Ukraine's plan to set minimum export prices for agricultural commodities could disrupt trade, reduce grain exports, and lead to significant losses for farmers, warns the UGA traders' union.

The Ukrainian government's proposed minimum export prices for agricultural commodities have sparked concerns within the UGA traders' union, which has called for the plan's suspension. The union argues that the scheme would negatively impact exporters' ability to fulfill obligations, undermine trust with international partners, and reduce the competitiveness of Ukrainian goods in global markets.

Ukraine is seeking to boost its revenues while addressing the fallout from last year's European farmer protests over cheap Ukrainian imports. In response, the EU, which had granted trade-free access to Ukraine post-Russia's 2022 invasion, imposed limits on some imports. The Ukrainian government has calculated the minimum export prices for key commodities, including wheat, corn, sunflower oil, soybeans, and rapeseed, but Deputy Agriculture Minister Mykhailo Sokolov stated that the new rules wouldn't start until August at the earliest.

"It will have a very negative impact on the ability of exporters to fulfill their obligations, undermine the trust of international partners in Ukrainian counterparties, complicate the planning and financing of export activities, and at the same time reduce the competitiveness of Ukrainian goods on world markets," the union said.

The UGA warns that the minimum export prices could jeopardize half of Ukraine's exports and destabilize the forward contract system, leading to market uncertainty regarding exporters' obligations and grain purchases. The ongoing conflict with Russia has already caused disruptions, leading to domestic purchases and exports at artificially low prices to avoid taxes. The proposed minimum price mechanism, set to apply to significant agricultural commodities, risks exacerbating these issues.