UGA against state control of grain prices

The Ukrainian Grain Association is against an enactment of a bill on amendments to the Act of Ukraine “On grain and market of grain in Ukraine” regarding the price control of grain resources of Ukraine No4277 as of October 28, 2020.

“Prices of Ukrainian grain are formed on the global market but not by producers or suppliers of grain. Therefore, it is the market that regulates and sets the minimal and maximal prices of grain and oilseed crops. Under the condition of the market mechanisms, any state control of the prices will have negative effect including decline of demand for Ukrainian grain resulting in accumulation of excessive stocks, price decrease and in the long run lowering of grain production and stagnation of the industry”.

The economy may lose more than 10 bln USD on export that will cut sharply the budget receipts and hurt the exchange rate of Ukrainian hryvnia.

“The state control of grain prices or setting of the minimal and maximal prices of grain and oilseed crops will push Ukrainian agricultural industry back to the planning and administrative economy when any market mechanisms are meaningless. The industry will no longer develop, investments will be null and the companies providing liquidity and opportunities for farmers to choose to whom to sell their grain will leave out country”.

At the same time, there is no monopoly on Ukrainian grain market. More than 20 companies cover about 80-90% of the exports. The fair competition between them allows optimizing the business activity and raising the efficiency of grain production and export.