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Economic Security Bureau: 'More than 20% of grain exported through high-risk channels'

by Nate Ostiller November 16, 2023 9:36 PM 2 min read
A Ukrainian flag flies atop a grain elevator owned by Nibulon, a Ukrainian agricultural, shipbuilding and transportation company in Mykolaiv on Oct. 21, 2023.(Sebastian Gollnow/picture alliance via Getty Images)
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More than 20% of grain exported over the past nine months went through black market or risky informal channels, Ukraine's Bureau of Economic Security said on Nov. 16.

The total export value of that grain is Hr 144 billion ($3.9 billion).

One of the primary forms of these high-risk channels involves grain that is sold for cash to recently created shell companies, often with falsified documents, which is then resold several times through different buyers. Through this method, grain can be sold without customs documents and also without paying tax to the Ukrainian government.

Grain has also been sold to foreign companies, which then purchase other goods to import back to Ukraine that are then sold for cash. As a result, the foreign companies can earn valuable tax credits.  

The bureau said that significant amounts of money that should go towards the Ukrainian government's budget are being lost in the process.

The body's investigative team has been looking into these illicit export schemes, which have resulted in 22 referrals for criminal proceedings and eight court indictments.

The bureau also recommended a number of reforms that would help strengthen regulations and crackdown on the black market export of grain.

Grain exports are one of the key sectors of Ukraine's economy, but haму suffered as a result of Russia's full-scale invasion and subsequent blockade of the Black Sea.

After Russia unilaterally withdrew from the Black Sea Grain initiative in July 2023, which allowed ships to transport grain out of Ukrainian ports, the transit of grain has significantly slowed. Ukraine opened a humanitarian corridor in August to allow some traffic to continue, but it is a fraction of the pre-war total.

Is Ukraine’s new Black Sea corridor working? Experts say it has potential
Perplexing reports earlier this week that Ukraine had suspended its temporary grain corridor in the Black Sea sparked confusion and concern. Kyiv-based Barva Invest consultancy reported on Oct. 26 that Ukraine had temporarily halted the use of its new trade route in the Black Sea due to the potenti…

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