Ukraine: EBRD is concerned over the grain quota introduced by the Ukrainian government

The European Bank for Reconstruction and Development (EBRD) voiced concern over the new grain quota system in Ukraine. "We are alarmed over [the introduction of quotas on the export of grain] and believe that the state should live under market conditions," Kamen Zahariev, EBRD Country Director for Ukraine told Interfax-Ukraine, UkrAgroConsult released November 01.

Ukraine, according to Zahariev, should rather focus on developing sale of grain via auctions and mechanisms aimed at offsetting price overshoots whenever the state takes to buying grain for the state reserve.

The EBRD official echoes the statement of Albert Jaeger, head of the IMF mission for Ukraine, who said export quotas sent a bad signal to investors.

Ukraine introduced quotas on the export of barley as of October 17 in an attempt to keep domestic prices stable. The resolution allows 600,000 t of barley to be exported to the end of 2006.

But analysts said Ukraine had a significant surplus of barley and that export limits would cause a sharp fall in domestic prices and was likely to hit local producers.

The Agrarian Committee of Ukraine's parliament has urged the government to consider abolishing export quotas on barley introduced last month, the parliament's press service said on November 01.