Ukrainian traders’ union UGA said on Thursday that parliament’s “ill-considered” plans to change grain trading rules could completely halt Ukraine’s key grain exports.
On Nov. 21, a bill passed its first reading in parliament that would change rules on the taxation of grain export transactions and could also introduce minimum export prices for grain.
The bill is designed to minimize tax evasion on certain agricultural products, such as grain and oilseeds.
“UGA is concerned about a possible complete halt in grain exports from Ukraine due to the adoption by the parliament of ill-considered legislative changes to grain and oilseed exports that introduce contradictions in legislation, including tax legislation,” the union said in a statement.
It noted that some of the new requirements are impossible to fulfill and others may result in significant losses for both, traders and farmers.
Ukraine was the fourth-largest grain supplier globally before Russia’s February 2022 invasion and in value terms grain accounted for half of its total exports last year.
UGA said the bill proposed that minimum export prices should not be lower than the average grain prices quoted on international exchanges for the previous 10 days.
“This requirement is unenforceable... at some point the minimum export price from Ukraine set by this mechanism will exceed the real prices on the world market,” traders said.
UGA said that global prices determined purchase and export prices in Ukraine, and not vice versa.
Earlier this month, Ukraine introduced rules requiring the mandatory registration of food export companies, aimed at preventing abuses such as tax avoidance in the export of key agrarian goods.
Ukraine is one of the world’s leading food producers and exporters, but officials estimate that up to a third of goods for subsequent export are bought in cash and without paying the necessary taxes.