Premier Viktor Yushchenko, addressing the MP group Working Ukraine (Trudova Ukraina), said one of the reasons for higher bread prices was an extra profit made by grain traders using state budget GDP compensations. Customs statistics show that over three million tons of hard wheat were exported from Ukraine by ground, producing a grain deficit and boosting costs.
Oleksandr Svyryda, MP, member of the budget committee, believes such budget GDP compensations — UAH 300-400 million — made up the exporters’ super-profits, this and their previous fuel-lubricant, chemicals, and machinery supplies in the agrarian sector, in return for grain paid by farmers at disparity costs. “Another income source, UAH 300-400 million — the grain traders received from the state budget,” says Mr. Svyryda. This super-profit, it should be stressed, is not directly received by the agricultural producer, because only traders have the technical means to conduct export operations. There are three or four such traders in Ukraine, maybe five, and they can use the sizable current assets required to form large wheat export shipments.
In other words, economic factors are still at play in Ukraine, stimulating grain exports, whereas the opposite should be the case, because this country has no surplus grain. This year, according to Viktor Yushchenko, pessimistic forecasts point at grain crops remaining at last year’s level (25-26 million tons); more optimistic ones promise an extra 3 million tons. However, grain can be exported again, because there are no changes in legislation to restrain certain agricultural exports. The Cabinet submitted a bill to Parliament proposing a zero tax rate for grain procurement and sales, thus putting an end to budget GDP compensations. In other words, grain exports would no longer be stimulated. Oleksandr Svyryda says the bill is shelved at the Verkhovna Rada, because there are forces in Parliament blocking its passage.
