The European Business Association (EBA) has asked the authorities to stop the illegal actions of the companies that are buying grain in foreign-currency cash, the Interfax Ukraine news agency reports, citing a press release by the association.

According to the EBA, since the beginning of this marketing year (July 2015-June 2016), the entire system of procurement, processing, and export of grains has been under threat because of the illegal procurement of grain, which has become systematic and widespread.

According to representatives of the business community, a group of unidentified individuals and companies make such purchases directly from farmers, making payments in foreign-currency cash.

Thus, according to the association, the currency legislation is being violated, taxes are not being paid, an illegal grain market is being created, and prerequisites are being created for abuse of value-added tax reimbursements and non-return of foreign-currency earnings to the country because such grain operations make sense only if the grain is subsequently exported based on forged documents and the foreign-currency earnings transferred to offshore jurisdictions, i.e. illegal transfer of capital from the country and large-scale money laundering.

"The currency and even the food security of the country could come under threat because the granary is not in a position to buy grain and traders will not be able to fulfill important contracts, including under government obligations," the EBA said.

According to forecasts by the association, such actions could lead to a sharp increase in domestic prices of grain and grain products because producers will be guided by foreign-currency settlements when setting prices in hryvnia and this could result in bankruptcy of linear granaries and reduction of investments in the elevator industry.

The EBA also said that in case of inadequate measures, major international agricultural companies could leave the Ukrainian market because it is impossible to operate within the legal framework; the quality of Ukrainian grain will reduce because of attempts to urgently sell grain directly from the field, ignoring the requirements of storage and processing technologies. Ukraine may lose its position on foreign agricultural markets.

Earlier, the State Fiscal Service arrested consignments of grain intended for three foreign traders - Bunge, Glencore, and Louis Dreyfus - in seaports. According to market participants, these actions are linked to an effort by the regulatory bodies to combat the "gray" market of grain and tax-evading companies.