November 1 2002, 21:00 UNIAN

Cancellation of export tax for sunflower seeds would increase profitability - deputy of Parliament

Cancellation of export duty for sunflower seeds would increase profitability of this crop, a member of Ukraine's parliamentary committee for agriculture and land relationships Olexandr Shevchenko believes.

He says sunflower production keeps rather profitable even under current conditions of the 17 percent export tax in effect. For a Ukrainian farmer sunflower now remains the only competitive and profitable crop to be sold in domestic and, which is most important, in the export market as well, Shevchenko said.

"Given the unbalanced domestic market of agricultural products, continuing smuggles of livestock commodities into the country, limitations for dry milk and casein export and resulting from it all large number of unprofitable farms, it is now the case that the only way an agricultural producers can mend its financial state is by growing sunflower," Shevchenko said.

He also said that today's purchasing prices for sunflower in the country were artificially lowered, due to absence of competition in the market between local crushers and traders who could export the seeds. Should such a competition exist, it would be shaping local prices with orientation of foreign ones, which are normally higher.

"If domestic purchasing prices rose by just 17 percent (i.e. the size of the duty), the farmers could be earning an extra UAH200 (US$37) on each tonne of the seeds, which, given a crop like this year's, would bring them another some UAH600 million (US$111 million)," he said. This was about a half of total state budget subsidies on agriculture in 2002, he added.