The embargo on the import of Russian fertilizers has led to serious damage to Ukrainian agricultural producers and the loss of their competitiveness due to a significant excess of domestic prices over world market prices, but almost did not contribute to the revival of the domestic chemical industry. The situation with the potash-phosphorus group is the most acute - the shortage that has arisen, threatens a sharp fall in yields and income of farmers, and hence the currency earnings of the country.

The fact of the crisis on the Ukrainian market of mineral fertilizers was recognized by representatives of domestic chemical enterprises during the round table on the theme: "Provision of Ukrainian farmers with fertilizers of Ukrainian production at an affordable price", which was conducted by the Federation of Employers of Ukraine with the participation of the Union of Chemists, the Ukrainian Agricultural Council and a number of other organizations. in the city of Cherkasy.

"According to the results of the event, it became clear that the ban on the import of Russian mineral fertilizers did not lead to the removal of the Ukrainian chemical industry from the crisis. At the same time, domestic farmers who are forced to pay and are simply deprived of the opportunity to buy some fertilizers, are subject to multibillion-dollar losses," said Mikhail Sokolov, deputy head of the UAC, who took part in the discussion of the round table.

Thus, according to the agency "Marker", as of now the excess of the domestic market (excluding VAT) over the price of FOB Black Sea ammoniac saltpeters amounted to 80.65 dollars / tone (41.25%), for urea - 53.55 dollars /tone (18.63%), on the urea-ammonia mixture - 26.95 dollars / tone (12.31%). At the same time, the reduction of consumption of potassium and phosphorus fertilizers due to their absence in the market by the results of 8 months of 2018 was 44% compared to the same period last year.

Sokolov noted that the ban on the import of nitrogen fertilizers from Russia only led to the sharp increase in the supply of this product from other countries: Kazakhstan, Uzbekistan, Georgia, Poland, Lithuania, etc. In particular, for 8 months of 2018, the supply of ammonium nitrate from third countries, with the exception of Russia, increased by 40.79%, urea - by 196.67%, urea-ammonia mixture - by 57.34%.

However, domestic chemical companies remain unprofitable.

Participants of the round table were looking for a way out of the situation in order to promote the removal of the domestic chemical industry from the crisis.

One of the above suggestions was to provide Ukrainian chemical plants with state budget support. According to Sokolov, the UAC will not object to such a step, but only on condition that the subsidy for chemical enterprises will NOT be paid at the expense of funds put into the draft state budget-2019 for state support of the agrarian sector.

However, according to the deputy head of the UAC, even if the government introduces the relevant article of expenditure, this amount will still not be enough to ensure profitable activity of the monopolist on the domestic fertilizer market - the group Ostchem owned by businessman Dmitry Firtash. After all, as it was announced during the round table, now the Agrarian Fund purchases from the company Ostchem fertilizers at a price that exceeds the market by 1000 UAH. At the same time, according to the management of Ostchem, even at such a price companies continue to work at a loss.

Therefore, according to Sokolov, the only way to bring the chemical industry out of the crisis is to provide domestic chemical plants with its own raw material base. In particular, through the construction of plants for the production of mineral fertilizers from Ukrainian gas, or the sale at auction of licenses for the extraction of gas exclusively for the production of mineral fertilizers.

Recall that in 2017 Russian producers covered 31% of domestic consumption of nitrogen fertilizers and 64.7% - phosphorus and potassium fertilizers (and in many positions - 100%). Therefore, their disappearance from the Ukrainian market has led to a sharp increase in prices on the domestic market. At the same time, agrarians have repeatedly noted that due to insufficient competitiveness of domestic chemical plants, prices for fertilizers on the Ukrainian domestic market in some periods exceeded the world by more than 50%.

According to the research conducted by the NSC "Institute of Agrarian Economics", the consulting agency "Ukragrokonsult" and the "Social Monitoring" center on request of the UAC, the loss of the domestic agricultural sector due to a shortage of crops due to high prices for nitrogen fertilizers within the country annually exceeds 32 billion UAH.

According to the farmers surveyed, corruption in public authorities and a monopoly position of the Ostchem group, which dictates their rules of the game in the market, leads to overpricing.

Because of the high prices for fertilizers, farmers make them much less than normal. As a result, Ukrainian soils are depleted - every year, every hectare of Ukrainian agricultural land loses from 200 to 400 kg of nutrients.

Friday, 12 October 2018

 

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