The Cabinet of Ministers of Ukraine confessed to the ineffectiveness of this year's programs of state support to the agrarian sector, and proposes to reduce their total funding in 2018 by UAH 2.079 billion — from UAH 6.3354 billion to UAH 4.275 billion.

The relevant government bill No. 9369 on amendments to the Law of Ukraine "On the State Budget of Ukraine for 2018" was registered in the parliament on December 5.

The government said that it managed to save over UAH 10 billion in 2018. In fact, all this savings were achieved at the expense of three programs: state support to the agro-industrial complex due to ineffective mechanisms for the distribution of funds, as well as payment of state social assistance and support of public administration reform.

Thus, according to the text of the bill, the Cabinet of Ministers proposes to reduce the amount of financial support for the development of farms by UAH 850 thousand — up to UAH 150 thousand, state support to the livestock sector by UAH 979 thousand — up to UAH 3,021 billion, and financial support of agricultural producers by 250 thousand UAH — up to UAH 695 thousand.

"We strongly object to such changes. Those 2 billion UAH, which supposedly "saved" the government, should be paid to farmers. "Savings" arose exclusively as a result of the ineffective mechanism of distribution of funds, which actually left agricultural producers without state aid. All major agrarian associations warned last year that everything would be the same. The Cabinet of Ministers must finally admit that it has not coped with its responsibilities and actually failed this year's program of state support to the agroindustrial complex, and the money that was left unused in the budget is aimed at financing really effective and necessary programs - cheaper loans and quasi-accumulation of VAT ", commented the decision of the Cabinet of Ministers of Ukraine Vice-Chairman of the UAC Mikhail Sokolov.

The results of the implementation of state support programs of the AIC in 2018 indicate that the real "economy" in domestic agricultural producers is much greater than UAH 2.079 billion, which proposes to redistribute the government.

As of December 1, 2018, the programs were provided only for 31%. In other words, for 11 month agrarians received only UAH 1.951 billion from the UAH 6.354 billion UAH formally allocated for them.

In particular, under the program of state support of the livestock sector UAH 1.545 billion was used (the program was implemented on 38.6%) from the allocated 4 billion USD as of December 1, 2018, under the program of cheaper agricultural machinery - UAH 383 million was used from the allocated UAH 945 million (40.5%). Under the program "Farm Billion" from the allocated UAH 1.043 billion farmers received only UAH 23 million.

A detailed analysis of the implementation of budget programs is provided in the presentation at the link: https://app.box.com/s/r6r6c7hk14ebvy44bfxkqtpbq78kd2fm.

The dynamics of budget payments under the state aid programs of the agroindustrial complex during the last month is also disappointing.

"For November, only UAH 313 million to all the state support programs were paid for agrarians, with the fact that most of this amount is the payment of subsidies on the head of the cattle for the second half-year, that is, according to other programs there is almost no progress," Sokolov said.

"We believe that the situation in 2018 with the state support to the agrarian sector is a planned government action in order to formally comply with the requirements for payment to agricultural producers of 1% of agricultural GDP, which is guaranteed by the Tax Code, but not to give money. Employees of the Ministry of Agrarian Policy and Food of Ukraine could not help but understand what happens if they adopt distribution mechanism. Everyone was aware that in the end, a small and medium-sized agrarian business, which really needs state aid, will not receive subsidies. Actually, this has happened, as evidenced by statistical data on the use of budget funds ", - summed up the deputy chairman of the UAC.

On November 5, UAC and other members of the Ukrainian Agri Forum appealed to the President of Ukraine Petro Poroshenko to encourage the abolition of inefficient state support to the agrarian sector, in which payments either are made in favor of large companies or remain unused in the budget. Despite the catastrophic results of the implementation of the state aid programs of the AIC in 2018, the government insists on the continuation of this negative practice in 2019 — they planned next year the same distribution procedure as the one that operated this year. This testifies to the institutional incapacity of the Cabinet of Ministers and the Verkhovna Rada to distribute fairly and efficiently the budget funds. Therefore, farmers decided to give up such "assistance", instead they proposed to send saved money to compensate for losses of budget revenues from the adoption of bills to reduce the VAT rate for some types of agricultural products to 10% (will help reduce retail prices for food) and the introduction of a capital tax (will lead to economic development, employment growth and wage levels).