KIEV, June 4 â€“ Ukraine is preparing to ban exports of grain amid reports that crops have been badly affected by drought throughout the country, people familiar with the situation said Monday.
The move by Ukraine, one of the worldâ€™s biggest grain exporters, would probably send shockwaves through grain markets by pushing grain prices upwards, analysts said.
A similar move by Ukraine last year to suspend grain exports for four months inflicted financial losses on farmers and major grain trading companies. The United States and the European Union have been persistently urging Ukraine to lift the ban.
Meanwhile, the government on Monday instructed the Agriculture Ministry and the Economy Ministry to draft regulations that would temporarily ban the exports of grain, the sources said.
The government also instructed the same ministries to make an estimate of crop losses due to the drought, which has badly affected at least 10 regions of the country. The worst-hit regions include Ukraineâ€™s major grain producing regions, such as Kherson, Mykolayiv, Odessa, Zaporizhia, Donetsk, Luhansk, Dnipropetrovsk, Cherkasy and Crimea.
President Viktor Yushchenko on Monday urged Prime Minister Viktor Yanukovych to take steps that would help farmers to deal with the drought, including funding to offset their losses.
Underscoring the rapidly worsening condition of grain crops in those regions, Yushchenko will travel to Mykolayiv, Kherson and Kirovohrad on Tuesday. Yushchenko will meet governors, local officials and farmers to get an update on the situation, according to the presidential press service.
Meanwhile, Yushchenkoâ€™s Our Ukraine party issued a statement on Monday criticizing the governmentâ€™s plans to ban the grain exports as an anti-market move.
â€śThis is a wrong approach. This is not a market-oriented measure,â€ť Mykhaylo Polianchych, a member of Our Ukraine, said.
Others said the impact of the drought may not be as bad as had been feared.
â€śThe impact of the drought on the crops is yet to be figured out. Possibly, it will reduce grain output by 10-15%. The situation is not as catastrophic so at to require banning the exports,â€ť Ksenia Liapina of Our Ukraine said. (nr/ez)