Opening of access to preferential lending, reduction of the tax burden by UAH 300 million, discount on Ukrzaliznytsia services and compensation for the costs of demining agricultural land – the Ukrainian Agri Council summarized the results of the project initiated by the USAID Agriculture Growing Rural Opportunities Activity in Ukraine (AGRO) to support agricultural MSMEs affected by active hostilities or Russia’s temporary occupation.

For 9 months, the project team has been actively cooperating with representatives of the Parliament, ministries and other executive authorities, developing systemic solutions to support affected agricultural producers from the frontline and de-occupied territories. This work resulted in the adoption of 6 important legislative changes on taxation, lending, and demining of agricultural land in the frontline areas. In addition, the project created a free hotline for legal, expert, and other advisory support for affected agricultural producers. It was the analysis of the most frequently asked questions that became the basis for developing the necessary legislative initiatives.

In particular, the project experts developed 6 proposals that were approved by the Cabinet of Ministers of Ukraine in the following resolutions:

• CMU Resolution No. 1403 as of December 27, 2023 - on allowing banks to provide preferential loans to farmers registered in the territories of active hostilities;
• CMU Resolution No. 91 as of January 26, 2024 – on extending the term of preferential lending in the “high military risk zone” up to 3 years.
• CMU Resolution No. 310 as of March 22, 2024 - on the prolongation of loans to enterprises relocated from the territories of active hostilities or occupation;
• CMU Resolution No. 485 as of April 30, 2024 - on the introduction of land tax exemptions, a single tax of the 4th group and minimal tax liability for farmers operating in “territories of active hostilities where state electronic information resources operate”.
• CMU Resolution No. 580 as of May 17, 2024 - on compensation for the costs of demining agricultural land carried out from February 2022 to April 15, 2024.
• CMU Resolution No. 580 as of May 17, 2024 - on the establishment of a 30% discount on export transportation of agricultural products by Ukrzaliznytsia from stations located in the territories of active and possible hostilities.

Farmers from the frontline and de-occupied territories have already felt the results of these legislative changes. For example, only by extending the terms of preferential lending in the high-risk war zone in 2024, affected businesses, including agricultural ones, were able to obtain loans worth about UAH 8 billion, which is more than 20% of all loans under the 5-7-9% preferential lending program. And thanks to the introduced tax exemptions, which cover more than 400,000 hectares of land, they will be able to save about UAH 300 million and use these funds to restore agricultural production. In addition, UAH 3 billion of state budget funds can be used to compensate for the demining already carried out by farmers, and UAH 1 billion can be used to discount the transportation of products by Ukrzaliznytsia.

In addition, with the participation of experts from the joint project of the Ukrainian Agri Council and the USAID AGRO Program, the draft law “On Amendments to the Civil Code of Ukraine on Lending for the Period of Martial Law” (Reg. No. 11180-1) was developed and registered in the Parliament. It stipulates that during martial law it is prohibited to collect loan debts and collateral from entrepreneurs whose production facilities as of February 24, 2022 were located in the territories of temporary occupation or active hostilities, provided that the collateral is also located in these territories. This proposal applies to loans for which state guarantees or state financial support were provided as partial compensation for the interest rate on the loan (the “5-7-9” preferential lending program).

Another important area of work within the project was legal assistance to affected agricultural producers. In particular, experts provided more than 300 consultations on taxation, documentation of losses, reservations and loans, demining, as well as state support and reimbursements. The same issues were also addressed during seminars and workshops attended by more than 700 farmers.

The project also actively worked with agricultural producers to document the damage caused by russian aggression. As a result, 2,573 photos and videos of crimes committed against 158 agricultural enterprises were collected. All of them are shown on the Interactive map of the Ukrainian agricultural sector destructions. These materials will be submitted to the International Register of Damage Caused by the Russian Federation's Aggression Against Ukraine.

“The losses and damages suffered by the agricultural sector as a result of the war unleashed by russia have reached a colossal amount of more than USD80 billion. These figures are striking in their magnitude. But most importantly, they are based on the stories of thousands of farmers who have suffered shocking losses but have not lost hope of resuming their life's work. The goal of the project initiated by the USAID AGRO Program was to find comprehensive solutions to support affected agricultural producers both at the national level (through advocacy for changes in legislation, training, and an awareness campaign) and on an individual basis (through consultations and assistance to each applicant),” said Ksenia Sydorkina, USAID AGRO Program Director.

“The implementation of the project has given impetus to the development of policies to support the agricultural sector in the de-occupied regions. But there is still work to be done. We hope that the results of our teamwork will contribute to the restoration of the regions and the growth of Ukraine's agricultural sector as a key industry to support the economy and defense capabilities of the state,” summarized Dmytro Kokhan, the UAC Deputy Chairman.