It can’t be said that the recent arrests of vessels with grain by the State Fiscal Service (SFS) in the Ukrainian ports is an accented stroke on grain traders. The State Fiscal Service has been engaged in this for several years. It disclosed fictitious elements in the operation of the Ukrainian domestic market on a regular basis. As a head of the large company, I can tell that the service quite efficiently monitored all the chains, prevented illegal actions and worked with companies doing business on the domestic market. If NIBULON, as a Ukrainian entity, buys grain on the Ukrainian market, so the tax authorities clearly control from whom our company and brokers have bought grain.
 Unfortunately, the State Fiscal Service didn’t deal with grain exporters earlier; it wasn’t interested in grain origin at all, as well as whether grain is bought for national currency with appropriate execution of documents. No one cared about this.
 Only the aggrieved party can tell about the existed conflict. But to my mind, the aggrieved party should critically look at its activity, reconsider its position and make right conclusions in this situation.
 Fortunately, the State Fiscal Service has begun to fulfill its function in the field of grain legalization. Personally, I am happy that there is the service which prevents illegal grain exports and production purchased for cash unofficially. It completely relates to the fight against shadow cash cycle and will positively improve the image of Ukraine.
 Although traders state that this will impact exports negatively, but I don’t think so. Everybody knows that there is a shadow market in Ukraine. The fight with it will positively influence the image of Ukraine.
 If a company is registered on a dead person, it is clear that the currency will enter its account. And if such a company under any false documents is registered on any off-shore company, it is a collusion. These are malicious actions of persons who plan not to bring currency in Ukraine for the grain shipped. Otherwise, what is the point in carrying on business on behalf of the company registered on a dead person?
 Who is to profit from shadow market
 Unfortunately, now shadow schemes on the Ukrainian grain market have a fertile ground for their development. As some agricultural producers want to get cash in US dollars on the day when they sale their commodities, passing over tax invoices and official execution of documents. Agricultural producers who cultivate grain illegally, breaking the Laws of Ukraine, choose this way.
 They live in the present and absolutely don’t think both about the perspective of agribusiness development in Ukraine and about future perspectives of the national agrarian sector development as a whole. Previous years, I came across a lot of people who considered that the shadow cash cycle is a rescue from the state. But it is not true. As experience shows, these very people are under distress, become bankrupt and gain problems both with law enforcement authorities and the criminal world.
 What are the reasons?
 Firstly, it concerns farmers who don’t have their own storage capacities to store grain. It means they are forced to sell it relatively quick. How to sell this grain profitably? If a farmer sells it officially today and deposits money on a transaction account, then tomorrow money can depreciated because of exchange fluctuations, and he will have purchase fuel at another price. These factors force producers of agricultural commodities to continue to keep money in foreign currency, in case they sale grain for US dollars.
 Observing such facts, you always think till when agricultural producers will live for the day, till when they will make decisions recklessly according to the simplified scheme, exposing to huge risks both themselves and their staff.
 Nowadays it is time to think how to resolve this question in a legal way even under inflation and instability of our currency. The simplest variant is to bring grain to a silo and to negotiate on collateral grain purchase. Such schemes acted legally several years ago. And they are profitable for agricultural producers.
 What is the benefit? Everybody knows that during the mass grain harvesting there have never been high prices. It means that it is high time to use the scheme of collateral grain purchases: grain is brought to silos, an agricultural producer is paid 30-40% (the quantity he needs for today), and grain is kept till the prices rise. Then agricultural producers can get the rest of money for grain. And there are no losses. In addition, this scheme is legal, transparent and public. The agricultural producer gets official money, can pay wages to people officially, pay all taxes, buy officially all material resources which he needs for farming.
 If agrarians think that getting money in “cash” will secure them against devaluation, they are mistaken. In fact, they are completely integrating with the criminal world and shadow grain trade. The opinion that they can sell US dollars in any moment and get hryvnas is also mistaken. After all, they can lose money at any time. Can anybody sleep well if there is a bag with US dollars under his bed? I do not think so.
 Secondly, the Draft Law according to which 20% of the grain selling is necessary to accumulate on a special account was issued ill-timed. This is “alive” money which a producer has had to recall. Additionally, it was necessary to register a tax invoice. During last month, this Draft Law was cancelled. It was stated that the producer did not lose this money; the funds could be credited to a special account in transit. But time has passed already.
