July 28 2001, 10:59 UNIAN

The government may purchase out grain of the new crop to avoid price decrease

The government may purchase out new crop grain to avoid price decrease, General Director of Ukrainian Grain Association Vladimir Klimenko announced during a meeting of the Agrarian Press Club on July 26.

In his words, recommendations of the Ministry of Agrarian Politics not to sell grain for less than set prices is not an effective method of keeping prices, because producers need live money to return credits. As UNIAN announced, the Ministry recommended producers not to sell grain for less than set prices. So, it is recommended to sell the 3rd class wheat for no less than 650 hryvnyas per ton, 3rd class barley - 400 hryvnyas per ton.

According to V. Klimenko, "there's no reason [for the government] to use administrative mechanisms of regulating grain prices, because this won't change prices at the world market that more or less influence domestic prices". Today, according to the General Director, 3rd class milling grain costs $89 per ton at elevators in southern regions of Russia. At trade exchanges in Moscow and St. Petersburg prices reach $106 per ton. Thus, Russian grain is significantly cheaper than Ukrainian, which influences domestic prices on grain at the Ukrainian market. As UNIAN reports, prices on the 3rd class wheat at Ukrainian trade exchanges total approximately 680 hryvnyas per ton.

In case of purchasing certain amount of grain, according to V. Klimenko, the government will be able to influence prices on grain not by administrative, but by economical means. Furthermore the government won't suffer financially, because in several months (after decrease of grain offers) it will be able to sell it returning money to the budget.