Ukraine. Law on export guarantees – tightening of state control or more efficient export management?

On 1 Dec., a law on minimum prices for agricultural exports will come into force. The main purpose of the Act is to reduce the shadow trade in cereals.

This law introduces an export guarantee scheme which will provide for:

• Only registered VAT payers will be allowed to export goods;
• Setting minimum export prices for certain commodities, including key cereals, oilseeds, oils and meals.

The Ministry of Agrarian Policy and Food (MAPF) sets the minimum export prices and publishes them on its official website by the 10th of each month.

From December 1, the export will be prohibited if commodity prices in the foreign trade contracts are lower than the minimum export prices approved by the MAPF.

Following the publication of the mechanism for calculating minimum prices and other explanatory documents, the largest exporters responded favourably to this guarantee scheme. However, some elements of the scheme were simplified. For example, the Ukrainian Grain Association stated that from the date of the law’s entry into force, exporters will no longer need to be verified in the State Agrarian Register (https://www.dar.gov.ua/ DAR) or obtain an export licence (if the company was not verified).

Exporters note that the new law is not a threat to the proper export flows. On the contrary, it will lead to a better market functioning. Over the past two years, the number of exporters in Ukraine increased sharply. For some commodities, the number of exporters doubled in MY 2022/23 compared to the pre-war period. And the increase occurred amid declining export volumes.

It is expected that the newly adopted guarantee scheme will lead to higher professionalism in export market operations.