February 12 2003, 09:56 Interfax-Ukraine

Ukrainian government approved procedure of mortgage grain purchases

Cabinet of Ministers of Ukraine by its decree of February 7 approved the procedure of mortgage grain purchases, competition-based establishment of state agent fur such purchases and methodology of formation of mortgage prices.

In particular, the document stipulates that mortgage purchases of grain are provided by the state agent and authorised companies, determined according to the outcomes of competition. The purchases are made for the costs of state budget and credits of commercial banks, at the prices, established by government.

The competition to determine the state agent is to have been held by the Ministry of Agrarian Policy till April 1.

Eligible to participate in competition are those companies, the share of state in the statutory fund of which is no less than 75 percent.

An agricultural producer who has signed a contract with the state agent for a sale of grain into the mortgage has a right to take their grain back within eight months, but no later than March 1, should the warehouse be reimbursed the costs of storing the grain.

The mortgage price is determined by state until March 31, with consideration of production costs and the minimal earning. It may be reviewed in case of sharp changes of the exchange prices.

In 2003 Ukrainian government intends to buy under the mortage schemes about 1.5-2 million tones of grain in the first months after the harvest at a price of about 400 hryvnias ($75) per tonne.

The state budget-2003 has allocated over 700 million hryvnias ($131 million) for compensation of banking rates under the mortgage purchases credits.