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Ukrainian government will support grain prices - Ukraine's Deputy Prime Minister
In 2003 Ukrainian government will form "strong price policy" in the grain market, to prevent "dissatisfaction and price collapse", Ukraine's Deputy Prime Minister for Agriculture Ivan Kyrylenko told reporters on January 22.
He said the government was going to build its grain pricing policy upon the mechanism of mortgage grain purchases. He said the mortgage price would incorporate the cost-price of grain plus 25 to 30 percent of profit to the farmers.
The government intends to buy some 1.5 to 2 million tonnes of grain under the mortgage scheme this year. The purchases will be maid during August-September, he said.
The farmers will get an advance payment for autumn fieldwork while the grain will be mortgaged with the state. In about four months, when the prices are higher, the farmers will get their grain back and re-sell it at the higher price, he explained.
If the producer is unwilling to get their grain back, the right to dispose of the grain will pass on to the state authorised agent, Kyrylenko explained.
He also said that the value of the fund to compensate farmers the high costs of banking loans had already been determined. The allocated sum is 145 million hryvnias (US$ 27.19 million).
At the same time, he said, it was vital to hold successful negotiations with banks to further facilitate the problem. "We now have negotiations with international banks with strong reputation, which know that Ukraine is a good country to work in," he said.
However, he failed to provide the exact names of these banks.
The government expects the quality of 2003 grain to be low, due to unfavourable weather conditions in December last year (strong frosts and snowless weather damaged winter grains). According to Kyrylenko, 2003 will be "the year of feed grain". Therefore, he foresees high grain prices in this year.
According to State Statistics Committee, grain crop in Ukraine in 2002 constituted 38.792 million tonnes (clean weight), which is 2.3 percent down from the 2001 crop.