Kazakhstan strangles Ukrainian buckwheat producers
Import of buckwheat from Kazakhstan suffocates Ukrainian producers of this cereal. The processors reported this to the publication AgroPolit.com, by asking the government to protect the domestic market.
The reason for the problem is that Kazakh processors receive raw materials from Russia without duties (due to membership in the Customs Union), and also import the finished product to the territory of Ukraine without duties (within the framework of the interstate free trade agreement).
Ukrainian processors in this situation are in unequal competitive conditions: in 2015, the government of Ukraine, as part of anti-Russian sanctions, imposed an import duty of 20% on Russian buckwheat groats and buckwheat grain.
Soon, the import of buckwheat groats (finished product) from Russia to Ukraine was banned. Ukrainian processors still have the opportunity to import buckwheat grain (raw materials) with a 20% duty for processing. They are forced to do this, because in the country itself, the area under this culture is constantly shrinking. In 2017, the country with a harvest of 176 thousand tons was the third among the world leaders after Russia (1 million tons) and China (400 thousand tons).
However, the annual reduction in acreage (from 200 thousand hectares to 60 thousand hectares) led to the fact that in 2019 the harvest was only 85 thousand tons.
It turned out to be a paradoxical situation: by banning the import of buckwheat groats to Ukraine from the Russian Federation, but not banning it from the EEU countries, the government of Ukraine simply "substituted" its producers, in fact clearing the market for imports. The share of imports over the past 5 years has grown to a critical level — from 10 to 50%.
The dominance of imports affects the economy of Ukraine itself, because the reduction in processing is the loss of jobs, taxes, and currency that has to be spent on imports. Therefore, Ukrainian refiners are asking the government to align the rules of the game for all market participants.
This is not all losses for the country. Ukraine is losing the ability to control the quality of cereals that are imported, and market levers of pricing. Also, in the absence of its own production, it will be impossible to maintain a strategic supply of buckwheat groats, which is necessary for the normal functioning of kindergartens, schools, and military units (groats are included in their mandatory diet).
According to the Ministry of national economy of the Republic of Kazakhstan, the export of processed cereals from the commodity group 1104 (there are no separate data on buckwheat groats) constantly grow.
The reason for the problem is that Kazakh processors receive raw materials from Russia without duties (due to membership in the Customs Union), and also import the finished product to the territory of Ukraine without duties (within the framework of the interstate free trade agreement).
Ukrainian processors in this situation are in unequal competitive conditions: in 2015, the government of Ukraine, as part of anti-Russian sanctions, imposed an import duty of 20% on Russian buckwheat groats and buckwheat grain.
Soon, the import of buckwheat groats (finished product) from Russia to Ukraine was banned. Ukrainian processors still have the opportunity to import buckwheat grain (raw materials) with a 20% duty for processing. They are forced to do this, because in the country itself, the area under this culture is constantly shrinking. In 2017, the country with a harvest of 176 thousand tons was the third among the world leaders after Russia (1 million tons) and China (400 thousand tons).
However, the annual reduction in acreage (from 200 thousand hectares to 60 thousand hectares) led to the fact that in 2019 the harvest was only 85 thousand tons.
It turned out to be a paradoxical situation: by banning the import of buckwheat groats to Ukraine from the Russian Federation, but not banning it from the EEU countries, the government of Ukraine simply "substituted" its producers, in fact clearing the market for imports. The share of imports over the past 5 years has grown to a critical level — from 10 to 50%.
The dominance of imports affects the economy of Ukraine itself, because the reduction in processing is the loss of jobs, taxes, and currency that has to be spent on imports. Therefore, Ukrainian refiners are asking the government to align the rules of the game for all market participants.
This is not all losses for the country. Ukraine is losing the ability to control the quality of cereals that are imported, and market levers of pricing. Also, in the absence of its own production, it will be impossible to maintain a strategic supply of buckwheat groats, which is necessary for the normal functioning of kindergartens, schools, and military units (groats are included in their mandatory diet).
According to the Ministry of national economy of the Republic of Kazakhstan, the export of processed cereals from the commodity group 1104 (there are no separate data on buckwheat groats) constantly grow.
According to the state statistics service of Ukraine, the import of processed grain of cereals (commodity group with the code 1104 — this includes buckwheat groats, but there is no data for it separately) shows the same dynamics.
Since 2015, market participants say, the import of processed grain (in particular, buckwheat groats) in Ukraine has increased almost fivefold, which almost completely coincides with the increase in exports of processed grain from the Republic of Kazakhstan.
Creating equal conditions for producers in Ukraine and Kazakhstan can protect the industry from destruction. Ukrainian entrepreneurs are calling for this. If the government does not take any measures, then in three years the Ukrainian processor of buckwheat groats will most likely disappear.
To prevent this, Ukrainian refiners propose to cancel the 20% duty on raw material supplies from Russia. Manufacturers believe that this trade barrier does not make sense, because it still does not affect the income of the Russian Federation.
Creating equal conditions for producers in Ukraine and Kazakhstan can protect the industry from destruction. Ukrainian entrepreneurs are calling for this. If the government does not take any measures, then in three years the Ukrainian processor of buckwheat groats will most likely disappear.
To prevent this, Ukrainian refiners propose to cancel the 20% duty on raw material supplies from Russia. Manufacturers believe that this trade barrier does not make sense, because it still does not affect the income of the Russian Federation.
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