Irina Prysiazhniuk, Alfred C. Toepfer International (Ukraine)

• Name: Irina Prysiazhniuk
• Position: General Director, Alfred C. Toepfer International (Ukraine)

How do you assess the business environment within the agro market? ( If compared to 2010) are there mostly positive or negative trends prevailing?

Second half of 2010 and the first quarter of 2011 were very detrimental to the grain industry in Ukraine.  Detention of ships loaded with grain, introduction of export quotas and their distribution, repetitive introduction of new legislative initiatives aimed at monopolizing the market, overall uncertainty about the future of the agrarian business in this country did not add optimism to market players and investors. We have seen the first positive developments only in May-June 2011. Presidential ban on the law of auctioning of export quotas, cancellation of export quotas, and postponement of introduction of export duties to July 1st are encouraging signals. We take them as an offer of a partnership dialog by the Government and this is exactly what we have been looking for.

How do you assess the scale of challenge facing the agricultural business growth?

This challenge is formidable both here and internationally. Our company is in business for almost 100 yearsand challenges we face now are of incomparable magnitude. Climate changes, supply and demand misbalances, and political turmoil add up to local and global financial uncertainties. This does not make our life easier. But it also puts our company in a unique position when we can use our worldwide resources and experience to respond to challenges in Ukraine, and our strong positions as a leading Ukrainian grain exporter to support our growth worldwide.

What is your vision of the current regulatory conditions the agromarket players operate in?

Regulatory conditions vary from country to country. The main feature of local regulatory framework is the uncertainty and unpredictability. Agriculture has pretty long production and business cycles and depends on many factors that are unpredictable because of their nature, but nothing is more detrimental to our business than ever changing rules and regulations.

Is current legislation beneficial for export boost or does it create barriers for trade?

• We do not know yet. This sounds strange but before we get familiar with one legislative norm and start to understand all its implications we have a new one that turns everything upside down. For instance, according to the new Tax Code we are supposed to lose VAT refunds on exported grain as of July 1st but according to amendments to Tax Code that may be adopted as early as July 5th we may get status of VAT receivers again. We can do business with or without VAT but our business requires stable and clear legislation and several month advance notice on legislative changes.
• The season 2010 – 2011 grain export we, as Toepfer can hardly talk as we did not get access to grain export through quota system. From July 1st the export of major grains is leviedby the Government. This certainly is the export restricting tool, introduced by the Government, but at least we do hope that administration of this instrument of export regulation will be more transparent than export quotas. Export boost is possible on the basis of two factors – good crop and free market.

Do you support EBA efforts to abolish Amendment 474 to the Tax Code of Ukraine, which prescribes imposing VAT refund to a certain limited category of grain exporters?

This norm if adopted would create privileged conditions for one or several companies and this is what we oppose. All market players should have equal conditions in terms of taxation and no exceptions should be made to this rule. This is our position but this is also a basic principle of Ukrainian and international legislation. We definitely support EBA efforts in this direction.

What other steps do you advocate as beneficial for agricultural products exporters?

We can discuss a lot of the investment possibilities of big grain trading companies which would be beneficial for farmers and country in general, but let’s start with those two steps, which are long overdue now.

We believe that trust and stability is the foundation of our business. We are the company of trusted business principles, including 20 years in Ukraine. But trust should be based on solid legislative and regulatory background. Level of trust in Ukraine’s agribusiness is very low yet and to build this trust regulatory foundation is badly needed. We are among biggest investors into Ukraine’s agricultural infrastructure. But we would be able to provide more financial resources especially to farmers would we have guarantees. Legitimizing use of warehouse receipts and land rent rights as collateral to loans made to farmers are the most obvious and easy steps to be made.

What are your predictions as to the harvest 2011 and the subsequent export in 2012?

Despite the fact that the weather still can influence crop harvesting and same as development of late crops, one can expect a regular crop at around 43-45 mio mt, which would theoretically allow around 20 mio mt of exports from the country. The share of corn is expected to increase, while the barley crop will hardly exceed the 5 year average. Regarding wheat, one can expect it around 20 mio mt or slightly higher, while the split of qualities will be known only after the harvesting campaign. To summarize it all - it will be an average year without any extraordinary export figures. And self understood that export numbers mentioned above are possible in case no restrictive formal and informal measures are implemented and the export market stays equal to all players and transparent commercial environment.