Ukrainian Grain Association asks Rada not to over-regulate grain market before new industry rules implemented

MOSCOW. Nov 16 (Interfax) - The Ukrainian Grain Association (UGA) has asked the Verkhovna Rada to refrain from initiating bills regulating the grain market before new rules recently introduced by the government for exports of grain and oilseed crops and their products are implemented and tested, Ukrainian media reported citing the UGA press service.

"The UGA has always advocated transparent rules of the game on the grain market and supports the government's efforts to restore order on the market and combat the shadow sector, particularly as regards repatriating foreign exchange earnings from exports. The UGA has always supported implementing efficient tools to make grain market participants more transparent and responsible," the UGA said in an address to the Rada on Thursday.

At the same time, the UGA believes that the government's new agricultural export rules should be tested for their efficiency and not create obstacles to exports critical for the state.

Market participants expect that the new export rules providing for verification of exporters will benefit those working transparently and fully complying with the regulation on repatriating forex earnings from exports, the UGA said.

"An excessive number of parliament's legislative initiatives for regulating grain exports while the system under the new rules has yet to be fully worked out may complicate the situation on the already over-regulated grain market prompting a significant drop in exports and subsequently in grain prices of Ukrainian farmers," it said.

Ukrainian farmers, who have suffered for two years from low prices for their products and high logistics costs due to limited export opportunities, may go bankrupt and lose everything. Excessive ill-conceived and unnecessary interference in the regulation of the grain and export market would only harm Ukraine, it said.

Hasty legislative innovations amid the implementation of new export rules may hinder the work of responsible and diligent exporters, while uncoordinated and harmful novelties may also scare off those few who might be willing to export grain through the provisional humanitarian corridor, it said.

"The bills in fact propose hands-on regulation of exports through indicative prices, where any tax or customs officer would be able to block any particular export operation at their discretion. This significantly increases the risk of corruption, while Western partners are demanding that Ukraine combat corruption to join the EU and NATO," it said.

The government has developed and is implementing effective solutions to make the grain market more transparent and ensure that forex earnings from grain exports are repatriated, the UGA said.

At the same time, before any legislative amendments on regulating grain exports, this system should start working and show its efficiency or identify problems in this field, it said.

Some of the lawmakers' proposals might fully stop grain export, which annually earns over $20 billion for the country, the UGA said.

"A halt in exports would automatically drive farmers to bankruptcy and almost nearly instantly worsen the crisis in the Ukrainian economy," it said.