Ukraine: Tax Codex to release grain traders from administrating and VAT refund

The changes introduced to the new Tax Codex of Ukraine concerning grains and sunflower seed VAT (Value Added Tax) “finally released Ukrainian grain traders from 15-years horror of administrating and VAT refund in realities of Ukraine ”, stated Sergey Stoyanov, the General Director of Ukrainian Agrarian Confederation.

At the same time, S.Stoyanov noted that all grain producers, without exclusion, who within the terms of the average grain production volumes at the level of 45 mln tonnes (commodity rate totals 80%) will settle for it, by losing about 10 bln UAH annually on the automated, forced by traders, pressed by the foreign market, reduction of grain purchasing prices for the further export trading.

The Government operator will be in the list of the last ones, if the company does not want to become bankrupt during a few months, underlined the General Director of Ukrainian Agrarian Confederation.

Ukraine. Grain export quotas to lower prices on domestic market - expert

Extension of export quotas to 31 March 2011 will lead to reduction of prices for cereals by 15% - 20%. This opinion was expressed by BG Capital analysts.

The Cabinet of Ministers extended the regime of quotas for grain exports by one quarter, from December 30, 2010 to March 31, 2011, with an increase in the size of quotas by 1.5 million tons up to 4.2 million tons, thus strengthening manual control over pricing in the domestic market. The prolongation has brought the Ukrainian government closer to achieving its main goal: to rein in food prices, and will ultimately lead to 15-20% grain price fall by the end of the first quarter of 2011, which, along with the recent innovations in reimbursement of VAT on the export of cereals, will be another 'hit in the pocket' of domestic farmers.

The first attempt to rein in rising prices for grains, taken by the Government in mid-October in the form of the introduction of quotas on exports until the end of the year, was unsuccessful. Farmers preferred to hold the grain until the end of the year, so as to sell out the harvest at market prices after the abolition of quotas. Activity in the market has sharply declined, while the pricing environment has remained almost unchanged.

Now that quotas are extended, Ukrainian farmers will be forced to sell their stocks urgently, since they will be physically unable to hold the volumes of grain until the end of the first quarter of 2011 (elimination of quotas) without significantly reducing its quality and even a loss of some crops, experts say.