There’s something rotten going on in Ukraine’s promising but troubled grain market.
And just as with the murky dealings long plaguing the nation’s multibillion-dollar natural gas business, the stench can be traced to opaque companies where private interests close to Ukraine’s highest echelons of power mix closely with the state.
In the end, a select few appear to profit handsomely at the expense of national interests.
Enter Khlib Investbud. Unknown to most Ukrainians until late last year, this part state-owned and part private company has received huge preferences by government – some say monopolistic deals – on the nation’s lucrative grain market.
Khlib Investbud has risen from obscurity to become Ukraine’s major grain player as domestic and international agribusinesses that have invested heavily into the nation count mounting losses triggered by government grain export restrictions.
To the shock of many, little-known Khlib Investbud was given the lion’s share of grain export quotas. Through what is widely considered to have been a non-transparent process, this firm was chosen over agribusiness giants that have long been prominently active in Ukraine.
With no sizable stockpiles of grain or abundant storage facilities, Khlib Investbud got much of the export quotas. It was also chosen as the state’s agent to amass a national grain reserve.
Disturbingly, Ukraine introduced the export restrictions despite a reasonably large harvest of nearly 40 million tons from last season’s crop. Farmers were hit hardest, prevented from selling their grain at world market prices.
Who is profiting on the losses of farmers and investors?
Insiders, grain firms and diplomats say windfalls are being made by insiders close to President Viktor Yanukovych. Documents also show that a top Russian bank ultimately controlled by Russian Prime Minister Vladimir Putin is also closely involved.
If true, then this picture raises a big question. Does Yanukovych care more about the pockets of close friends and Russian interests than about domestic farmers, big investors and national interests?
If Yanukovych is serious about making Ukraine a civilized democracy, then a major policy shift is due. Otherwise, Ukraine risks becoming the “Breadbasket of Russian and Ukrainian Cronies” as opposed to reclaiming its reputation as the “Breadbasket of Europe.”
