April 7 2005, 14:13 APK-Inform

Because of new railway tariffs, grain transportation costs will increase at $4-8/t - expert

Because of new railway tariffs for transportation of grain, its transport costs will increase by about 20 to 40 hryvnias per tonne ($1 = 5.28 hryvnias), Deputy General Director of Ukrainian Grain Association Volodymyr Lapa has told APK-Inform.

He said that the costs of grain transportation from grain growing regions of Central Ukraine to seaports would increase on average by 20 to 25 hryvnias per tonne, while grain transportation costs from the north and east of the country would increase more substantially - by up to 40 hryvnias per tonne.

"This will result in a cut of local purchase prices. A decrease of purchasing prices of exporters usually pulls down bidding prices of domestic grain consumers too. That is to say that the thing concerns the earnings of grain producers as a whole and the agricultural economy at large", said the expert.

However, he said, if the information about introduction by Ukrzaliznytsia of reducing coefficient for transportation of grain proves true, the transportation costs will increase not so significantly.

"If reducing coefficient is effective until June 30, this is nothing more but a respite. But it's this very respite that we were asking about. At least it will enable us to fulfil the current contracts without losses", he said.

On April 6 this year Ukrainian railway department (Ukrzaliznytsia) increased the tariffs for its freight services. The cost of grain transportation by railway inside Ukraine or from abroad (imports) increased 50 percent, the cost of grain transportation for export - 39.9 percent.