To get the next tranche of 1 billion USD from the IMF, Ukrainian government signed a Memorandum and obliged to carry out key reforms this year, one of them – is agrarian reform. Thus, by the end of May the Verkhovna Rada should abolish the moratorium on sale of agricultural lands.
However, the creation of a land market is only a part of the agrarian reform, aiming to promote the development of the agricultural sector in Ukraine and entry into new foreign markets. To achieve the aim it is necessary to facilitate the business environment for small and medium-sized farms, their support and improvement of existing legal framework, also, approach of food production standards to international.
Andriy Zablotskyi, the head of the agricultural sector of NGO “Better Regulation Delivery Office” (BRDO), reported about achievements and the main holdback of agricultural sector reforming.
The reform achievements
State support of farmers. At the beginning of February this year, the government approved the procedure on a monthly distribution of subsidies to farmers. For these purposes, 4 billion UAH were included into budget in 2017.
According to Andriy Zablotskyi, grants will be distributed among the branches: “The funds will be received by small and medium enterprises that carry out production in key areas: horticulture, meat and dairy industry”. Relatively small amounts of subsidies are not attractive for large agricultural holdings, but for small and medium enterprises they are important, that is why farmers should not worry that the budget funds will go to the large companies, considers the expert.
In general, this year 5.5 billion UAH were provided to support the agricultural sector, which is 1% of gross agricultural production. In particular, the allocation norm of 1% of the agricultural GDP is fixed in the Budget Code for 2017-2021 years.
Permission to mix grain in elevators. The issue is the abolition of Instruction on record keeping and operational executions with grain and its conversion products at grain-collecting stations and grain mills. The relevant instruction of the Cabinet of Ministers will join into force as of May, 10.
As explained by Andriy Zablotskyi, this step is very important for the economy, since there are still Soviet norms regulating the grain market so that market participants have to store the grain according to the classes and each class is kept in separate containers. “Instead, most countries of the world do not have such norms, since consumers evaluate the grain by certain quality criteria that are specific for each market. Today Ukraine exports the grain to Asia, Africa and Europe, and each of these regions has its own specific indicators which cannot always be achieved when you have over-regulation of grain storage”, – said the expert.
According to expert, the main benefit of this rule abolition is the reduction of logistic costs and price increase for the entire chain – from the producer to the trader. “We have evaluated and considered these benefits – 100 million USD. The significant logistics benefits”, – underlines the expert. It will give Ukraine an easier option of products export to other countries.
Food safety control. In September this year all producing companies should necessarily introduce HACCP (Hazard Analysis and Critical Control Point) – the system of food safety management. “On the one hand this implies certain expenses, on the other – it makes produced products much safer”, – stated the expert. Implementation of HACCP greatly increases the probability of Ukrainian products to enter the EU, the USA and other markets.
What’s causing the delay?
Legislation on food safety. As of today, there has not been implemented the legislation on food safety provided by the Law “On amendments to some legislative acts of Ukraine concerning food”, which was adopted in 2014. According to expert, for the reformative law to work, about 30 regulatory legal acts should be adopted.
The adaptation speed to the EU rules and regulations, approved by the Association Agreement. The experts calculated that as of today Ukraine has implemented about 30% of the necessary legislation. “Basically, we have 10 years ahead, but it’s only Ukraine’s concern how quickly we do this. First of all it serves our interests”, – said Zablotskyi.
Among other problematic issues – privatization of state enterprises, such as Ukrspyrt and DPZKU (State Food and Grain Corporation of Ukraine) and the decision on the moratorium on land sales.
The fate of the moratorium on timber export also remains unresolved. The expert believes, the moratorium cannot be abolished without domestic regulation: at first, there should be introduced the electronic register of woods, procedures for implementing woods in Ukraine and certificate of origin issuing procedures.
Illustration by Dmytro Zinchuk