The suspension of value-added tax (VAT) refunds on soybean exports by the Ukrainian government over the September 2018-May 2020 period saw as much as 57pc of the country's crushed soybean volume coming from the black market.
More than 600,000t of the 1.195mn t processed by Ukrainian crushing plants was sourced from the black market during the 2019-20 season, according to a number of large Ukrainian soybean crushers.
And this is projected to have translated into up to 120,000t of Ukraine's soybean oil having originated from black market product, equal to around 30pc of the country's total soybean oil exports.
The key reason for the sharp increase in shadow market activity for soybeans in Ukraine was the suspension of VAT refunds on bean exports in September 2018, forcing many large exporters to suspend their export operations.
Reduced exports resulted in a significant increase in local soybean supplies and subsequent fall in prices, particularly boosting the size of the black market where taxes are not collected.
The soybean black market remained active into the 2020-21 season, but VAT refunds on soybean exports were restored in May 2020, and this is expected to see the size of black market activity decrease during 2021-22.
In addition, Ukrainian farmers are likely to increase their soybean planted areas in the coming season, following a huge increase in profitability this year. It should expand soybean supply, allowing large exporters to regain their position on the Ukrainian market.
