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Ukraine’s Agricultural Policy

The role of agriculture in the Ukrainian economy is remarkable. Almost two thirds of the country’s area is used for agricultural production. The agricultural sector contributes significantly to the employment and the GDP. It provides the population with food at the level of 95% that is one of the highest rates in the world. Besides of that, the agricultural products market of Ukraine has a vast potential to increase in the absolute numbers and great possibilities to substitute many import positions. Due to UNO data Ukraine closes the set of three world leaders as for the dynamics in agricultural production (after Brazil and Russia). Furthermore, agriculture has a pivotal role in foreign trade.

The main cornerstones of Ukrainian agricultural policy were laid down in the “Law on Basic Principles of the State Agrarian Policy” in 2005 where long-term objectives were established until 2015. These include:

1. Food security.

2. Efficiency and international competitiveness of the agricultural sector.

3. Integrated development of rural areas and improvement of social conditions of rural people.

In 2007 a program was attached to the above-mentioned law called State Targeted Program for Development of the Ukrainian Countryside. This program renders concrete tasks for the objectives and determines financial (both governmental and private) sources and needs for the specific tasks. In 2008 the third objective was further affirmed with the National Program for Rural Development

The main agricultural policy measures include input subsidies through concessional taxes and credit availabilities for agricultural producers. One feature of these subsidies is the option for agricultural producers and food processors to hold back their VAT payments. Further support is granted in the form of tax and credit preferences. Different forms of market price support instruments are widespread. Minimum price is an important market price support measure. Mostly grains, oilseeds, and livestock products are "subject to state regulation".

Ukrainian government provides direct budgetary subsidies for different purchased inputs, like electricity, fuel for irrigation, domestically produced fertilisers, and seeds.

Another form of financial support aims to develop the quality of agricultural plants and livestock products. For example, support can be received in order to improve seed production, pedigree breeding, and biotechnologies.

Among Ukraine’s agro-environmental measures the goal is the protection and rational usage of agricultural land.

5-year prospects:

ü increase of the volumes of internal consumption and export;

ü import substitution with the domestic production;

ü the improvement of the conditions for the activity of the enterprises due to the state support;

ü increase of competition due to the sector attractiveness;

ü increase of the competitiveness of the domestic products comparing to the import ones.