On December 7, 2017 Verkhovna Rada of Ukraine adopted in the second reading and general the draft law, which provided for the abolition of VAT refund when exporting oil crops: soybean, rapeseed and sunflower.
On December 21, 2017 Verkhovna Rada of Ukraine decided to eliminate inconsistencies in the text bode of the above law, which clarified the provisions on the abolition of VAT refund for oilseeds export, namely – exempt from VAT operations for the export of soybeans for the period from September 1, 2018 till 31 December, 2021; rapeseed – from January 1, 2020 up to December 31, 2021.
Agrarians went out with protest demanding to return VAT refund to all exporters, assessing the damage to agricultural producers from such a decision at the level of 10-16 billion UAH. As a result, on may 22, 2018 the Parliament abolished non-reimbursement of VAT for producers.
In August 2018, President of Ukraine Petro Poroshenko was accused of deliberately delaying the signing of soybean and rapeseed amendments and called upon urgently tp sign a bill № 7403-d, which protects farmers against losses of 16 billion UAH. The appeal also indicates that manufactures and other market participants are already suffering from losses, since the unresolved problem is already almost a year old.
And on August 2018, President signed the bill number 7403-d, which keeps a VAT refund when exporting soybeans and rapeseed only for producers, who export these crops abroad themselves.
It is evidenced by the data on the Verkhovna Rada website. “The main purpose of the bill is to protect the rights and legitimate interests of agricultural producers exporting oilseeds, and to stimulate the development of enterprises in Ukraine fpr processing oilseeds” – was stated in the explanatory note.
New regulation comes into force on September 1, 2018 for soybeans and from January 1, 2020 for rapeseed. In fact, it means that new oilseed season will be characterized by a significant increase in the processing of soybeans. According to the UkrAgroConsult resource, Ukraine might collect about 4 million tons in 2018, potentially more than half of which can became raw materials for processing enterprises. As a result, the volume of soybeans processing in the new season will reach a record level.
According to the exports, the final result of this debates is the priority of producers. They can export and receive VAT refunds themselves. And the processors will not be monopolists, which dictate the price policy. In such situation, traders won’t allow themselves to lose the VAT refund and will not export soybeans itself, but the products of processing. The competition between processors and traders will increase, and, as a result, the price of soybeans will grow. And given the fact, that abnormal drought in Auguct reduced the forecast for the crop, we can safely expect a significant strengthening of its value.
With kind regards, team of GC “Agroliga”.