 And the agricultural producers, taking into account the absence of control concerning the area they farm and its location, what grain they cultivate, where they sell it, whether they sell it legally or not, are dealing with dealers and happily sale their grain, falling for US dollars in cash. It is difficult for them to be creative and to work in the legislative field.
 And it is easy for them to display our Ukrainian “creative work”, to work on the shadow market without thinking about implications. And if we speak about criminal activity in such cases, then, as a rule, such a crime is committed by both sides. One side offers, and the other one assists. And it is the collusion. Both sides completely understand that they violate the law. And the agrarian market becomes completely shadow.
 Such a vicious practice has generated the shadow business in the whole sector. Now it is necessary to buy fuel, fertilizers, plant protection agents for cash money, and to pay salary unofficially. The conclusion is as follows. Will the village live better? No, it won’t. Will people engaging in this agribusiness be protected? No, they won’t. Will schools work? No, they won’t. Will medical industry work appropriately? No, it will not. Will the roads be good? No, they won’t.
 Everything goes to the shadow turnover. Come to sense, agrarians! The President and the Prime Minister of Ukraine will never make you happy if each of us thinks only about today.
 Weak control over traders
 I think transnational companies operating in Ukraine took the problem of grain origin carelessly. This problem was not of interest to them. They know they are supported by rich and influential countries, ambassadors, and they can gain support of different international civil society organizations, chambers of commerce, etc. if they say there are obstacles for their operation. They took carelessly their offshore partners abroad, hired people running afoul of the Ukrainian law, without even asking their documents.
 Ukrainian representative offices of international companies using permissiveness and absence of control believed it is the problem of the state but not theirs. They were not interested in grain origin, who had bought it and for what money. None had doubts about transparency of these suppliers. In fact, such companies became accomplices for shadow schemes. It is also indicates that the security service of these transnational companies did not operate appropriately. Probably, the service did not want to check it at all.
 Dear managers of transnational companies, please pay attention to how many faked grain exporters have appeared during recent years. Using the absence of control, a lot of such faked exporters appeared near your terminals. They actually pushed the country to the shadow market of grain.
 The point is that foreign companies are owners of transshipment terminals in Ukraine. Everybody was allowed to sell grain for exports at these terminals, without asking what they had at their own, whether a head of a company had a passport, an income declaration or any financial reports.
 If I, for example as general director of the company, would like to work with you, then you should make a multipage folder on me and my company and would pass it to your foreign office for detailed consideration in order to obtain a permit to cooperate with me. But in this case, everything is so simple. What for? In order to benefit today? And blame the state authorities in case of problems. But it is both your problem and the problem of the state authorities. And there cannot be only one responsible party. As a rule, two parties are responsible. How can one consider this?
 And now let’s proceed further. If a fictitious company in Ukraine makes a similar fictitious company abroad, we have a simple scheme of tax non-payment here. And grain from one fictitious company is transferred to another fictitious one. It means that the Ukrainian representative offices of the Western trading companies should learn to work with agricultural commodity producers transparently, like NIBULON does.
 Personal experience
 Specialists of our company concluded 4 thousand contracts in Ukraine. It means we have 4 thousand partners who work with us transparently. They legally sale their legally grown grain to us. Thus, 91% of the contracts are concluded directly with agricultural commodity producers and 9% of the contracts are concluded with wholesale suppliers to whom the purchase of grain from agricultural commodity producers is an obligatory requirement. NIBULON on principle does not cooperate with companies buying grain from intermediaries.
 To cooperate with our company, it is necessary to submit a set of documents. And the payment for commodities is executed only after the respective examination of the documents. With the course of time, in case we have been cooperating with a client for a long time, we go toward cooperation simplification and work on the basis of trust with people who have accepted our business ideology, i.e. to work transparently. The whole chain of grain movement is completely documented at our company. We can say which driver came to NIBULON, watch his photo, car number, etc. at any time.
 As NIBULON’s General Director, I know the situation perfectly. When I see grain delivered to our company, I am happy. We take all measures to serve drivers as quick as possible and show our respect to them and their managers. I know many heads of farms and grain suppliers personally. The company has a rule – our employees should know their partners they cooperate with.
