Green Deal without state support is a path to unprofitability of the agricultural sector, - Denys Marchuk

Ukrainian agribusiness is forced to adapt to environmental standards in the context of European integration.

As part of the panel “Economic and Green Revival of Ukraine: Investment Projects and Regional Priorities” at the Second International Business Forum “Vision of Ukraine 2030”, Denys Marchuk, Deputy Chairman of the Ukrainian Agri Council, outlined the key challenges for the Ukrainian agricultural sector on the way to sustainable recovery.

"In the process of European integration, the Green Deal is becoming one of the key topics. At the same time, its implementation means significant costs for Ukrainian agribusiness. New technologies and techniques are needed, and all this without subsidies for farmers operating in the EU. That is why it is important to decide how to integrate into the European Green Deal policy while maintaining the economic viability of the industry. After all, the agricultural sector accounts for 20% of GDP and 60% of Ukraine's exports during the war. Losing it means losing the backbone of the economy," emphasized the UAC Deputy Chairman.

Particular attention should be paid to irrigation, which is a powerful tool for climate change adaptation and production growth.

"Irrigation reform is our number one priority. Even before the full-scale invasion, the UAC initiated the creation of Water Users Organizations (WUOs) because the state proved to be an inefficient water resource manager. Water losses were enormous, prices were excessive, and infrastructure was partially destroyed. A law that could have kick-started the changes was passed in 2022, but bureaucratic barriers are hindering its implementation. Currently, the key obstacle is the reluctance of the State Agency of Water Resources, which is subordinated to the Ministry of Ecology, to transfer irrigation systems to the State Fisheries Agency of Ukraine, and from there to water user associations, as provided for by law. Despite active support from the Ministry of Agrarian Policy, the process is moving slowly. And while the approvals are being finalized, farmers are losing the opportunity to invest in irrigation," said Denys Marchuk.

Another critical barrier to irrigation reform is taxation.

"Even when the state or utility companies are ready to transfer irrigation infrastructure to WUOs, they are obliged to pay VAT. But these companies are already unprofitable and cannot do so. As a result, the transfer process is blocked. The UAC is working on changes to the legislation to abolish VAT in this case. This will allow farmers to get access to water and invest in irrigation. Without irrigation reform, it is impossible to ensure food security and competitiveness of the Ukrainian agro-industrial complex," summarized the UAC Deputy Chairman.