18 Aug 2010 14:47

Ukrainian govt postpones grain export quota discussion

KYIV. Aug 18 (Interfax) - Possible Ukrainian grain export quotas were not discussed at Wednesday's Cabinet meeting and the issue has been postponed until the next meeting.

"It wasn't discussed," Economics Minister Vasyl Tsushko told reporters in Kyiv following Wednesday's meeting.

Tsushko said he did not know when the decision might be reached.

But First Deputy Agrarian Policy Minister Serhiy Melnik said grain export quotas would be discussed at the next Cabinet meeting, adding that the issue was being cleared with the Economics Ministry. Melnik said any quotas would be on fodder wheat, barley and rye.

Agrarian Policy Minister Mykola Prisyazhnyuk said on Tuesday that the government intended to restrict grain exports until the end of this year to ensure the country's food security by means of a 2.5 million-tonne quota.

An additional 1 million tonnes already located at ports will be allowed to ship, and the quotas will not apply to corn, Prisyazhnyuk said.

Export quotas are anticipated for barley (1 million tonnes) and wheat (1.5 million tonnes). There will be additional details provided for fodder and food-grade groups, he said.

September 1 is the suggested date for the start of the quotas, Prisyazhnyuk said

Since the start of the current agricultural year (July 1 to August 16), 2.69 million tonnes of grain have already been exported, including 1.2 million tonnes of barley and 1.1 million tonnes of wheat.

Prisyazhnyuk said the main reason for grain export quotas is ensuring the country's food security. "The question is of ensuring food security. It is not a matter of prices," he said.

World Trade Organization and European Union standards allow quotas in such a situation, he said.

Because of poor weather conditions, this year's harvest has proven smaller than forecast. "The coming year will also be complicated," Prisyazhnyuk said, noting that, historically, after a large harvest subsequent years often see much smaller ones.

Deputy Prime Minister for agrarian policy issues Viktor Slauta said the presumed size of the quota will allow for "reviving" the market, which today is waiting breathlessly for a decision from the government. "Quotas are not prohibitive," he said.

Some grain-traders have asked the government for a ban on grain exports, Slauta said.

Prisyazhnyuk said he thinks the introduction of quotas will not affect the pricing situation on the market. "We will be battling to keep prices from falling," he said. The government has established market prices at which grain will be bought for the country's Agrarian Fund. In particular, the price for class-3 wheat is up to 1,520 hryvna per tonne.

At such prices, he said, there are no reasons for bread prices to rise substantially, and if conditions for some price rises develop, the government will pay bakers' credit rates, while the Agrarian Fund is used for flour interventions.

The forecast for Ukrainian grain production this year has been reduced from 45-47 million tonnes to 40-42 million tonnes compared to the 46 million tonnes the country produced last year. The harvest of early grain is virtually complete, and weighs in a roughly 31 million tonnes, and at this point the total harvest will depend on how the country's corn fares.

The U.S. Department of Agriculture last week reduced its forecast for Ukrainian grain production this year by 6.2 million tonnes to 38.75 million tonnes and its export forecast by 4.2 million tonnes to 15 million tonnes.