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Business supports the liquidation of the Fund for the fulfillment of obligations under grain storage documents

17/ 09/ 2020

The European Business Association welcomes the initiative of the Mineconomy to liquidate the Guarantee Fund (GF) to fulfill for the fulfillment of obligations under grain storage documents. The draft law was recently published on the Ministry’s website. As of today, the business representatives claim that the GF has not actually been created and has not started functioning.

It will be recalled that the creation of the GF was provided by the Law of Ukraine №5493-VI “On Amendments to Certain Laws of Ukraine Concerning the Guarantee Fund for the Fulfillment of Obligations under Grain Storage Documents” dated November 20, 2012. The main purpose of this Law was to introduce a mechanism that guarantees the reimbursement of the cost of grain to the owners of storage documents if the grain warehouse fails to return the grain transferred for storage. By this, grain storage documents could become an attractive tool for lenders and, as a result, provide access to cheaper loans for small and medium-sized farmers.

However, forcing grain warehouses to take up a significant material burden would lead to a sharp increase in the cost of services provided by grain warehouses. In this case, the grain warehouses would include in the tariff the amount of money equivalent to deductions they would possibly pay to the GF. First of all, it would negatively affect the profits of producers. Thus, the creation of GF in the format provided by the Law of Ukraine №5493-VI is impractical and would lead to a number of negative consequences.

 

 

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