Ukraine has finalized a new system of minimum export prices for its essential grains and oilseeds, a move the government believes will address price distortions exacerbated by the ongoing conflict with Russia. This initiative aims to curb the practice of selling agricultural products at artificially low prices to evade taxes.
The cabinet has approved the procedures for establishing these minimum prices, which could be implemented as early as August, though the exact timeline remains uncertain. The new pricing mechanism will apply to shipments of wheat, corn, sunflower oil, soybeans, rapeseed, and other agricultural commodities that are vital to Ukraine’s economy.
Minimum export prices will be determined using data from the state customs service, factoring in delivery terms from the previous month with a 10% discount. However, the Ukrainian Grain Association (UGA) has raised concerns that this policy could jeopardize half of the country’s grain exports, disrupt the forward contract system, and create market uncertainty regarding exporters’ commitments and grain purchases.
Many agricultural businesses rely on bank loans secured by forward contracts, and the absence of these contracts could hinder farmers’ access to financing.