Governmental actions may result in full shutdown of many Ukrainian fat&oil enterprises - Ukroliyaprom




A preposition of Ukrainian government to implement in 2021 quotas and licensing on export of sunflower oil can have a negative effect, declared the Association Ukroliyaprom on April 14.

The experts says none of the attempts to regulate price situation on the domestic market have brought a positive results in the past.

Ukroliyaprom reminded that the implementation of quotas and licensing on export of sunflower oil in 2008 resulted in the shutdown of many of processing enterprises, especially middle and small crushers, as they were not able to export sunflower oil and meal (domestic market consumes only 10% of the overall production of sunflower oil). Moreover, it caused the nonfulfillment of forward contracts, cut of government revenue and growth of social tension due to strikes of processors.

“Measures implemented in 2011 were short-lasting as well. Mainly, the situation on sunflower oil market was stabilized in 2011 due to the position of management of processing enterprises, who focused on the direct contracts with trade chains and trade fair activities”, - they add.

Currently, the processing enterprises of Ukraine carry out weighted price policy providing high priority supply of sunflower oil to the retail.

“Producers of bottled sunflower oil are subsidizing the domestic market in fact. Despite the prices on the global market and the high prices of sunflower seed on the domestic market, they are maintaining the internal prices below economically justified level”, - the association says.

Ukroliyaprom urges the government to avoid quotas and licensing on export of sunflower oil “that can result in full shutdown of many Ukrainian fat&oil enterprises, nonfulfillment of export contracts, discredit of Ukrainian exporters, significant losses to the state budget and loss of about 2 bln USD of currency revenue”.   

The association emphasizes that the price situation on the market of sunflower oil has the objective reasons and was expected.

“The price of sunflower seed more than doubled on the domestic market from August 2020 to March 2021. Moreover, the export of sunflower seed increased and it was sold at price significantly lower than that on the world market. At that time, on the domestic market, the prices of sunflower seed were much higher compared to the global market”, - the experts explained.