Ukraine to cut extra costs to boost grain exports

Ukraine's government intends to cut what it believes to be unnecessary grain export delivery costs in an effort to boost sales, Ukraine's Farm Minister Oleksander Baranivsky said on Thursday. "Exporters now pay between 215 and 217 hryvnias ($42.5-$42.9) additional costs to deliver one tonne of grain from producer to ports for exports," Baranivsky told an international grain forum. "We are considering cutting these tariffs as much as possible to provide the most attractive conditions for exports." He gave no details on proposed cuts. Traders have repeatedly said they are forced to pay high rates for more than 10 additional services to proceed with exports.
"In Europe, such services are half the price. The farm minister has not enough power to resolve the problem and this is the responsibility of the government. But I doubt this could be resolved soon," said analyst Mykola Vernytsky from ProAgro agriculture consultancy.
Analysts and traders say high delivery costs, combined with a possible jump in grain net prices, high freight costs and a rise in the value of Ukraine's hryvnia currency, could depress Ukrainian grain exports in the 2005/06 July-June season.
Last week, Baranivsky said grain exports were likely to fall in the 2005/06 season compared to about 10 million tonnes in 2004/05. Ukraine has exported about nine million tonnes of grain so far this season.
The government has given no export forecast for the new season, but said the harvest could fall to about 37.4 million tonnes from a record 41.8 million in 2004.
Baranivsky said Ukrainian farms had already sown more than 90 percent of spring crops and the country was likely to thresh about 15.4 million hectares sown to spring and winter grain this year.
Most Ukrainian analysts also forecast the crop at about 37 million tonnes of grain in 2005, but said exports could reach a record 12 million tonnes in 2005/06, including about six million tonnes of wheat. "Our forecast is 36.7 million tonnes," Andriy Pankratov from APK-Inform agriculture consultancy told the forum.
"But we could have a new record (in exports) - 12.3 million tonnes, which could be reached by a rise in wheat shipments."
He said high ending stocks in Ukraine and a decrease in world grain output could help the country to increase sales.