The collapse of the transport system may come as early as December
In order to avert critical consequences, it is necessary to take a number of successive steps at the state level. In particular, the government should initiate intervention purchases of grain intended for export, so that farmers receive working capital, and at the same time the factors of a more favorable price situation on the world markets are formed. Also, this mechanism will make it possible to reduce the tension on logistics routes.
It was for such moments of crisis that the Agrarian Reserve Fund of Ukraine was created. The intervention procurement mechanism was foreseen by the Government 20 years ago. Today, a farmer sells corn for $110 per ton at a cost of production of $150-175, and these cargoes are sent to ports that are unable to process them.
Therefore, the use of the buyback mechanism from the producers of that corn, which is currently looking for sale, and will be broken into the ports in December, would immediately reduce the tension. Then the export of this grain can be extended for a longer period. And when the market hears that this volume will not be squeezed into 50 days, but will be stretched over 500 days, no one will jump into wagons.
Yes, the door to the market is small, but we open it for 500 days, there is no point in creating a stir. Other than that, you will get your money, consider your grain sold. What will happen in the head of the producer? He will gain confidence in today’s day and even start thinking about the new harvest. Buying at a price close to the cost price — 150 dollars/ton — will push the price situation in a more favorable direction, because then the trader will definitely not set today’s price at 110 dollars/ton.
Our allies, in particular, from Lithuania, have already announced estimates that nearly 1.5 billion euros are needed to implement this plan. But this is a profitable investment with the expectation of a future rise, because $150 per ton is very cheap.
In addition, you can set a deferral of payments: say, the manufacturer will receive 60% of the price now, and the remaining 40% after shipment. It is logical that these operations of the reserve fund should be completely transparent and accountable to our allies, and its activities should be monitored by a supervisory board, which should include people of impeccable reputation.
Another step that could eliminate the factors of collapse in the freight transportation market should be the return of the state to the functions of mediator and coordinator of the logistics market. These functions of the state regulator should be performed by Ukrzaliznytsia. But in fact, it is a monopolist that extorts funds from producers.
Instead of balancing the market with available public services, the state company, on the contrary, artificially heats up prices. Last year’s actions of UZ with heating up prices for logistics became the root cause of today’s strikes by motor carriers of neighboring countries. Because the swinging pendulum of prices stimulated Ukrainian business to buy trucks, which currently have no work in Ukraine. Ukrainian vehicles are leaking into the EU countries and taking away work from the carriers there.
The role of UZ draws direct parallels with “PrivatBank”, which at a certain time became a threat to the entire financial system of the country. In order to save the economy, the government should do the same to Ukrzaliznytsia as it did to PrivatBank in 2016.