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Deputy Prime Minister for Agricultural Policy Viktor Slauta. Slauta announced new grain quotas during a press conference in Kyiv on June 20. A few weeks earlier, the government had completed its cancellation of similar restrictions. UNIAN The new quotas are meant to guarantee Ukraine’s food security in the wake of last month’s drought

m that, among other things, Ukraine’s bid to join the World Trade Organization could be under threat as a result.

Just weeks after canceling the remaining grain quotas from last year, which cost grain traders and farmers hundreds of millions of dollars in losses, the Cabinet of Prime Minister Viktor Yanukovych has announced even tighter limits on exports from this year’s harvest.

The new quotas are meant to guarantee Ukraine’s food security in the wake of last month’s drought, the government has said.

But critics at home and abroad have dismissed the risk of a grain shortage, arguing that the government’s continued use of command-economy tactics could not only destroy the country’s position as the world’s sixth largest grain exporter, but further delay its finalization of WTO accession.

As world grain prices continue to rise, the hopes of Ukrainian farmers and international traders of reaping higher profits have come into conflict with the Ukrainian government’s fears of higher bread prices at home in the run-up to snap elections later this year.

Deputy Prime Minister for Agricultural Policy Viktor Slauta announced the new quotas during a press conference on June 20.

Starting on July 1, exports of wheat, rye, barely and corn will be limited to 3,000 metric tons each, he said.

Just a few weeks earlier, on June 8, the government had completed its cancellation of similar restrictions, which were imposed in late 2006 and cancelled gradually throughout the first half of this year.

Traders scowled at the return of the export limits, as well as the short notice of their introduction.

Having lost around $200 million from last year’s quotas, farmers resigned themselves to again accepting a lower price for their grain from the government.

Both traders and representatives of farmers’ associations said they had not been consulted before the government took its decision.

Last fall, the government had also surprised traders and farmers by unexpectedly announcing quotas of just over 1.1 million tons between December 2006 and June 2007.

Nevertheless, grain exports fell just a one or two million metric tons below the usual 10 million sold abroad.

The 2006 harvest totaled around 34 million metric tons. This year, estimates by independent analysts go as high as 31 million metric tons.

If the government doesn’t review its new quotas in the fall, the country’s grain exports will be virtually nil this year.

Slauta tried to soften the blow of the new quotas by suggesting that farmers might receive drought relief, but market players are taking a wait-and-see approach.

He also pointed out that exporters could use the window of time between the cancellation of last year’s quotas and the new ones that begin on July 1 to sell what they have already stored at ports.

Last year, some grain traders were forced to dump their rotting grain into the Black Sea to avoid paying crippling storage costs.

The ambassadors of the US, Germany and the Netherlands, where multinational grain traders operating in Ukraine have their headquarters, harshly criticized the quotas at that time.

More recently, US Ambassador to Ukraine William Taylor told a live television audience that this year’s drought was no reason to limit grain exports, and that Ukrainian farmers would be the ones who suffered the most.

Market insiders have echoed the ambassador’s view.

Ukrainian President Viktor Yushchenko has also jumped into the fray, against the government, with which he has been locked in power struggles for over a year.

The president’s Secretariat issued a statement on June 21, saying that the new quotas threaten the country’s WTO bid.

“The introduction of quotas and other methods currently being used by the government are again threatening Ukraine’s bid to join the WTO and the country’s cooperation with the WTO,” Deputy Head of the Presidential Secretariat Viktor Bondar said during a press conference in Kyiv.

Yushchenko has made WTO entry one of the pillars of his policy of Western integration.

Prime Minister Yanukovych has also supported WTO entry, while halting other attempts at Western integration, such as NATO membership.

WTO officials in Geneva declined to comment on the specifics of Ukraine’s bid as a matter of policy, saying only that the country could theoretically achieve membership by the end of this year.

In early 2006, President Yushchenko predicted WTO entry by the end of that year, while last fall the parliament boasted that it had pushed through the last bill necessary for membership.

However, the entry process has taken longer than planned.

Oleg Riabokon, managing partner of the Kyiv-based law firm Magister & Partners, who has represented Ukraine in trade talks with the United States, said the grain restrictions imposed by the government would “definitely” affect Ukraine’s WTO bid.

According to Riabokon, multinational grain traders based in the United States and EU have powerful lobbies, whose positions will be voiced during future WTO accession talks.

“They should have consulted with the US and EU trade missions,” he said.

Ukraine’s WTO application could be delayed as a result of the way it imposed the new quotas, he added.

“These measures could have been introduced, but not so harshly and with more transparency,” Riabokon said.

Ryan Koch, a spokesman for the US Embassy in Kyiv, told the Post that, “It is hard to predict what effect new trade restrictive measures, on agricultural or other sectors, might have on the timetable for WTO membership.”

But he added, “It is safe to say they have the potential to complicate the accession.”

For its part, the government has played up losses from the drought to justify its policy, although information is still scarce on the exact extent of the damage.

Economy Minister Anatoly Kinakh told a Ukrainian daily last week that as much as 7 to 10 million tons of grain had been lost to drought this year.

“Forecasts vary. Losses are estimated at 7 to 10 million metric tons,” he said.

Kyiv-based agriculture analyst Radion Rybchinsky of APK-Inform said no one knows yet for sure what the loss to this year’s grain crops will be, as the State Statistics Committee has still not released figures.

“Unfortunately, I cannot confirm the numbers given by Mr. Kinakh,” he said.

He added, however, that Ukrainian farmers would likely bear the brunt of the drought, as well as the new quotas.