News last update:6 Aug 2012

Ukraine's grain dumped into sea

Grain traders in Ukraine are throwing thousands of tonnes of rotting crops into the Black Sea as a protectionist trade embargo in what was once the "breadbasket of Europe" extends into its fifth month.

The export restrictions, a populist move, have kept food prices low and earned political points for the governing coalition, headed by Viktor Yanukovich, the prime minister. But traders warn that the move could backfire and damage the country's reputation as a reliable grain supplier.Ukraine, one of the world's leading grain exporters, harvested about 34m tonnes from last season's crop, 9% less than the previous harvest. Analysts are hopeful that the quotas will be eased soon, to allow traders to boost exports from 5.5m to 8m tonnes.

Lost market
Competitors such as Kazakhstan and Russia have captured market from Ukraine. Some traders, and the insurance companies covering their losses, plan to retaliate with lawsuits targeting the Ukraine government.

Andriy Klyuyev, Ukraine's deputy prime minister told the Financial Times last week that export restrictions might be lifted by the end of this month. However, the increasingly marginalized president has remained powerless.

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