Expert: Dividing of the EU grain and flour export quota will help increase the competitiveness of Ukrainian manufactures

To protect the interests of Ukrainian flour and cereal manufacturers, it is needed to divide the grain quota and the flour quota. The Better Regulation Delivery Office (BRDO) Food&Agriculture Sector Head Andriy Zablotskyi expressed this opinion in his report “EU Export Procedure Changing: is it a new strategy for the sector?”

Certification and quota allocation policy concerning the flour production in the framework of the Association Agreement with the EU, development of the export strategy to enter the European markets, real prospects for Ukrainian manufacturers were just some of topics to be discussed by experts and practitioners during the seminar “Flour and cereal exports to the EU: from theory to practice”.

In his report, Andriy Zablotskyi raised the issue of imbalances in grain, flour and cereal exports to the EU and special aspects of quota allocation under the Association Agreement with the EU. The expert noted that the tariff quota for product supplies combines grain and flour supplies. Thus, the Ukrainian flour manufacturers are in unequal conditions with grain exporters.

Flour and cereal products cannot enter the market actively in the framework of quotas, although it has a bigger added value while being more profitable for the state in terms of implementation, including for the reason of the administration procedure.

“The manufacturer must find a partner in the European Union or register his own business, which would have an import history at least of 1 year, to enter the EU markets. Moreover, during this year the manufacturer must supply his products to the EU countries paying 172 euros of import duty per ton. It significantly reduces the competitive ability of our manufactures,” the BRDO Food&Agriculture Sector Head said.

According to the expert, the dividing of quotas will allow Ukrainian flour and cereal manufacturers to pass the certification procedures in a more efficient way and get the possibility not only to be competitive on the EU markets but also to avoid the competition on the exports with the corn traders.

The analyst of the European Bank for Reconstruction and Development (EBRD) Olga Ivanchenko, the Ukraine Investment & Trade Facilitation Center’s (ITFC) expert Olexandra Brovko, the Ukrainian Industry Expertise Head Volodymyr Vlasyuk and other experts showed the Ukrainian manufacturers of the flour and cereal production segment the detailed export algorithm from the first to the last step by the concrete examples.

As of February 8, according to the Ministry of Agrarian Policy and Food, Ukraine had exported 24.4 million tons of grain for the last 8 months of 2015/2016 marketing year. By the way, it exported 203 thousand tons of flour for the same period. According to the SC “DERZHZOVNISHINFORM”, EU countries became the main customers of Ukrainian agricultural products, but the volume of flour products in the export structure is small.