Ukraine doesn’t profit from grain export quota

14-12-2006 | |

The World Bank has released a report on the recently introduced export quotas for grain in Ukraine, which was prepared together with the German Advisory Group on Economic Reform.

According to the World Bank, the quota system is both ineffective (does not reach the poor), inefficient (imposes large cost for very limited gain), and prone to corruption.

Moreover, it says that the quotas will result in loss of significant export revenues and loss of investment. Furthermore, the introduction of the quota is not justified because domestic grain supply is amply adequate to cover all domestic needs and allow considerably higher grain exports than estimated by the government. Moreover, it says that this year’s grain production is well above the average of the last ten years.

Little gain
Ukrainian food consumers gain very little from the quota; although wheat prices have been constant, prices for flour and bread have actually increased since the quota’s introduction, the report said.
At the same time, according to the report, the quota system imposes large losses on grain producers and significantly affects export revenues.

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