Ukrainian farmers under the government-funded program to support acquisition of Ukrainian machinery and equipment bought it for the amount of over UAH 5.77 billion in 2019, which is 31.2% more than in 2018, Secretary of the National Committee for Industrial Development Olena Salikhova has said.
“At the same time, the amount of compensation [25% of the cost] for the purchased equipment according to the Ministry of Economic Development, Trade and Agriculture, in fact in 2019 amounted to UAH 640 million (applications submitted by farmers in September were satisfied), while applications filed in October-November for the amount of UAH 563 million were not compensated, but the equipment was purchased,” she said during a Thursday working meeting with Deputy Minister of Economic Development, Trade and Agriculture Taras Vysotsky with agricultural associations devoted to support programs for 2020.
In turn, Vysotsky said that this program was underfunded due to the fact that the budget provided for these purposes less funds (UAH 682 million) than the demand for this program.
“Farmers bought a lot more equipment under the program than there were funds in the budget, so we can discuss the possibility of considering this compensation in 2020. Our position is to complete all the programs,” the deputy minister said.
He said that in the fourth quarter, when there was no money left for compensation, farmers purchased equipment for UAH 2 billion, which means compensation for another UAH 500 million.
The World Bank invites the Ukrainian government to consider the creation of the Partial Credit Guarantee Agency as a special financial tool that will allow small and medium-sized agricultural producers to receive financing for the acquisition of land after the launch of the market. “Partial guarantee for loan contributions is the best option for Ukraine,” Lead Financial Sector Specialist for the Finance and Markets Global Practice in Belarus, Moldova and Ukraine Vahe Vardanyan said at a press conference on Thursday.
According to him, at least half of the countries have introduced government partial guarantees as a way to facilitate access to loans. There is also the practice of creating specialized partial guarantees designed specifically for agriculture, for example, in Mexico and Colombia, he said.
In order to receive partial guarantees, the farmer applies for a loan to a bank, which analyzes the application and determines the need for partial guarantee, then the bank contacts the Credit Guarantee Agency. The latter checks the compliance criteria and carries out risk analysis, approves and provides a partial credit guarantee, receives a fee from the bank for issuing the guarantee. Further, the bank provides a loan secured by partial guarantees.
In addition, the World Bank said that the Credit Guarantee Agency (company/fund) is usually a non-banking financial institution, it has its own: management, governance, capital, operating procedures. The legal structure of the agency allows for a mixed type of ownership at a certain stage, the government is not always a full owner. The National Commission for Financial Service Markets Regulation exercises supervision as over a non-banking financial institution.
All over the world, guarantee agencies are state-owned, co-financing, public private partnership is possible, but this is about joining after the first year of the institutions’ work, World Bank Country Director for Belarus, Ukraine and Moldova Satu Kahkonen said.
The Ministry of Agrarian Policy and Food of Ukraine in January-July 2019 allocated UAH 64.12 million to compensate interest on loans for agricultural producers.
According to the press service of the ministry, farmers for the seven months attracted loans in the amount of UAH 3.8 billion. The largest amounts of compensation were received by manufacturers in Vinnytsia (UAH 6.17 million), Cherkasy (UAH 5.95 million), Kyiv (UAH 5.43 million), Poltava (UAH 4.5 million) and Khmelnytsky (UAH 4.29 million) regions.
As reported, the 2019 budget under state programs for agribusinesses foresees UAH 800 million for support to farmers, UAH 244.5 million in loans to farms, UAH 127.2 million for cheapening loans for farmers, UAH 400 million in support for hop growing, gardens, vineyards, and berry production. Some UAH 3.5 billion is provided for the program to support animal farming, storage and processing of agricultural products, as well as fish farming in 2019.
The program of financial support for agricultural producers (subsidies for the purchase of agricultural machinery, equipment, wagons) foresees about UAH 881.8 million.
The Ministry of Agrarian Policy and Food of Ukraine intends to allocate UAH 119.8 million for reimbursement of expenses to 112 business entities under the program to support the development of viticulture, horticulture and hop production, the press service of the ministry has reported.
The ministry’s commissions made the corresponding decision at a meeting on July 12.
“Thanks to state support, Ukrainian agricultural producers have already planted 1,853 hectares with new crops, in particular, hazelnuts, walnuts, apples, pears, cherries, blueberries, strawberries, grapes, cherries, raspberries, plums, peaches, sea buckthorn,” the ministry noted.
The Ukrsadprom has addressed the Ukrainian president, prime minister and leaders of the political parties asking to introduce some measures for the development of gardening, in particular, to introduce the fixed land tax per ha depending on the type of economic activities.
According to the press service of the association, Ukrsadprom also asked to return preferential VAT for farmers, to provide state support for the export of horticultural products, and also to modernize the industry’s subsidy program with a focus on processing.
As reported, the Ukrsadvynprom association asked the Agricultural Policy and Food Ministry to adapt the program of state support for gardening to berry enterprises, as well as to expand the list of wine-making areas.
AgroFoodCluster Kharkiv, uniting small and medium-sized agricultural producers in Kharkiv region, plans to develop a direct export scheme for small farmers in 2019, Cluster Chairman Yuriy Mykhailov has said. “Next year we want to build an export scheme for our farmers, according to which they will be able to receive currency into their account. This is the main motive for the region, so that the currency comes to the manufacturer, and does not remain partially abroad, which most traders abuse,” Mykhailov told Interfax-Ukraine at the third Ukrainian-German forum “BEA: Bioenergy, Energy Efficiency and Agribusiness” in Kharkiv.
According to him, the cluster in 2019 also intends to increase the number of participants.
Among the projects of AgroFoodCluster in 2017-2018 is the participation in the ANUGA food fair (Cologne, Germany). According to Honorary Consul of the Federal Republic of Germany in Kharkiv and managing partner of ILF Tetiana Havrysh, this allowed the cluster members to get new contracts in the European, Asian and African markets.
Mykhailov said that the cluster also carries out joint projects with the ILF law firm, aimed at raising the legal awareness of cluster members on taxes and protecting businesses from illegal seizures.
“The last initiative that we have to implement is to become representatives of the Ukrainian Agricultural Council, which actively protects the interests of producers, and cooperate with them on the protection of the property of our participants,” Mykhailov said.
According to him, in October 2018, the cluster included 19 companies.
“If there are about 400-500 agricultural producers in Kharkiv, the share of cluster members is very small. We had a goal to reach 100 participants, but this is quite difficult,” he said.
According to Havrysh, the priorities of the cluster are also cooperation with educational institutions, which are part of the cluster, to improve the quality of staff, as well as the development of communities.
“Now the cluster is looking for strategies for introducing green tourism. It is launching cultural programs. This is an evolution, although it may not be fast, because the Ukrainian government does not have a specific strategy regarding clusters,” she said.
Havrysh said that the cluster is also interested in creating a branded regional product to increase competitiveness in the domestic market.
“This can seriously influence domestic exports between regions in Ukraine. We often see products from Western Ukraine in Kharkiv, but it is unlikely that products from Kharkiv are seen in Western Ukraine,” she said.
As reported, the AgroFoodCluster Kharkiv was created in July 2017 intending to bring the region’s products to new markets.