Economy 2021-05-15T04:05:23+03:00
Ukrainian news
Possible Restriction On Export Of Sunflowerseed Oil By Cabinet May Lead To Even Greater Increase In Prices - U

Possible Restriction On Export Of Sunflowerseed Oil By Cabinet May Lead To Even Greater Increase In Prices - UGA

Cabinet, Cabinet of Ministers, price, export, sunflowerseed oil, UGA, Ukrainian Grain Association, sunflowerseed oil export

The Ukrainian Grain Association (UGA) states that the Cabinet of Ministers is considering the possibility of limiting the export of sunflowerseed oil, which, according to the UGA, may lead to an even greater increase in prices.

The association has said this in a statement, Ukrainian News Agency reports.

"The Ukrainian Grain Association is concerned about rumors about the desire of certain populists in the government to push through the restriction of the export of sunflowerseed oil from Ukraine through the introduction of quotas and the establishment of quotas at a zero level. Such a government decision will immediately lead to a loss of about USD 3 billion in foreign exchange earnings, taking into account how much oil will not be exported due to restrictions until the end of the current season. Moreover, such a restriction may provoke a refusal of farmers from growing sunflower and, as a result, a shortage of raw materials for processors in the new season will cause an even greater increase in the price of both raw materials and sunflowerseed oil, and at the same time there will be a drop in exports and foreign exchange earnings," the statement reads.

It is expected that from sunflower grown in the 2020/2021 marketing year (September 2020 - August 2021) (about 13 million tons), farmers will produce about 6 million tons of oil, while about 5.6 million tons of oil will be exported, since domestic consumption does not exceed 400,000 tons.

Besides, according to UGA data, the capacity of domestic oilseed processors makes it possible to produce a monthly volume of domestic oil consumption in 1.5 days.

UGA President Mykola Horbachiov noted that against the background of a growing budget deficit, a decrease in foreign exchange reserves since the beginning of the year, as well as a lack of lending from international financial organizations, export restrictions will lead to an extremely difficult situation in the economy and with the country's budget and will negatively affect the country's reputation due to failure to fulfill the obligations assumed.

It is noted that in 2020 Ukraine joined the group of countries that agreed not to restrict food exports in order not to disrupt the established food supply chains in the world and thus ensure the food security of the world.

At the same time, the association said that prices are growing for all commodities in the world, since the world is entering a new commodity supercycle, when prices, including for grains and oilseeds, will be high for a long time.

UGA stressed that, despite natural and weather disasters and a lower harvest than last season, Ukraine demonstrates the reliability and stability of grain and processed products supply to the world market, in contrast to its competitors, such as Russia or Argentina, which resorted to strict export restrictions.

"The consequences of the introduction of quotas are very clearly visible in the example of Russia, where, due to the introduction of quotas and export duties in the current marketing season, according to experts, Russian grain producers will lose USD 2.8 billion. And the introduction of a constant duty on grain exports will cost Russian agricultural producers almost another USD 5 billion. Prices for grain in the domestic market will fall, respectively, agricultural producers' incomes and investments in grain cultivation in the short and medium term will also decrease," the expert of the association said.

UGA notes the absence of objective grounds for limiting, quoting or licensing agricultural exports, and also states that there is no shortage of oil on the domestic market.

As Ukrainian News Agency earlier reported, in April, the U.S. Department of Agriculture kept its forecast for the export of sunflowerseed oil from Ukraine at 5.52 million tons, with domestic oil consumption of 0.565 million tons in the 2020/2021 marketing year.

Earlier, the Antimonopoly Committee began to study the increase in retail prices for eggs and sunflowerseed oil.