June 13 2002, 09:23 UNIAN

No sharp decline in grain prices shall occur as new MY starts

UNIAN reported that Ukrainian Vice-Premier Kozachenko talking to the press conference as of June 12 declared that domestic grain market should not have a price dive as it starts in July 2002 and continues through July of 2003.

He believes that certain grain price decline at harvest time is a common thing and is available across the world but in Ukraine such price fluctuations have not always been economically grounded and were sharper than in countries with market economy in place.

Lately in Ukraine prices were diving 40% whereas in market based countries only 10-12%. The vice-Premier believes that this year price dive shall not exceed 15%.

Only through developing the domestic market infrastructure it will become possible to avoid price dives, he said.

One tool here is grain sales at mortgage basis.

UNIAN reported as of Apr 21 that the Cabinet adopted the "floating price" for mortgaged grain to be 50% of the market value.

"Thus, up to 4mn MT of grain is planned to withdraw from the market at harvest time", said Kozachenko.

Another tool is decreasing barter transactions.

Footnote: According to UNIAN in 2001 grain production was about 40mn MT. At harvest time grain prices in 2001 experienced almost a 50% dive.