Editor's note:The following is a statement issued by the American Chamber of Commerce in Ukraine on April 28, 2011:
Today the American Chamber of Commerce held a meeting with Mykola Prysyazhnyuk, Minister for Agricultural Policy and Food of Ukraine.
The purpose of the meeting was to discuss recommended solutions to the issues of major concern to the international business community that are stifling additional investment into this important sector of Ukraine’s economy. The following points were clearly presented to Prysyazhnyuk regarding the grain trade:
The industry welcomes the release of corn for free export although it was unfortunate it took so much time to take this correct decision. The minister was asked to recommend the Cabinet of Ministers to introduce free exports for barley and wheat around May 15 when the preliminary grain harvest forecasts for 2011 should be available, allowing old stocks to be exported in order to empty grain storage facilities from the previous harvest and to prepare for the new crop.
It was discussed during the meeting that the VAT refund period that expires on July 1st according to the new tax code could be extended until the existing stocks from the 2010 harvest are exported from the country. Moreover, Prysiyzhnuuk encouraged the participants to provide contributions into the improvement of the new tax code that would benefit the development of the agricultural industry pledging his support.
The minister was urged to introduce free market principles without preferences to certain players through introduction of regulations and legislation that provide predictability and stability in the system of agricultural policy which will enable new domestic and foreign investment to support the new harvest and sowing campaign.
The minister clearly stated he did not support draft law #8163 and suggested to grain trading companies to work jointly with the ministry to develop new legislation that would prevent monopolization trends in the grain market.
A consensus was reached between grain trading companies and the ministry that the grain market would function on the principles of transparency, predictability and stability and the government would provide at least a two-month notice before taking any decisions that would influence core activities of grain trading companies.
Agricultural industry representatives stated that they were against forced crop rotation and stated there were other ways to further develop the Ukrainian agricultural sector and to reach 80 million tonnes of crop utput by 2016. At the meeting grain trading companies supported Prysyazhnyuk’s initiative to organize training sessions for farmers in order to educate them in international grain market operations.
Addressing the introduction of grain export duties, the grain trading companies clearly stated that they opposed any restrictions of free market operations, especially export quotas. However, introduction of export duties was considered as the preferred second best option once the government has decided to interfere in the market in order to ensure price stability and food security in a global environment with high grain prices but should only be a temporary solution.
The grain trading companies strongly opposed the idea of controlling crop rotation by the government. Grain traders are convinced that it is the farmer who knows best what to plant on their field in order to maximize his revenues and in the same time maintain the value of the soil and there is no need to have government involvement into this process.
The American Chamber of Commercestrongly believes that free market functioning provides the best answer to creating a competitive agricultural industry that has the potential to expand production significantly, guarantee food security for the population, and ensure Ukraine is able to play a vital role in feeding an increasing global population.
International businesses have also discussed with Prysyazhnyuk and his colleagues a very serious issue of counterfeit chemicals on the Ukrainian market, as a large amount of grain is jeopardized due to counterfeit pesticides. The situation in the seeds market, including artificial problems with the import and poor quality of domestic seeds leading to poor harvests and increased prices, was also discussed. These issues could be tackled within the framework of the Working Group between the Ministry and business community representatives.
