Grain export duties approved by parliament

Ukraine’s parliament, the Verkhovna Rada, approved a law introducing 9-14% export duties for cereals yesterday, which was proposed by the Cabinet of Ministers in April. According to the law, duties for cereals will be: maximum of 9% of the value or EUR 17 per mt for wheat, maximum of 14% or EUR 23 per mt for barley and maximum of 12% or EUR 20 per mt for corn. The law should come effective the first day the month following signature by the president and remain in effect until January 1, 2012. Yegor Samusenko: The biggest positive for farmers is that the law will be effective only until yearend. We see this as a short term initiative with the key aim to shift the focus to increasing the processing of cereals in Ukraine rather than exporting raw commodities. We believe the government is drawing on its implementation of oilseeds duties in 2003, which spurred rapid development of the sunflower oilseed crushing industry – as a result, sunflowers are mostly exported in oil form rather than oilseeds, creating a higher domestic value chain. As soon as government sees this policy is unlikely to succeed for wheat, corn and barley, we expect the abolition of export duties. As the law was proposed in April and was widely anticipated to be approved, we believe it is generally priced in by the market.