Quite often Ukrainian agricultural producers face a number of obstacles and problems that prevent them from doing business effectively.

Oleg Kolomiiets, Chairman of the Board of NGO "Ukrainian Agrarian Association", spoke about the problems of inefficient use and distribution of state aid funds, existence of a "shadow" land market, imperfect logistics.

"Last year, within the framework of farmers’ support program from one billion provided for in the budget, only UAH 203 million was spent at the end of the year. Both the objective and the subjective reasons contributed to the low level of use of these funds. First, this is a new type of state aid in Ukraine. Previously, the state, in fact, did not provide support directly to farmers. More attention and resources were concentrated on large agricultural producers.

When the state introduced a new type of support, it was confronted with a misunderstanding of the rules and peculiarities under which small and medium-sized producer operates. Farmers are small and medium-sized agricultural producers. For example, state aid instruments focused primarily on reimbursement of farmers' capital, operational costs, including repayment of interest on loans. That is, the state had to partially offset the farmer's actual costs. But no one asked the farmer where he should take the money to make these expenses: buy a tractor or a combine, etc. Unfortunately, in our country there is a big problem with access to financial resources for small and medium-sized agricultural producers" explained Oleg Kolomiiets commenting on the reason for the low use of state aid funds.

"Also unsuccessful mechanism was the introduction of bills of exchange that did not allow farmers to buy machinery or equipment and to return part of the funds spent under these bills. The procedure prescribed was quite difficult. Even the Ministry did not understand how to work with these bills properly: how to avalize them, how to pay them off, etc. At the end, a solution was found, but it did not produce an effective result. We have repeatedly suggested that the Ministry abandon this instrument and switch to another. The Ministry listened and the relevant amendments were made to the Procedure", summed up the Chairman of the Board.

It’s worth recalling that last year, through the mechanism of bills of exchange, agricultural service cooperatives (ASCs) were reimbursed part of the cost of purchasing equipment for storage and processing of agricultural products. At the end of 2018, only 6 cooperatives received such compensation in the amount of UAH 7 million, out of the UAH 155 million provided for in the budget (or 5%).

For more details, hot topics and issues raised during the broadcast on Agro FM, see the full story.

Want to stay updated on the most recent news of the Ukrainian Agrarian Association?

Subscribe to this content and receive updates directly in your inbox.