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Experts: exclusive title to export agri-commodities vested in agrarians and state agency to result in monopolized agricultural market

Kyiv. February 11, 2011

“Adoption of the Draft Law providing for export of objects of state price regulation exclusively by agri-producers and state agent will lead to monopolization of the agricultural market,” considers president of Ukrainian Grain Association (UGA), Volodymyr Klymenko.
“The issue concerns (in the Draft Law – IF) monopolization of the market, which may devastate the agricultural market and throw the market back to 90’s,” said he during the press-conference on Friday, at the Interfax-Ukraine Agency, Kyiv.
Head of the Association reminded that Ukrainian deputies Vitaliy Bort (Party of Regions), Maryna Perestenko (CPU), Serhiy Tereshchuk (Litvin Block) and Ivan Sydelnyk (BYT) registered the draft law, by which they propose to provide permission to export the objects of state price regulation within in-house volumes only to agri-producers and the state agent.
Mr. Klimenko emphasized that agri-producers have never lost their right to export their products, but the proposed deed is likely to restrict agrarians’ export capabilities merely by the output yield. “As for traders”, the export says, “the draft law adoption means they would be able to operate Ukrainian grain on FOB terms only. And we must remember that grain traders are owners of linear and port granaries, as well as facilities on grain transshipment, with huge investments tied up into them. If traders are deprived of the title to export, one can talk about no investments at all.”
In addition, he assumed that the Draft Law adoption would affect adversely Ukrainian agrarian sector’s investment attractiveness. “In case where such draft is enacted, our agrarian operators will have nothing to do at world stock markets”, said Mr. Klimenko.
Oleksiy Volkov, Managing Partner and Attorney at Law with Volkov & Partners, believes the Draft Law, registered with the Parliament, contravenes the effective legislation and, more specifically, the Constitution of Ukraine, Economic Code, Laws "On Foreign Economic Activity” and “On Protection of Economic Competition”.
“The establishment of the state agent implies the establishment of supermonopoly… If the Draft Law is adopted, a great part of business activity relied on today by a majority of companies will be in fact eliminated as a separate type of the economic activity. This means that nobody will export commercial grain any longer,” the expert mentioned.
Reportedly, under the effective legislation the Cabinet of Ministers annually defines the list of objects of state price regulation to regulate their value through the Agrarian Fund. In the current marketing year this list, in particularly, includes wheat, barley, rye, corn, buckwheat and sugar.
Early in October 2010 the Ukrainian government imposed grain export quotation until December 31, 2010 and extended this period until March 31, 2011 later on.
According to the previous data of the State Statistics Committee, in 2010 Ukraine harvested 39.2 million tons of grain vs. 46 million tons in 2009.
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