KIEV, March 30 – Defying an order from President Viktor Yanukovych, the government decided on Wednesday to extend for three months controversial restrictions on exports of grain from Ukraine.
The government, in reaction to quickly growing food prices, in October 2010 slapped on quotas on exports of grain, and the quotas were supposed to expire on March 31.
“The quotas will be extended through July 1,” Mykola Prysiazhniuk, the agriculture policy and food minister, said Wednesday. “The size of the quota was increased by 2 million metric tons of corn.”
The continued restrictions suggest the government views as extreme situation in the country’s food sector as growing food prices may have potentially significant political risk for the authorities.
The measure comes a day after a senior official at the office of Yanukovych had suggested the government must stop restricting the exports through the quotas and should come up with a more market friendly measure, such as customs duties.
Iryna Akimova, the deputy chief of the Yanukovych administration and his top economic advisor, said Tuesday these were direct demands from the president.
"If restrictions are required, then these will be the customs measures, rather than quotas," she said at a conference on Tuesday. “There will be no quotas.”
The split between Yanukovych and the government over how to manage the agriculture sector, underscores the lack of strategic vision of reforms within Ukraine’s economic team.
Yanukovych has been facing growing international pressure for cancelling the controversial restrictions on exports of grain.
But Prime Minister Mykola Azarov on Wednesday praised the grain exports restrictions for keeping under control prices of bread, an important food staple for many Ukrainians.
“Isn’t that the government’s grain market policy in conditions of poor harvest that has allowed us keeping the price of wheat bread in Kiev at 3.5-4 hryvnias per kilogram?” Azarov said at a meeting. “In Moscow the same bread costs 11 hryvnias, in Baku – 9 hryvnias, in Minsk and Yerevan – 10 hryvnias.”
Ukraine can export 5.8 million metric tons of grain in March, April, May and June, the Trade and Economy Ministry said in a statement on its website. Wheat accounts for 2.3 million metric tons and corn for 3.4 million metric tons of the possible exports, according to the statement.
The continued restrictions on exports of grain undermine Yanukovych’s plan of turning Ukraine into a global producer and exporter of food.
Yanukovych first made the pledge in September 2010 while addressing heads of states at United Nations General Assembly meeting in New York. (tl/ez)