Law project “About rates of export customs on seed of certain types of plants" registered under number of 4734 in the parliament on May 31, 2016 regarding cancellation of export custom on oil flax, granulated or not, and false flax. Association UCAB supports this initiative as planned cancellation will allow increasing production and export.

Conducted analysis of custom on production demonstrates strong correlation within the rate and sowing area, the less sowing area the higher custom duty rate. Export custom duty on oil flax, false flax and sunflower was implemented in 1999 with rate of 23% of custom value. Later the rate has been changed to 10% and sowing areas have been increased. Presently, producers estimate custom duty as to high. At the same time, the association’s experts underline that in case of duty cancellation in 2016, production of this type of crops may double up to 2018.

According to the association information, custom duty was introduced to create balanced framework for foreign and national customers. Nevertheless, if sunflower case has allowed rising internal processing based on existence plants, large agro producers and high global demand level on oil, oil flax and false flax case has shown negative limiting recovery effects of custom duty implementation.

Underdeveloped of processing segment and export orientation of crops as flax has been seen in foreign trade statistics. Last ten years demonstrates 60% export average level of flax yield. Every second ton of exported flax volume is sold to European Union and according to the FTA Ukraine has to reduce export custom duties on flax. Thus, in 2016 export of flax to the EU is taxed by duty of 9.1% and in 2026 it has to be cancelled.

“Export duty has to be cancelled already in this year as it has not proved its purpose and even has harmful influence on the business. In fact we have got vicious circle as processing companies don’t have real business incentives due to low production level in Ukraine and farming entities don’t raise production due to low internal demand and high custom duties. According to the FTA Ukraine has to cancel custom duty in any case and that is why we call for speed of the process”, said Taras Vysotskyi, UCAB General Director.