Today, the Ukraine’s agrarian business is trying to survive in the conditions of lack of state funding, delays in VAT refunds, complex logistics and constant innovations in the field of currency control. However, the authorities do not stop trying to make the producers’ lives even more difficult by proposing impractical draft laws.

For example, draft law No. 8166 "On amendments to the Customs Code of Ukraine and other laws of Ukraine regarding the introduction of special export procedures" should have solved the problem of foreign exchange earnings returning to the country by unscrupulous entities, but instead creates additional losses for honest agricultural producers.

Fatal consequences for the sector in case of the bill adoption and possible alternatives for solving the problem were discussed by representatives of business and agricultural associations during the joint press conference "Foreign exchange control: how not to destroy agricultural exports?" on the Ukrinform platform on November 8.

The main innovations proposed by Bill No. 8166 are:

• create export deposits for each export operation, when the exporter must "freeze" at least 15% of the amount of the export contract; 
• enable the NBU to dispose these funds, the order of return will be independently determined by the NBU;
• if the total amount of previous export deposits is at least 35 million dollars, then such a person may not put down the deposit.

The problem of foreign exchange undoubtedly exists. In addition, it was increased after the full-scale war due to the significant difference between the official rate of the NBU and the market currency exchange. According to Dmytro Kokhan, Deputy Chair of the Ukrainian Agri Council, only because of this aspect, a legal exporter loses up to 10-15% to an illegal one, and during the peak of dollar jumps, the percentage reached 20-30%.

"Unfortunately, the state has not been able to solve the main problems – the currency equalization and the adjustment of the VAT refund process. At the same time, to solve the issue of currency control, the lawmakers chose the worst option - the created draft law will only complicate the situation. The legal exporter will really pay this 15%, and the "black" will show the minimum customs value and "deposit" insignificant funds, as well as use other schemes to bypass the proposed system, which are not covered by this bill. We agree that the problem of currency return must be solved. But simple solutions cannot be used here - it is necessary to build an effective control system, such as the VAT electronic administration system, where all transactions follow the same formula through calculation that is understandable for farmers. An integral part of this system should be an "overdraft" for legal exporters, the amount of which they can export without the obligation to fill up export deposits - for example, a percentage of the taxes they paid or the foreign exchange earnings previously returned to the country." - Dmytro Kokhan emphasizes

If we evaluate the financial burden that will be placed on exporters, according to the Deputy General Director of the association Ukrainian Agri Business Club Maria Revenko, the amount of funds that will be blocked on the accounts and temporarily withdrawn from the working capital of the farmer will not be small at all: "If we take the revenue of the agricultural industry for September-October, which amounted to 2.6 billion dollars, and freeze 15% of this amount, then we will have about 400 million dollars in deposits per month. The amount may be even higher, considering the difficult situation with logistics." 

The introduction of additional export procedures will create even greater liquidity problems for agribusiness, in case when the market situation is already difficult. Farmers managed to carry out the sowing and harvesting campaigns of 2022 thanks to the state program "5-7-9% available loans". However, due to complicated export and, as a result, a longer product sales cycle, many agricultural producers currently have zero liquidity. It is practically impossible to find additional 15% of the funds that need to be invested in export deposits.

"The adoption of draft law No. 8166 will be the treason. This document does not solve specific problems, but instead creates more of them. The fact that there are individuals who profit from the non-return of foreign exchange earnings should not affect the entire agricultural sector. In addition, the draft law leaves backdoors for new schemes. Currently, the authorities should encourage agricultural producers to increase their activities, and do not create conditions that will lead to a decrease in foreign exchange earnings, " emphasizes the president of the association "Ukrainian Agribusiness Club ", executive director of Agricom Group Petro Melnyk.

In addition, the adoption of this draft law at a time when small and medium-sized agricultural producers are just starting to export products on their own will destroy any entrepreneurs’ initiatives: "Such producers do not have an export history, they are considered risky, despite long and honest activity. In order to solve the problem of currency control, it is not necessary to create such complex mechanisms, but it is necessary to write down clear criteria that would determine who is a risky exporter and who is not, " adds Olena Vorona, director of operations of the AGROTRADE Group.

The agricultural community insists on finding simple and transparent mechanisms, not general, but those that would have a clear understanding of how to minimize the abuse of unscrupulous exporters, without harming the economy and real honest agricultural producers. Business representatives are ready for a dialogue with the authorities to jointly find rational solutions to the problem of currency control.