The abolition of export VAT refund will lead to lower incomes of agrarians — Petrashko

The decision of the Ukrainian Parliament (Verkhovna Rada) on the abolition of VAT refunds for the export of soybeans, sunflower and rapeseed is a dubious act that reduces the incomes of farmers.

This was stated by Igor Petrashko, Deputy CEO of UkrLandFarming in the exclusive comment for Latifundist.com.

He added that this will be beneficial for no one, especially for the processors, because the agrarians are most likely to reduce the sowing areas of these crops.

"Such an initiative will definitely lead to price drop in the market. The market is balanced in terms of exports, so the supply in the domestic market will increase. At large, this will lead to a redistribution of funds between producers and processors," he stressed.

According to Igor Petrashko, this initiative is strange, since mainly processed products are exported from Ukraine. The logistics of raw materials is quite expensive, so the economic incentives for export are not strong enough.

"I doubt that there will appear new players in recycling. As to sunflower, all players are known and fairly stable, while rapeseed and soybeans are more local cultures. There is a possibility that due to this decision of the Verkhovna Rada, someone will build new capacities specifically," said Deputy CEO of UkrLandFarming.

He added that this is a one-off norm, which is likely to be abolished next year.

Reference: The Ukrainian Parliament voted to abolish value added tax (VAT) refund for the export of soybeans, rapeseed and sunflower from March 1, 2018. Experts say that this will cause UAH 10 billion losses for agrarians.