With grain shipments halved, Ukraine imposes tighter rules for food exports

Ukraine is set to introduce a requirement that food export companies register with the government in order to crack down on fraud and tax avoidance.

All Ukrainian food exporters must register with the State Agrarian Register, and additionally, companies wishing to export must be registered as value-added taxpayers and have no tax debts or delays in tax payment or returns of foreign currency, according to Reuters.

Ukraine is a major grain exporter, but the new rule extends to all foodstuffs, including seafood, though the country's seafood export capacity has been deciminated by the Russian invasion. The country’s government has been making a push to crack down on corruption and illegal trading as a means of strengthening its bid for membership to the European Union and appeasing its foreign sponsors, who have donated tens of billions of dollars to support its self-defense after Russia invaded in February 2022.

The Ukrainian government estimates up to a third of goods exported from the country are bought in cash so as to avoid taxation. And illegal concealment or delay of foreign currency proceeds on accounts outside of Ukraine is a major problem, Reuters reported.

"The purpose of the pilot project is to create conditions for preventing abuses and violations of the law during the export of goods," the government said. “[The move will] ensure the protection of the rights of agricultural entities that carry out economic activities without violating the law."

The global aquaculture sector has historically relied on Ukrainian grain as an important input ingredient – particularly wheat and rapeseed oil. Ukraine produced 86 million tons of grain in 2021, with production falling to 55 million tons in 2022, and the Ukrainian Agriculture Ministry has predicted to produce 56 million tons in 2023, according to Successful Farming.

After a deal with Russia allowing the export of some grain fell through in July 2023, Ukraine has found alternative shipping routes to allow a limited amount of exports. But its October grain exports are down 50 percent in 2023 to 2.15 million metric tons. While Russian bombardment of Ukrainian infrastructure and the threat of Russian attacks have been blamed as the primary reason for the shortfall, a previous effort by the Ukrainian government to tighten controls on grain exports also had an impact. The mechanism required a preliminary analysis of the legality of the origin of all grain loaded onto ships in Ukrainian ports.

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