Take away and divide: how the introduction of duties on soybeans and rapeseed will affect farmers
15 July 14:40
ANALYSIS
If you can’t, but you really need to, you can. And more than once. Parliament is once again being asked to legalize duties on soybeans and rapeseed. "Komersant Ukrainian" investigated who is in favor of this proposal and who is against it, who can win and who will definitely lose.
The first attempt to “sneak in” duties on soybeans and rapeseed by “hiding” them in a non-core bill dates back to mid-June. To do this, they tried to use a draft law with a title that is very far from the agricultural sector – “On Amendments to the Tax Code of Ukraine on Expanding Patient Access to Medicines Subject to Procurement by a Person Authorized to Make Procurement in the Healthcare Sector by Concluding Managed Access Agreements.” The special operation failed: the amendments were not supported in the session hall.
For the second attempt, the initiators decided to use the draft law “On Amendments to the Tax Code of Ukraine in connection with the adoption of the Law of Ukraine “On Integrated Prevention and Control of Industrial Pollution”. According to the comparative table prepared for the second reading of the document, it is proposed to amend the Law “On Rates of Export Duty on Seeds of Certain Types of Oilseeds” and set a 10% duty on soybeans and 10% duty on rapeseed or kola seeds.
Who is pushing for such changes?
The direct initiators of the export duties on soybeans and rapeseed mostly avoid publicity. It is another matter that the procedure for introducing amendments requires disclosure of authorship. In the first case, the proposal came from Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy. In the second case, the author is a representative of the same committee, Andriy Motovylovets. Both MPs represent the Servant of the People party faction.
Dmytro Kysylevskyi, Deputy Chairman of the Verkhovna Rada Committee on Economic Development, also announced his co-authorship of the initiative to introduce a 10% duty on the export of soybeans and rapeseed before the vote in mid-June. At the time, he argued his position as follows.
“In 2024, Ukraine harvested 6.6 mln tons of soybeans, 54.5% of which were exported for processing abroad. Also, last year, the rapeseed harvest in Ukraine amounted to 3.7 mln tons, of which 86.4% was exported abroad. These shameful figures are a clear illustration of the reasons for the poverty of Ukrainians. Instead of making money from processing, we give these opportunities to rich developed countries. And we keep only crumbs from the master’s table. The introduction of a 10% duty on the export of raw materials will allow us to increase the export of processed products – to quadruple the export of rapeseed oil, to increase the export of rapeseed meal by more than three times, to increase the export of soybean oil by 50%, and to almost double the export of soybean meal,”
– emphasized the MP.
He also said that
“Ukrainian soybean and rapeseed processing plants are underutilized by 35%, and if these processing capacities are utilized, Ukraine will receive additional UAH 7.3 billion in revenues to the state budget to finance the Armed Forces, $238 million in foreign exchange earnings, and thousands of new jobs.”
In mid-June, this argumentation did not convince enough MPs to pass the bill: it influenced only 204 MPs, who voted in favor.
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Who is against the customs amendments
The latest initiative to introduce export duties on soybeans and rapeseed was not supported by members of the Verkhovna Rada Committee on Agrarian and Land Policy. According to the All-Ukrainian Agrarian Council, 16 members of the committee voted against it, which indicates that they are aware of the risks to small and medium-sized agricultural businesses.
The appeal of leading agrarian public associations addressed to the heads of parliamentary factions states that
“the consequences of the introduction of export duties will be the temporary enrichment of processors due to falling purchase prices.”
This is what Denys Marchuk, Deputy Chairman of the All-Ukrainian Agrarian Council, says:
“This is a situation where a large processing business is trying to subsidize others. When they lobby for duties, it will actually create difficulties for exporters. Because exporters will have to pay 10% duties. If they pay 10% duties, they will be able to buy goods in Ukraine at an average of 15% cheaper. Consequently, producers, and these are small and medium-sized enterprises, will actually be forced to sell their goods 15-20 percent cheaper than the market price.”
