Representatives of the Ukrainian Agri Council and agrarian business, MPs, representatives of the Ministry of Economy, Ministry of Agrarian Policy and Food, Ministry of Reintegration of the Temporarily Occupied Territories, National Bank of Ukraine and USAID AGRO Program took part in the hearings of the Verkhovna Rada Committee on Agrarian and Land Policy on the topic: "Financial Capacity of Agricultural Enterprises from the Occupied and De-occupied Territories Operating in the Government Controlled Territories: Key Issues".

Today, farmers from the de-occupied territories and those who have left the occupied territories have lost their ability to do business: they have no facilities, their equipment is lost, and their land is mined or occupied, while they have debts to banks and tax authorities. They have also almost completely lost the ability to receive financing.

According to Dmytro Kokhan, Deputy Chairman of the UAC, only one government program is currently effective in Ukraine: the 5-7-9 program, which provides loans at preferential interest rates. But not every farmer can get this financing. It all depends on the zones into which Ukraine is divided, depending on the distance from the front.

"The gray zone is the occupied zone, and here farmers have not only lost everything, but have remained in debt to banks. These farmers found themselves in a situation where they had to choose: to stay in the occupation or to leave the country. Because as soon as you get to the free territory, you stay with nothing and even with debts on loans you received before February 24, 2022. This problem cannot be solved by agricultural producers and banks on their own. The state must intervene and take measures - restructuring programs and deferral of obligations on such loans are needed.

The red zone is a zone of hostilities, and businesses here also receive nothing, but they still work. Apart from the war, they face the same difficulties as farmers in other areas: paying taxes and interest on loans. But they have no government support and no opportunity to get new bank financing. Such enterprises need to be provided with subsidies per hectare at least in the amount of rent," said Dmytro Kokhan.

According to Serhii Rybalko, a member of the UAC board and Chairman of the Adelaide Farm located on the left bank of Kherson region, the state's preferential lending program "5-7-9" is currently an effective financing tool. However, all the provisions of this program for obtaining a loan exclude farmers who have left the occupied territories and are trying to resume work in the government-controlled area.

"To participate in the 5-7-9 program, we will not find in its provisions the criterion: "operating or relocated business from the occupied territories". As of today, 5% of agricultural enterprises have moved to the free territory. They have problematic or bad loans. Banks are already “following them” and suing them. They also have no collateral to take out another loan. But these managers lost everything not because of their negligence, but because of the war. They can work, provide jobs and pay taxes to the budget for millions," noted Serhii Rybalko.

In general, according to him, the state should introduce:

• provide relocated enterprises with the opportunity to receive preferential loans under the 5-7-9 program;
• prolong existing loans for relocated enterprises for 3 years with the possibility of obtaining investment loans for 10 years, with a state guarantee of 80% of the loan;
• increase the limit under the "5-7-9" program for all farmers from UAH 90 million to UAH 150 million;
• to allow relocated enterprises not to re-register their business at a new address, as this brings many bureaucratic obstacles.

“After the de-occupation of their land, farmers find themselves in a helpless state: they have no land, no financing, and a lot of debts”, said Ivan Samoliuk, director of "Agricultural Producers of Occupied Territories"

"It is easy to predict what problems a farmer will face after de-occupation. The farm was bombed and looted. From the first day of liberation, the tax office says we have to pay taxes. At that time, the land was mined and there was nothing to earn. And then the bank comes and says to pay the loan," said Ivan Samolyuk.

Yaroslav Mykhailov, Chairman of “Monolith” agricultural enterprise and a member of the UAC board from Luhansk region, says that he is trying to resume economic activity on the free territory of Ukraine with grants from international donors. However, this money can be taken away by Ukrainian banks.

"On February 24, 2022, our city was bombed before anyone else, at 3 am. I left my hometown at the same day. I have been in business for 25 years. The main activity of our farm is seed selection. In recent years, we have been working on creating quinoa for the Ukrainian climate. In 2021, we started industrial production of this type of crop. In the same year, we took out loans from several banks, including for the purchase of a tractor. Currently, I have a debt of UAH 2.5 million. One of the banks has filed a lawsuit against me. So, it turns out that russians have freed me from my home and business, and the state bank wants to take the latter away from me," said Yaroslav Mykhailov.

Currently, a court hearing has been held, and Yaroslav has to pay UAH 900,000. At the time, the farmer won a grant from the USAID AGRO Program, in the amount of USD 250,000 to purchase equipment.

"As soon as I start resuming my business, the executive service can come to me and take away what I will buy with the grant money," added Yaroslav Mykhailov.

Viktor Polkov, a member of the UAC and Head of Agrofirm Rozdolne LLC from Kherson region, said that his company was completely under the control of trussians, while he had to pay off his debt to a Ukrainian bank.

"Alliance Bank has already filed a lawsuit to collect UAH 12 million from me. For two years of the war, I have been alone with my problems. I wonder if anything will change in the future?" asked Viktor Polkov.

His colleague, Vasyl Shtendera, a member of the UAC from Kherson region, was a little luckier, as 70% of his farm is located in the de-occupied territory.

"Before the war, we took out a loan for expensive machinery to implement no-till farming. In the first year of the war, we closed most of it. But we still haven't received a response from the tax office to the positive decision on the impossibility of paying tax liabilities. Instead, we have already paid UAH 10 million for demining. We signed an agreement with the state-owned enterprise Ukroboronservice, which started demining in March, and in May we ran out of money. Because we did everything at our own expense. We have not completed a single hectare of humanitarian demining," said Vasyl Stymbir.

According to the results of the committee hearings, it was stated that the budget for 2024 provided for compensation for humanitarian demining. Currently, the Ministry of Economy and the Ministry of Agrarian Policy are developing a resolution that will regulate the compensation process. In addition, next year, reimbursement of the cost of agricultural machinery for farmers will be returned.

According to Oleksandr Haidu, Head of the Verkhovna Rada Committee on Agrarian and Land Policy, the Verkhovna Rada's Agricultural Committee has also developed several proposals. In particular, they proposed to provide for a subsidy per hectare of land in the de-occupied regions at the level of rent, as well as compensation for the demining of agricultural land in the state budget.

In her turn, First Deputy Governor of the NBU Kateryna Rozhkova said that solutions would be developed to simplify access to credit for farmers from the de-occupied territories. Regarding the requirements to pay off loans to farms in the occupied territories, the regulator promised to take measures to ensure that banks, especially state-owned ones, can postpone payment of loan obligations.

The Ministry of Economy noted that the "5-7-9" lending program will be limited to large agricultural holdings and will be focused on developing enterprises. Consultations will also begin with experts on the procedure for simplifying the conditions for obtaining preferential lending by farms in the de-occupied territories.