Ukraine. Regulation of soy and rapeseed exports remains uncertain

In Ukraine, discussions regarding the introduction of export duties on soybeans and rapeseed continue, with the prospects of adopting or rejecting this decision still unclear. Debates in the relevant authorities focus on the potential impact of such measures on the agricultural sector and international trade. No specific deadlines for a decision have been announced, adding uncertainty for exporters and farmers.

Meanwhile, Europe is closely monitoring the situation and considering possible countermeasures if Ukraine imposes export restrictions. Specifically, the European Union may introduce a retaliatory import duty of 5.6% on Ukrainian vegetable oils if soybean and rapeseed exports are restricted. Such actions could affect trade relations between Ukraine and the EU, raising concerns among market participants.

The Verkhovna Rada’s Committee on Agrarian and Land Policy has rejected a proposal to introduce a 10% export duty on soybeans and rapeseed, as reported by the Ukrainian Agri Council (UAC). During the committee’s meeting on July 7, 16 members voted against the measure. However, the Committee on Finance, Tax, and Customs Policy recommends adopting these duties, highlighting conflicting positions among parliamentary committees.

The Verkhovna Rada is preparing to review the so-called “soy and rapeseed amendments” as part of bill No. 13157, which is being prepared for its second reading. The bill also includes other tax initiatives, such as provisions for paying patronage dividends within agricultural cooperatives. The soy amendments relate to changes made to Ukraine’s Tax Code in late 2017, which addressed VAT refunds on soybean and rapeseed exports.

Stepan Kapshuk, Director General of the Ukroliyaprom association, has advocated for several years for a ban on exporting 50% of the rapeseed harvest to increase the capacity utilization of Ukrainian processing plants, which, particularly in 2024, faced significant raw material shortages. Meanwhile, Dmytro Kysylevsky, Deputy Chair of the Parliamentary Committee on Economic Development, proposed bill No. 13134, which includes amendment No. 40 introducing a 10% export duty on rapeseed and soybeans. He argues that fully utilizing processing plants, currently operating at 35% below capacity, could generate an additional UAH 7.3 billion for the state budget, which could support the Armed Forces of Ukraine, as well as provide $238 million in additional revenue to fund new plants and create thousands of jobs.

Several industry associations have criticized the legislative proposal titled “On Amendments to the Tax Code of Ukraine Regarding Expanded Access to Medicines Through Managed Entry Agreements,” which includes export duties on soybeans and rapeseed. Business associations argue that such measures discriminate against small and medium-sized producers, aim to increase processors’ profits at the expense of smaller farmers, and violate the terms of Ukraine’s Association Agreement with the EU.