Conclusions and Recommendations

ple, the oilseed export tax leads to reduced output prices for oilseed producers. In the past, export bans have depressed farm gate prices for grain. The lack of competition in the grain marketing chain has reduced farm revenues by billions of UAH over the years.⁹

6 References

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7 Price Determination and Government Policy on Ukrainian Grain Markets

Stephan von Cramon-Taubadel

1 Introduction

Grains, especially wheat, play a central role in Ukrainian agriculture and agricultural policy making. Grain is considered ‘strategic’, and the size of the grain harvest is a barometer of conditions in agriculture. Since Independence, Ukrainian grain production has, subject to the usual annual fluc-tuations, fallen considerably. This has generated a great deal of concern, analysis and policy advice from within and without Ukraine, and it has also led to concrete policy responses. On July 29, 2000, for example, President Kuchma signed Decree No. 832 „On immediate measures to stimulate grain production and to develop the grain market” in Ukraine.

Coming after a period in which the Government of Ukraine had taken a number of very en-couraging reform steps, some elements of this Decree were quite controversial. Grain traders and many bi- and multilateral donors were among the Decree’s most vocal critics. These critics were concerned that agricultural policy makers in Ukraine might be backtracking on their commitment to market-oriented reform of Ukrainian grain markets. On July 17, the Senior IMF Representative in Ukraine together with the Chief of the World Bank Office in Ukraine and the Ambassador of the United States of America in Ukraine, in a letter to the Deputy Head of the Presidential Administra-tion Haidutskiy, stated that Decree No. 832 presents a ‘serious threat’ to the process of economic reform in Ukraine, and urged that this Decree be re-examined.

Representatives of the Government of Ukraine (GOU) and the Presidential Administration (PA) were equally adamant in arguing that Decree No. 832 is nothing more than a legitimate attempt to monitor and stabilise grain markets at a time when production is very low and food security may be at risk. It was argued that the „grain market in Ukraine is currently completely out of balance“

and that the „majority of countries all over the world have their state programs for the stimulation of grain production and the improvement of grain markets...“.¹¹

The grain market developments that led to the signing of Decree No. 832, as well as the reac-tions to this Decree, provide an excellent opportunity to study both grain markets in Ukraine (and in particular, price determination on these markets) and policy makers’ understanding of how these markets function. In the following we analyse recent developments on grain markets in Ukraine against the background of Decree No. 832. We begin by discussing how Decree No. 832 was pre-pared and launched. We then consider the current situation on Ukraine’s grain market and prospects for its future development, including some simple forecasts of future grain price development. We close with policy recommendations.