants also hampered by the country's VAT regime, Andrey Sizov, managing director of Moscow-based SovEcon, said.

 

The sowings shortfall is "not only down to bad weather, but also to the export duties which remain in place and other factors too", Sizov told

 

"Exporters are not receiving VAT refunds too, and that is quite important."

 

In fact, it may take several weeks for President Yanukovych to sign-off on export duties, and even then there was talk that the levies would not be ditched as cleanly as parliament has demanded, he added.

 

The levies were supported by the International Monetary Fund which, after handing Ukraine US$3.4 billion of a US$15.6 billion loan programme, has frozen further tranches while the country tightens up an austerity campaign.

 

Ukraine's plight has become particularly important given the threat of a fresh world economic slowdown. In 2009, during the last downturn, its economy shrank by nearly 15%.

 

A separate farming source told that, "It is interesting that the president has not signed off on these duty cuts yet. Usually, it only takes a few days."
 

"You have to suppose that the duty cuts may not end up quite as parliament has envisaged."

 

However, at UkrAgroConsult, a Kiev-based consultancy, general director Sergey Feofilov was more optimistic over the existing legislation.

 

"After the president signs the law and it is published, the law will come into force. I hope this happens this week," Mr Feofilov said.

 

Ukraine's farm ministry has forecast that growers will plant 8.15 metre hectares with winter grains, a rise of nearly 150,000 hectares year on year.

 

As of October 14 (Fri), sowings had reached 6.9 metre hectares, and some believe that even this figure may be too large.

 

"Sources report that some farming enterprises haven't seeded winter grains on up to 40% of intended area, and official statistics are overestimated," UkrAgroConsult said.