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Ukraine: cancelling sunseed export duty would entail great losses for the country - expert
Commenting on recent rumours about attempts of some traders to cancel 17-percent export duty for sunsseds, General Director of Association Ukroliyaprom Ludmila Zinchenko has told APK-Inform that such a decision would be absolutely illogical. Besides, she said, for the decision to be taken its authors would have to ground its economic feasibility and this was hardly possible.
According to the law of Ukraine of June 21, 2001 export duty for sunflower seeds was established in the amount of 17 percent. Before that date a 23-percent export duty was in effect, established in 1999.
Thanks to the duty, production of sunflower oil in Ukraine has risen up to the level of early 1990's, crushing plants that came to a standstill have resumed operations, output of margarine and mayonnaise has substantially increased, additional working places appeared, budget deductions grew, Ms. Zinchenko continued. "Maybe there is someone who is displeased with such results and they want to turn the industry back to times, when we had to import suniol, produced from Ukrainian seeds in EU countries," she said.
Duty opposers have been saying that at EU exchanges sunflower seeds cost US$280 per tonne, while back at home they cost less than US$200, so farmers could earn more if they export seeds. According to APK-Inform data, the price for the nearest sunseed contract at MATIF as of September 13 was $263.1 per tonne.
Ms. Zinchenko commented this as follows: "Futures prices in EU and FOB prices in Ukrainian ports are quite different things. There are export and transportation costs that should be added… Besides that, if export of sunseeds from Ukraine increases, European prices for them will considerably drop."
She believes, the government rather ought to concentrate attention on such issues as improvement of taxation system in oilseed industry with the account of seasonal character of operations and issues of VAT refund to exporters of oil. According to industry sources, tax authorities have been refusing to sign the developed schedules of VAT refund to sunflower oil exporters. This means losses of US$80 to 90 per each tonne of the exported commodity. Last season 435,000 tonnes of oil were exported, which brings the total figure of losses to US$37 million. If government does not refund the VAT, it will be the farmer who will ultimately have to pay this money, as crushing plants will have to reduce purchasing prices for seeds, Ms. Zinchenko says.
She believes, if one way or another the duty is lifted, Ukrainian plants will be able to process just about 1 million tonnes of seeds, while rest of the seeds will be taking out within two or three months. Demand for Ukrainian sunoil abroad will decrease, as its production in foreign countries will rise. Besides production of margarine in Ukraine will drop and its imports from Russia and other countries will soar, Ms. Zinchenko said.
Sunflower seed crop in Ukraine in 2002 is expected at about 3.3 million tonnes.
Ms. Zinchenko concluded the interview by referring to the common truth: "It is more profitable for any country to export end products - not raw materials."