Ukrainian grain producers have reacted negatively to the announcement by the State Railway Administration (Ukrzaliznytsia) that freight tariffs will increase by 12.5% because they believe that this will deal an economic blow to their operations. The Ukrainian Grain Association’s President Volodymyr Klymenko announced this during the international conference "Grain Forum 2014: New Markets, Challenges and Opportunities" in Odessa, the CFTS reports.
Klymenko said that the Cabinet of Ministers was obliged to consider the opinions and calculations of all parties (Ukrainian farmers in this case) and not only Ukrzaliznytsia.
"The profitability of crop cultivation was 17% in 2013. Today, the world price of grain has fallen, profitability has declined, and for some types of products - corn, barley - it has gone into the negative for several producers. I understand railroaders, they have their own arithmetic, but we cannot allow producers to ‘get the raw end of the deal’ in this situation, especially considering the fact that Ukraine is trying to increase its grain export volumes," said Klymenko.
At the same time, the head of the association stressed that recalculation of domestic prices of products has taken place due to the recent collapse of the hryvnia. Therefore, according to him, definitive conclusions should wait until the final figures are obtained at the end of the marketing year.
As reported earlier, Ukrzaliznytsia announced on May 29 that freight rates would be increased by 12.5% this summer, which translates to an average annual increase of 6.2%. The relevant draft directive provides for establishment of a uniform coefficient for determining the freight rates for grain, regardless of whether it is domestic, export, or import grain, which will allow domestic freight rates for grain to increase.
