Wednesday, 16 December 2015

Ukraine legislation significant for grain trade

The agri-news out of Ukraine continues to pass by largely unnoticed, getting lost amongst the
geopolitics, but the implications could be significant for the world’s grain trade.

Last week Ukraine’s parliament adopted a law to bring seed legislation in line with European and other international standards which could have the knock on effect of opening up the cereal seed market to imported western varieties.

Ukraine farmers have been limited to using domestically produced wheat varieties which by and large are poor; if legislation allows for western varieties to be imported then we could see a seismic jump in production in a fairly short time frame.

Then this week Ukraine’s parliament passed a bill removing or limiting 22 permit procedures that were deemed obsolete or duplicate or provided opportunities for corrupt officials to exploit.

One of the outcomes of removing the permits will be to breakup of the monopoly on nitrogen fertiliser which has been holding Ukraine’s fertiliser above world market prices for several years now.

Ukraine should see other suppliers of fertiliser enter the market which will create competition and help keep prices lower than has previously been the case.

The net effect of this will be to reduce farm production costs making Ukraine agricultural commodities more competitive while increasing the rates of fertiliser applied with a corresponding jump in yield particularly for wheat and corn.

This is all set against a backdrop of ongoing and active government policy aimed at improving the business climate, attracting external investment and promoting exports.