Duty-free Export Quota for Sunseed – a Black Swan?

UkrAgroConsult

On February 3, a Free Trade Agreement was signed with one of the main trading partners of Ukraine – Turkey – which caused an information storm in the agricultural sector. The market has yet to figure out in detail the pros and cons this will bring. But, what is being actively discussed now, is the zeroing of the sunseed export duty.

Of course, this could not be ignored, as thanks to the sunseed export duty, Ukraine was able to build a highly efficient oil & fat industry. Sunseed crushing capacity already now exceeds 20 MMT per year. We can be proud of the fact that Ukrainian plants crush 98-99% of all sunseed grown in the country. Few industries and countries can boast of such results. Ukraine is a leader in the global sun oil trade, and this is also due to the protective duty.

Despite a constant growth of sunseed production, the lack of raw materials (sunseed) is a fact. The growth of its exports by 10 KMT or 100 KMT could negatively impact the industry.

By the way, the documents on the free trade zone with Turkey refer to a 50 KMT quota for duty-free sunseed exports. Many do not understand why there was a fuss due to such insignificant volume. Yes, indeed, this quota is small compared to Ukrainian crop production – 15-17 MMT. However, we should not forget that this is not the first quota for a duty-free export of sunseed in international agreements.

Of course, Ukraine needs to develop trade relations with strategic partners. The question is whether the abolition of the duty, albeit on small quota volumes, will turn into the main condition in any other agreements, as a result… After all, these small quotas can turn into a very substantial volume for raw material exports and a problem for a success of Ukrainian crushing industry, UkrAgroConsult analysts comment.

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Tags: Ukraine, sunflower, Turkey, export quotes