LAW FIRM DIRECTORY

Industry Sectors

ANNA ZORYA,

Laying All Hopes on Agriculture

Agriculture is one of the most promising sectors for investors in Ukraine. The following aspects testify to this fact: 1) Ukraine supplies to the world market more than 15% of the global volume of corn and over 10% of crops, being second only to the USA in the export of agricultural produce; 2) domestic companies control over 30% of the crops market in countries of North Africa and the Middle East; 3) the import ratio of Ukrainian crops in some countries exceeds 70%. At present, the agro-industrial complex accumulates almost one third of fixed capital stock and employs a quarter of the population. However, the legal framework, which is insufficient and inappropriate with new trends and market demands, continuous reforms of agricultural produce taxation and absence of real financing of the agro-industrial complex of Ukraine (despite the formal existence of state support programs) restrain the development of the agricultural sector’s business.

The need to fight such obstacles is an urgent one. Moreover, the recipe of agricultural sector survival is not kept secret. What we mean by this is production risk diversification, refusal of unprofitable trends, focus on profitability, proper structuring and optimization of business-processes in the company. At the same time, the state can also help agricultural producers and investors by means of further deregulation of agrarian business, creating conditions for the agricultural derivatives market, simplification of the order and circulation procedures of agrarian receipts.

It should not go unnoticed that in 2015 government authorities undertook radical steps towards deregulation and adopted significant changes. Such changes are intended to cut down expenses on business activities, to reduce the corruption component and to bring the legislation of Ukraine into compliance with EU legislation. The key changes are the following: abolition of overregulation in the sphere of pesticide and chemicals control; reduction of the time period for issuing conformity certificates to organic growers (from a month to five working days) and simplification procedures of organic produce certification; reduction of the time period for issuing phytosanitary and quarantine certificates (from five days to twenty-four hours); cancellation of demands regarding the procurement of operational permits on milk and dairy produce production capacity. The government claims that it is just the start and they are not going to rest.

At present, the Association Agreement with the EU opens up new opportunities for  domestic business, providing a transition to the European Safe Quality Food Standards. We should not overlook these possibilities. As a consequence, we will observe gradual elimination of trade barriers between Ukrainian and European markets and, as a result, interest on the part of foreign investors in our country. Taking into account the above-mentioned, Ukraine can and should in the near future become one of the most attractive investment trends.

At the moment any kind of investment into Ukraine, for obvious reasons, involves risk. Subject to these risks being eliminated or at least reduced, current investments into the agrarian business promise to yield investors quite solid dividends in the near-term prospect. As the saying goes, “Nothing ventured, nothing gained.”

If we face the future and try to predict Ukraine’s progress in a couple of years, we will realize that in the long term there isn’t a more important sector than the agricultural one. Our task is to transform all emerging obstacles into new opportunities for the development of the agricultural sector in Ukraine.

On taking the correct path to reforms, Ukraine shouldn’t be satisfied with the results achieved, but should make steady further progress, despite all the ups and downs. As Lucius Seneca once said: “The path will be overcome by the one who walks it”. We will achieve success!