UGA explained why the new law on minimum prices will work incorrectly

The “Ukrainian Grain Association” criticized the new law on price regulation for the export of Ukrainian agricultural products, and gave an example of why it can work incorrectly.

We will remind, earlier it became known that the Ministry of Agrarian Policy is introducing minimum export prices for agricultural products, including grain, oilseeds and sunflower oil. The department noted that official customs data for the previous month will be used to calculate the minimum price for export agricultural products.

Now the president of the “Ukrainian Grain Association” Mykola Gorbachev told how, in the opinion of UGA, this law will work. The expert noted that there are three steps in how this will happen:

The first of them is that the customs office will analyze all export prices for the past month. Prices will be taken from customs declarations for export on various bases of supply (SRT, DAP, FOB). Will select 5% of the lowest prices for the past month and forward this representative sample to the Ministry of Agrarian Policy and Food.

Next, the Ministry of Agricultural Policy will publish the minimum export prices for each crop on its website in terms of supply bases and give a 10% possible deviation from the published minimum prices. So these minimum prices will be valid for a month, until the next customs analysis.

And at the end, Gorbachev added that the exporter (farmer, grain producer, trader) will be able to export his products at prices not lower than the minimum prices indicated on the official resources of the Ministry of Agriculture.

The president of UGA also gave an example of the calculation, noting that the prices are completely conditional and are not based on the analysis of any organization.

“For June, wheat prices fluctuated between $175-205 CPT ports of Great Odesa. Assume that 5% of the contracts were cleared at a price of $175. The customs office reports the results of its analysis to the Ministry of Agrarian Policy, which for its part declares the minimum price for wheat for July according to the following formula: $175-10% = $157.5 SRT. And so on each of the supply bases,” he explained.

We will remind, earlier USM told that the Ministry of Agrarian Policy believes that the minimum export prices will not hinder the market.