February 12 2008, 09:01

Ukraine's entrance to WTO will lead to sharp increase of vegetable and fruit imports

The official press release on the entrance of Ukraine to WTO informs about quite sharp decrease of import tariff rates for agricultural products. According to new agreements, the average level of import tariff rates for agricultural products will amount to 10.66%; at the same time, the average level of the tariff rates for non-agricultural products will equal to 4.95%.

Import tariff rate will remain the highest for sugar - 50% (imported without tariff quota) and for sunflower oil - 30%. All other rates for agricultural products will be not higher than 25%. So we can say that Ukraine switches to the system of ad valorem import tariff rates which are the percents of the product cost.

Before Ukraine entered WTO, most part of tariff rates for vegetables and fruits was collected as specific rates (set in money equivalent per one item of the product); now we can say that the tariff rates for almost all types of fruits and vegetables have been declined.

For example, the import tariff rate for apple earlier amounted to EUR 0.5/kg April 1st till November 30th; if the wholesale price was on the level of $1/kg, the final cost was increased on around $ 0.76/kg. I.e., the import tariff rate was almost 75%. The similar rates were set up for almost all types of vegetables and potato produced in Ukraine.

We'd like to point out that these changes will enter into force in 30 days after the agreements with WTO are ratified. The deadline for ratification of the agreements is July 4th 2008. However, this term can be extended, if there is a necessity. Taking into account the situation in Ukrainian Parliament, new rates will hardly enter into effect earlier than late March - early April.

"As soon as in the second half 2008 Ukraine may significantly increase the imports of peach, grape, apple, pear, and other types of fruit & vegetable products", Andriy Yarmak, the head of "Agrooglyad: Vegetables and Fruits" thinks. To the expert's opinion, the volume of contraband products will be reduced on market; however, the producers' revenues will decrease too. The repeal of VAT benefits will be a negative moment for fruit & vegetable producers; nevertheless, to the opinion of A. Yarmak, it will primarily affect medium and large farmers. At the same time, small producers will still sell their products for cash on the wholesale and retail markets.

The analysts of "Agrooglyad: Vegetables and Fruits" weekly continue analyzing the possible consequences of Ukraine's entrance to WTO for fruit & vegetable business. However, it is obvious now that the sharply increased imports of fruits and some vegetables to Ukraine are possible in a new season.