Farmers sound the alarm: additional rules can lead to halt in grain exports

The Ukrainian Grain Association has addressed the members of the Verkhovna Rada (Ukrainian parliament) and the government not to introduce additional rules and mechanisms for grain exports, claiming that they could lead to a complete stop of exports.

Source: Press service of the Ukrainian Grain Association (UGA)

Details: The Association states that the adoption of bills No. 10168-2 and No. 10169-2 without consultation and the involvement of business associations will lead to the introduction of unenforceable and inapplicable rules and, accordingly, paralysis in the grain market and a complete halt in exports.

It is noted that the new rules may lead to the fact that exporters may find themselves in a situation where they can neither deliver the goods nor receive payment for them in order to register a tax invoice.

Quote: "Another novelty of the adopted bills is the postponement of the tax credit check at the time of physical export of grain. This will allow the tax authorities to conduct such an audit for a certain time or even delay it. In this case, the exporter will be forced to pay for the downtime of ships in the port, and losses will amount to at least US$1.5-2 per tonne and can reach US$50,000 or more per day. None of the exporters will take even more risks in such conditions," the report said.

The UGA also reports that the establishment of minimum prices at which exporters can send grain for export is generally not feasible since it establishes a mechanism for a constant increase in the minimum export price and at one point, the minimum export price from Ukraine set down by such a mechanism will exceed real prices on the world market.

UGA believes that the recent introduction by the Cabinet of Ministers (Resolutions No. 1132 and No. 1133) of new rules for the export of agricultural products that are just starting to work should be tested for effectiveness and not create obstacles to critical grain exports from Ukraine. Market players hope that the new export rules will facilitate the work of exporters who work transparently and fully comply with the requirements of legislation to return foreign exchange earnings from exports to the country.

"UGA calls on MPs and the government not to introduce additional rules and mechanisms that are not applicable in advance and unrealistic for grain exports, as this will lead to a complete halt in exports and therefore the receipt of foreign exchange earnings. Moreover, this will lead to huge losses for Ukrainian farmers and their bankruptcy," the association emphasises.

Background: 

At the meeting on 21 November, the Verkhovna Rada supported in the first reading bills No. 10168-2 and No. 10169 on improving the implementation of foreign economic operations for the export of certain goods, namely grain and oils.

The Cabinet of Ministers adopted a new procedure for the export of agricultural products, according to which only exporters included in the State Agrarian Register or companies licensed for such exports will be able to export them.

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