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Grain and Oilseeds

01/ 07/ 2013

Following lobbying efforts of the European Business Association and other NGOs, on 11 June 2013 the Verkhovna Rada of Ukraine adopted the Draft Resolution aiming to reject the Draft Law of Ukraine on Import (Export) Duties to Certain Oilseeds regarding cancellation Import (Export) Duty on sunflower seeds.

Background: Ukraine has always been striving to retain its position as a key player in the international markets for agricultural products with a top-level oil processing industry.  Sunflower processing cultivation potential has been constantly increasing. However, this potential has almost reached its natural limit of 5 million hectares of utilized agricultural land under sunflower. A significant further increase in sunflower yields is hardly possible due to climatic, biotechnological and agronomic reasons. Moreover it has already reached 8.6-9.0 million tons. Thereby there is a certain balance between the limited possibilities of increasing raw sunflower seeds, and the rising demand of the oil processing industry, which is focused on processing sunflower. This balance ensures a competitive market environment, where more efficient oil-processing companies offer primary producers higher prices while manufacturers invest in technology to increase yields.

This balance’s key factor is a ten percent export duty on sunflower seeds. However, even with a ten percent export duty a certain number of seeds (5-10 percent) is exported. On one hand, it creates a shortage of raw materials and results in shortage at the end of the season. On the other hand, it ensures sound competition and a high price received by the manufacturer. Due to the unique role of Ukrainian sunflower oil in the world market the EU has agreed to save a ten percent margin for export of sunflower seeds in the negotiations on an agreement on free trade between Ukraine and the EU.

Once the world markets situation remains and Ukrainian sunflower’s ten percent export duty is cancelled sunflower will be totally exported as a raw material and the oil processing industry will die.

The Draft Resolution of the Verkhovna Rada of Ukraine to reject the aforementioned Draft Law as being contrary to the economic interests of the state is long awaited and we welcome progress in regulating the issue.

This remarkable progress achieved due to continuous cooperation of the Government of Ukraine, the Parliament and representatives of the grain and oilseed industry will contribute to further deregulation and, consequently, further development and prosperity of agriculture in Ukraine as a whole.

The European Business Association expresses its sincere gratitude to the Verkhovna Rada of Ukraine Agrarian Policy, Land Relations Committee and MPs who have supported this important initiative and we are delighted to share this progress with members of the Association.

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