Key moments of 2014 for the CIS agricultural market

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APK-Inform

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For Ukraine and Russia the year 2014 was replete with different events. The majority of them touched political and economic spheres and everyone can perceive them in his or her own way, but in this material we focus on agricultural sector and refresh in your memory key moments of the CIS agricultural market of 2014.

 

The most heart-pounding event of the CIS grain market occurred in the end of the year. After two weeks of unofficial embargos of wheat exports and refusal of Rosselkhoznadzor to issue phytosanitary certificates for the grain exports, on December 26 Russian government officially imposed the export duty for wheat at the level of 15% of the custom cost plus 7.5 EUR, but not less than 35 EUR/t. The reason of the duty imposition is to protect the grain domestic market. It worth noting that after the duty imposition JSC Russian Railways canceled limitations on export shipments of Russian grains that were introduced on December 17. The failure of provision of the required rates of grain rail cars unloading and acceptance with grains of cargo receivers, some lag in the trains movement were called as the reasons for given limitations. At the same time, JSC Russian Railways increased the tariffs for grain export transportation by 13.4% on December 24. The premium tariffs are expected to become active in January 2015.

Opening of the EU market for Ukrainian commodities became one of the most significant moments of 2014 for Ukraine. Since April 23, the European Union opened its markets in sole discretion within frames of the autonomous preferential trade regime between Ukraine and the EU. The corresponding regulation No 374/2014 of the European Parliament was published in the Official Journal of the European Union on April 22. Preferential arrangements provide reduction or elimination of the customs duties on the commodities originating from Ukraine, and setting of the import quotas for such supplies.

The EU granted tariff-free quotas for Ukraine to import 0.95 mln tonnes of wheat and flour, 400 thsd tonnes of maize and 250 thsd tonnes of barley by October 31, 2014. The quotas for wheat and maize were fully awarded, and the EU did not offer additional volumes for the November-December period. However, the demand for Ukrainian barley is quite low, so the EU extended the action date of the import quotas on Ukrainian barley until the end of 2014.

 

Cooperation between Ukraine and Russia became more complicated in 2014. Thus, since August 1, the Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) bans the imports of sunflower seed, maize grits, soybeans and soy meal from Ukraine.

Moreover, Dmitry Medvedev, Prime Minister of Russia, signed the decree on imposition of the import duties on Ukrainian products supplied to the territory of the Russian Federation. He declared on high decision on September 19. It comes on food products, as well as the light and processing industrial goods. At the same time, he stressed that the customs duties will be imposed, "if Ukraine starts applying the economic clauses of the Association Agreement with the EU before the previously announced terms (until the end of 2015), in other words starts either legal implementation, or the actual usage of the reporting clauses”.

Moreover, due to political tension, Vladimir Putin, President of the Russian Federation, imposed the ban on imports of certain agricultural products, raw materials and food to the territory of the Russian Federation, from the countries, which decided to impose economic sanctions against Russian legal entities and (or) individuals, or acceded to the reporting decision. The presidential decree "On application of the certain special economic measures to ensure the security of the Russian Federation" signed on August 6, provides the above-mentioned import ban. The import limitations are valid for one-year period, and come into force from the date of signing of the decree.

 

Also it worth noting several other changes in Ukrainian agricultural market. Thus, On April 9, the Verkhovna Rada of Ukraine adopted the Draft Law on the quality certification cancellation of the grain and its by-products and granary services certification as well.

Moreover, Ukraine canceled obtaining of the permission documents for realization of transboundary movement of oilseed meals/cakes, according to the decree of the Cabinet of Ministers of Ukraine #140 dd. May 21, 2014. According to the association Ukroliyaprom, the reporting document simplifies the existing procedure of government control on the exports of oilseed meals and cakes, obtained after processing of oilseed raw materials.

In addition, the Verkhovna Rada of Ukraine adopted the draft law #1578 “On amendments to the Tax Code of Ukraine and several laws of Ukraine (re tax reform)" amended to cancel the VAT refund during grain export operations for both grain traders and producers. On December 28, 250 people`s deputies voted "For" the appropriate decision. According to the adopted law, in 2015 the preferential tax treatment rates for agrarians will continue working.

 

At least it worth noting that tension in Eastern Ukraine also influenced on agricultural market. Besides some loses in crops’ harvest, the part of Donetsk oblast, uncontrolled to the central government of Ukraine, imposed the advance tax on flour exports at the sum of 6000 UAH/t, declared several mass media on December 9, referring to the press-center of the so-called Donetsk People's Republic (DNR). In addition, there was imposed the advance tax on the exports of wheat at 3000 UAH/t. According to the announcement, the Ministry of income and fees of the Donetsk People's Republic imposed the tax, in order to ensure the food security of the DNR, and limit grain supplies to the territory of Ukraine.

 

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