KIEV, UKRAINE — The Ukraine Grain and Feed Trade Association (GAFTA) sent a letter on Feb. 15 to the Ukrainian parliament expressing its concern over a draft law that GAFTA said gives priority to the state agent for export of agricultural products, thus creating a monopoly.

GAFTA said the law is a contradiction to all known standards of free trade.

Authors of the law said it will protect the interests of domestic producers of agricultural commodities, covered by state price regulation and interests of the government. The law would impose new export rules for agricultural commodities. Sergey Teresjuk, the deputy head of the parliament Agrarian Committee, said the document will be introduced for the discussion.

Grain producers will depend on the state agent, and agrarians will loose the chance to choose the buyer. Only grain processors with annual demand at the level of 8 million tonnes, which are not able to support prices on the market by their measured purchasing activity, will be the “competitor” of the agent.

GAFTA said exports account for 50% of grains demand and 80% of sunflower oil demand.

Vladimir Klimenko, president of the Ukrainian Grain Association, said he considers that the monopolization measures will cause essential losses for grain traders and agricultural producers. GAFTA noted that to date, the government owns only two port elevators, thus passing of the draft law will also cause a increase in logistical expenses.

Klimenko said agricultural producers have never lost the right to export food commodities. To date, grain traders would be able to trade on FOB terms only. GAFTA said that if this law is passed it will aggravate the investment attractiveness of the agrarian sector of Ukraine.