Ukraine grain export ban lifts partially, still tight

Sep 26, 2007, 11:31 GMT

Kiev - Ukraine's government on Wednesday reduced limitations to a near total ban on grain exports, but left in place substantial barriers to removing bulk seeds from the country.

A Cabinet of Ministers order effective from November 1 2007 will make legal the export of 1.2 million tons of grain of various types.

The former Soviet imposed an almost-complete halt to grain exports on March 1 2007, to hold down price inflation for domestic food products. The ban had been scheduled to end on October 1.

International agencies, including the World Bank and International Monetary Fund, condemned the March move as violating free market principles.

The export ban harmed profits of agro-corporations such as Cargill and ADM, which had invested in Ukrainian agricultural infrastructure but as a result of the law were unable to export product to international markets.

The Wednesday government announcement established limited export quotas, among them 600,000 tons of corn, 400,000 tons of barley, and 200,000 tons of feed wheat until the next growing season.

The limits represent between 25 and 35 per cent of Ukraine's entire export capacity for seed crops, whose annual volume averages between 4 and 5 million tons, according to the report.

The spring and summer export ban allowed the Ukrainian government to augment state-owned grain reserves of its own, as the government was able to purchase grain at reduced prices, said Anatoly Kinakh, Ukraine Economics Minister.

Ukraine's government routinely attempts to control the cost of food commodities like wheat and oats, in an effort to subsidise the retail price of staples like meat and bread.

Rising retail food prices are particular thorn in the side of the present cabinet, which is attempting to retain control of the government in a parliamentary election scheduled for Sunday.