Another consequence may be a gradual reduction in soybean and rapeseed acreage and farmers’ reorientation to other crops. This is actually confirmed by Ruslan Khomych, the head of the Volyn Oblast Farmers’ Association.
“Traders will recover their losses from farmers because of the duty. That is, they will simply reduce our price when they buy. And we can’t export ourselves because we don’t have the experience, we don’t have the number of people to do it: to arrange, clear, ship. The answer of the farmers may be simple: we will not grow soybeans or rapeseed for the second year,”
– says the farmer.
The European Business Association also emphasizes that the introduction of duties on soybeans and rapeseed discriminates against Ukrainian farmers, who are the backbone of the agricultural sector. The legal aspect of this decision is also important, as it is a violation of the Association Agreement with the EU. Iryna Dushnyk, Executive Director of the EBA Grain and Oilseeds Committee, continues.
“The proposal to introduce export duties directly contradicts Ukraine’s obligations under the Association Agreement with the European Union. In particular, Article 31 of the Agreement clearly prohibits the introduction of any export duties or similar measures. Therefore, the introduction of export duties is not only economically inexpedient, but also legally risky – it undermines the EU’s trust, calls into question Ukraine’s obligations as a party to an international agreement and may have consequences for the trade regime with the European Union,”
– notes Iryna Dushnyk.
In addition, the decision-making procedure raises questions. The European Business Association draws attention to the fact that decisions affecting tens of thousands of farmers and agricultural companies are made without public consultations, without discussions with market participants.
Who and what can win and lose from the introduction of duties
Oleh Nivievskyi, Dean of the Faculty of Master’s Economic Studies at the Kyiv School of Economics, Associate Professor, founder of the Center for Food and Land Use Research at the Kyiv School of Economics, assesses the impact of the introduction of duties on soybeans and rapeseed on the economy as generally negative. According to him, there is simply a transfer of added value from agricultural producers to processors and to the budget with simultaneous losses for the entire economy.
“Now the topic of processing development is very popular at the political level, which is, of course, necessary. But the trouble is that they don’t think much about incentive tools, as can be seen from the legislative initiative of MPs and the strange silence of the Ministry of Agrarian Policy and the Cabinet of Ministers in general…. There is a duty, let’s ban or restrict the export of raw materials and that’s it. Just like Sharikov: take (from farmers) and fall (between processors and the budget).”
– this is how Oleg Nivievsky described the situation around the introduction of duties in his Telegram.
In an interview with , he briefly analyzed the economic side of the matter. According to him, the economics of this issue is quite simple.
“Agricultural producers will lose directly from this. That is, if the duties are 10%, then domestic prices will drop by about the same amount. And, accordingly, agricultural producers will lose their income because the purchase price will be lower due to export duties. But processors, of course, will benefit. And another plus is additional revenues to the state budget, because export duties will be collected. But in general, from the economic point of view, a decrease in the domestic price will result in less agricultural production and net losses for the economy. I have calculated that this will amount to about UAH 670 million in economic losses. This is how the economic picture looks like,”
– oleg Nivievsky summarized.
By the way, taking into account the unsuccessful first attempt to introduce duties on soybeans and rapeseed, but also the weight of the initiators, Oleg Nivievsky estimated the chances of introducing duties as 40 to 60.
Summary
So, in summary, the introduction of export duties on soybeans and rapeseed is not just a technical decision on the rates of duties, but a deeply political and economically sensitive step that splits the agricultural community. On the one hand, there is a declared desire to stimulate domestic processing, fill the budget and create jobs. On the other hand, there is a risk of losing the trust of European partners, undermining the market for small and medium-sized agricultural producers, and causing overall damage to the economy. So far, one thing is clear: duties on soybeans and rapeseed remain a hot spot in agricultural policy, where each subsequent attempt to “extend” them is not only a legal decision, but also a test of economic logic, political transparency and respect for partnership obligations.
Serhiy Vasylevych
