Cost of transporting grain for export in Ukrzaliznytsia wagons up by almost 10 times - UCAB

MOSCOW. July 7 (Interfax) - The resumption of auctions by JSC Ukrzaliznytsia for the distribution of grain wagons has resulted in an increase in the cost of their rent by almost 10 times from 2,170 hryvnias per day to the maximum of 20,500 hryvnias per day at the end of the auction, the Ukrainian Agribusiness Club (UCAB) association said on Thursday.

Along with the growth of tariffs for the transportation of goods by 70% from July 1, this measure will put the agricultural sector on the brink of survival, the UCAB said.

According to the organization, with the cost of using a grain carrier for 20,500 hryvnias per day and the turnover of the wagon in ten days, the cost of use alone will be 3,150 hryvnias per tonne. Additionally, farmers need to pay the tariff for transporting grain by rail, which has recently increased by 70%, the fee for loading and unloading wagons, the fee for foreign carriers, as well as a number of other additional payments, the UCAB said.

At the same time, back in June, the association called on Ukrzaliznytsia not to introduce the practice of auctions amid the crisis, an artificially created shortage of grain wagons and the specifics of the monopoly position of JSC Ukrzaliznytsia.

"The UCAB calls on the government to immediately end the practice of such auctions, make available information on the order of handling freight wagons with agricultural products for export, introduce responsible planning for the transportation of goods and their implementation, reconsider the decision to increase tariffs by 70%," the association said.

As reported, on June 14, 2022, Ukrzaliznytsia resumed holding auctions for the distribution of grain wagons from the beginning of July.

Ukrzaliznytsia said that the increase in tariffs would not be critical in the formation of export prices: the price of ferrous metals and grain will rise by only a few percent, which is fully compensated by the positive price situation on foreign markets.

On June 28, the Ukrainian Infrastructure Ministry agreed with Ukrzaliznytsia's proposal to increase the cargo transportation tariffs by 70% from July 1.

The Ukrainian Grain Association, the largest association of grain traders, opposed the increase. The organization asked the Ukrainian government to impose a moratorium on raising freight transportation tariffs during martial law and for three to six months after it ends, as well as to repeal Ukrzaliznytsia's decision to hike them.