 We had a bitter experience, when there was no opportunity to address ourselves to foreign ambassadors, and our own state attempted to take away our business. But the very transparent and honest work of our company helped to defend from encroachments on private property. We made sure it is unacceptable to play with the state, as we understand that unfair work can lead to business loss. And although we believe that the one who sold grain to us should be responsible for its origin. Unfortunately, the beneficiary, i.e. trader, was the first to be responsible. Despite this, we have done everything to prove we worked transparently. Certainly, this disciplines market players.
 Sometimes being on business trip and passing by truck queues, I stop near them involuntarily. Providing that most of drivers recognize me, we can easily have a trustworthy talk. They tell that they stay under the baking sun along the road for 24 hours and would gladly carry grain to NIBULON, as they can be treated humanly there. And if you ask why they do not carry grain to us, they propose to phone their managers. It comes clear that they sell grain for cash here (there is demand), and NIBULON works transparently that means a set of documents should be provided.
 Multiple problem
 It is necessary to deal seriously with shadow exporters which spring up like mushrooms in Ukraine, and to demand documents for grain origin at customs declaration processing. By the way, such documents are also required by the Chamber of Commerce and Industry as well as by foreign partners. One should provide the documents, proving he purchased grain legally. But it is simpler in Ukraine, as such fake exporters moved further and now they have full range of offshore “grey” markets.
 If our security officials involve international law enforcement forces, it will be not the last headline-making case in Ukraine.
 The guilty should be punished making an example for other market players. And being only discussed, the shadow market (at the current level of 60%) will expand up to 70% – 80% and even to 100%. And transparent business in Ukraine will have nothing to do. It should not be a demonstration act in three courts, but a constant planned work unless the shadow market vanishes. And I am convinced that everybody will benefit: agricultural commodity producers, state, communities where these agricultural commodity producers are located and the country as a whole. And we will become a society which is ready to go to the civilized Europe. After all, we do not want to live among criminals.
 The shadow grain market is not a problem of the tax authorities only. First and foremost, it is the problem of grain exporters who purchase grain from fake exporters. Secondly, it is the problem of the National Bank of Ukraine, the Ministry of Internal Affairs, the Prosecution, all administrative authorities, ministries and administrations, the Security Service of Ukraine as it is referred to the Ukrainian economic security.
 During the meeting of traders with the State Fiscal Service management, I spoke that the National Bank of Ukraine take fairly severe and unpopular measures in exchange regulations and liquidation of shadow cash turnover, closing of  ineffective banks, and etc.
 This situation on the grain market should push the National Bank of Ukraine to implement requirements prohibiting sale of grain for cash without documents issuance. If a bank provides a market participant with cash, it should require an official confirmation about an entity who sold the grain to a market participant. This market participant should show the account on which these funds are deposited. This situation on the grain market should push the National Bank of Ukraine to implement such requirements.
 Summary
 In general, it is a global problem for the agrarian sector in Ukraine. Let’s come back to earth. Let’s ask all agricultural commodity producers what they grow and on what area, where they sale their grain. Today it is simply to identify a bio yield of every crop on every field. Today there are many monitoring organizations which should come to an agricultural commodity producer and ask him to whom he has sold his grain. Only one such inspection will be enough for a farmer to understand he is monitored. The preventive activities and training on legal business in the agrarian sector of Ukraine or on legal business benefits in Ukraine would be also effective. After all, people unconsciously lose huge funds because they work on the shadow grain market. It is not yet late today to commence the activity for legal sale of sunflower oilseeds, sorghum, soybean and corn.
 I know many farms and managers that work transparently and denounce shadow market players. Our company is also ready to share its experience with international companies to show the realities of life in Ukraine. First of all, the cooperation with shadow traders is disrespectful towards Ukraine. Today, in such a situation, everybody should assist law enforcement authorities to find people working on the shadow market, to assist so that investigations may be effective, to stop any operations with suspicious companies. These very actions can help us altogether to liquidate these negative event shocking the Ukrainian grain market.
 Alongside, I call on large agrarian holdings, as you call them “latifundists”, to stop asking the state about preferences and to return to VAT reimbursement. Anyway, our agrarian sector is an offshore zone and “free economic zone”. Everybody wishes to be rich, receive good salary and to have well-appointed settlements . But nobody wants to pay taxes.
 My position is as follows: the Ukrainian agrarians should be ashamed of operating at a loss. It is disgraceful for them to operate on the shadow market. I denounce such people and managers of companies. Stop to piggyback on our state!
 
Source: Latifundist agro-portal