Dear Mykola Yanovych,             On the behalf of the members of Ukrainian Grain Association I address to you with a request to pay attention at situation that occurred in the grain market of Ukraine, and prevent the grain crisis in the country, which is the breadbasket of Europe. Members of the Association are concerned about government plans as for the possible introduction of restrictions on grain exports from Ukraine, as well as existing barriers. As Minister of agriculture, Mykola Prysyazhnyuk stated, the Government plans to introduce quotas on grain exports in the amount of 2,5 million tons by the end of 2010, and this decision may be adopted and go into effect over the coming days. The Minister also announced about plans to release an additional 1 million tons of grain, which is now in the ports. This amount is insufficient as a result of actions of state bodies, particularly the State Customs Service, that sometimes directly contradict the laws of Ukraine and are aimed at blocking exports. For example: the introduction of additional controls that are not required by law, delaying the issuance of certificates and permits, etc. Thus, the amount of grain that is accumulated in ports far exceed the amounts stated by the Minister, as of today 1,1 million tons of grain are located in the port elevators, 400 thousand tons have been loaded on vessels and 360 thousand tons are in railway wagons. That is to release 1,9 million tons instead of one million tons. We also believe that the amount of export quotas announced by the minister is unreasonably low, that is why its implementation can lead to very negative consequences for the market and Ukraine in general: • It will result purchase prices drop that will negatively affect grain producers, and can cause significant reduction of amount of grain crops next year. • Ukrainian and international grain companies will suffer multimillion losses due to failure of contract obligations, simple chartered vessels in the ports of Ukraine, unplanned storage of grain in port elevators and grain spoilage because of the inability to store it in appropriate conditions. • Ukraine may soon lose nearly 1,9 million tons of grain that is currently loaded on vessels that stand idle in ports, stored in port elevators that are not adjusted for long-term storage of grain, and are transported by rail. • During the year, Ukraine can still lose about 8-9 million tons of grain, as power of certified elevators is enough for storage of only 29,5 million tons of grain while it was expected to receive harvest of 40-40,8 million tons. • It will negatively affect the reputation of Ukraine, which will be taken as an unreliable supplier. • Unpredictability of state policy and non-market methods used in regulating of the market, will significantly reduce investment in the agrarian sector of Ukraine.   This year’s grain harvest gives us opportunities to assert confidently that the grain crisis does not threaten Ukraine. According to forecasts of Ministry of Agriculture, Ukraine will be able to harvest 40-40,8 million tons of grain, that will fully satisfy domestic needs of the state at the annual grain consumption of 26-27 million tons. These data are also confirmed by reports of the Department of Agriculture (USDA), under which Ukraine has a possibility to export more than 15 million tons of grain, including 6 million tons of wheat, 4 million tons of barley and 5 million tons of corn. Capacity of certified elevators in Ukraine is sufficient to store only 29,5 million tons of grain. We have already exported only 1,2 million tons, that is why the urgent issue on the rest of the grain storage in the amount of 8-9 million tons will rise. We would like to draw your attention that the restrictions on grain exports directly contradict the commitments that Ukraine has made, entering the World Trade Organization. Such actions could cause significant deterioration of Ukraine’s reputation in the international environment. Ukrainian Grain Association on behalf of all its members asks you not to impose any restrictions on grain exports till the 15th of September, and remove all existing informal constraints and obstacles that make it impossible to conduct export operations in order to enable companies-exporters ship at least the grain that is located in wagons, port elevators and in vessels. To allocate the quotas, we ask to use the mechanism that was developed in 2006-2007, by joint efforts of Ukrainian Grain Association, the Ministry of Economy and Ministry of Agricultural Policy. Using this mechanism would speed up the process of allocation of quotas among companies, and would satisfy both state and market participants’ needs. We stress that last time it was spent more then a month of hard work on its development. Also, we ask to turn back to the question of quotas size, because limits declared by the Minister of Agrarian Policy Mykola Prysyazhnyuk are unreasonably low, and their approval will lead to oversupply of domestic market, price drop and bankruptcy of farmers, as well as damage of almost 8-9 million tons of grain.