The Ukrainian Agrarian Confederation has called on the Cabinet of Ministers to abandon plans to raise rates for transportation of grain by rail. The Ukrainian Agrarian Confederation made the call in a letter sent to Prime Minister Arsenii Yatseniuk and the head of the Cabinet of Ministers’ Council of Entrepreneurs, Leonid Kozachenko, on July 2.
The Ukrainian Agrarian Confederation does not support the Ministry of Infrastructure’s plans to abolish the differentiation of grain transportation costs depending on the mode of transportation when revising the freight tariff book. Currently, the coefficient of 0.881 applies to grain transportation within Ukraine and the coefficient of 1.095 applies to grain transportation on export. The ministry proposes setting a single coefficient.
According to the Ukrainian Agrarian Confederation, the Ministry of Infrastructure essentially proposes raising grain freight rates by 24.3% in the relevant draft order. In addition, the cost of grain transportation will immediately increase by 38% in line with a plan to raise freight rates by a total of 13.7% in 2014.
Meanwhile, as the Ukrainian Agrarian Confederation said in the letter, the profitability of grain production was only 1.7% in 2013.
In addition, the Ukrainian Agrarian Confederation wrote in the letter that the State Railway Administration (Ukrzaliznytsia), which occupies a monopoly or dominant position in the Ukrainian market of freight transportation, "has the opportunity to manipulate the coefficient for the tariff book’s standard rates during transportation of grain freight within Ukraine by groundlessly categorizing such transportation as export, levying inflated freight charges, and earning super-profits."
