Ukraine's agriculture, the most export-oriented sector of the economy accounting for 12 percent of gross domestic product last year, has long been hampered by inefficient, corrupt and bureaucratic regulation.
This is coming to an end.
At the nation’s ports alone, an estimated
Hr 8 billion ($366 million) is collected yearly in bribes, Agriculture
Minister Oleksiy Pavlenko said at an agricultural forum in Kyiv on Oct.
15.
To eliminate opportunities for bribes, his ministry is now
designing a “single window” office that will allow businesses to take
goods through customs in just 10 minutes using electronic applications.
Now the procedure often takes days.
“Our first goal is to leave business alone, create conditions for you to breathe freely and work conveniently,” Pavlenko said.
Another goal is to introduce predictable tax and administrative regulations, and not change them for at least five years.
At
its latest meeting on Oct. 13, the Cabinet of Ministers cancelled a
measure that required exporters to receive a veterinary certificate for
their agricultural products, adding it to the six licenses and 14
permits that were cancelled this year. Veterinary certification used to
cost businesses an estimated Hr 1 billion a year. It also delayed goods
delivery by two days.
“The infrastructure minister evaluates the
efficiency gain of this cancellation at 900 additional (train) wagons
per year which allows us to increase export (transportation) without
additional investments,” Pavlenko said.
Agriculture Minister Oleksiy Pavlenko. (Anastasia Vlasova)
Deputy Agriculture Minister
Vladyslava Rutytska said the deregulation measures will bring up to $300
million to the state budget.
Ukraine exported $8.6 billion worth
agricultural goods in the first eight months of this year, accounting
for 40 percent of total exports. Ukraine’s economy has become more
dependent on agriculture. The sector’s share of gross domestic product
grew from 7.9 percent in 2008 to 11.8 percent last year, according to
the World Bank.
Olena Voloshina, head of the International Finance
Corporation in Ukraine, praised the ministry’s efforts, saying that the
government measures so far will save businesses over $100 million
yearly. One of the most harmful measures that was repealed were
mandatory certificates for grain elevators.
“Just this single reform will save businesses $60 million annually,” she said.
The
food security and standardization initiatives that are bringing Ukraine
closer to European Union standards have already resulted in foreign
markets opening up for Ukrainian producers, Voloshina said.
But deregulation alone is not a sufficient argument for investors and creditors.
“For
me as a banker and an agronomist the most important things are
stability and confidence,” said Jean-Jacques Herve, an adviser to
agricultural board of Credit Agricole bank. “If investors don’t
understand on what lands they will be working in the next five or seven
years, they will not invest. Why do I invest in good seeds and plant
protection substances if I don’t know how much I would have to pay for
nitrogen fertilizers as the supplies may be blocked at some caprice.”
Understanding
and trusting a company’s management and possibility to split risks
among partners is what Herve sees as essential for capital to come to
the sector.
In the meantime, 2015 was hard for farmers but not too bad.
“I am grateful to everyone working on the ground this year as we have overcome a very tough year,” Pavlenko said.
In
the previous marketing year, a record 34.6 million tons of grain was
exported out of 63.8 million tons that was harvested. This year 60
million tons is expected to be reaped, 35-36 million tons of which
slated for export markets.
Preliminary harvest figures for the first nine months of 2015 show that Ukraine has surpassed last year’s figures for the same period, except for sugar beets.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected]
