In March 2020, the Verkhovna Rada adopted the Law №552-IX "On Amendments to Certain Legislative Acts of Ukraine Concerning the Circulation of Agricultural Land". This is a long-awaited step in the liberalization of the Ukrainian agricultural land market, which has been discussed for a long time among experts of the agricultural sector and the business community.

What will the land market bring to Ukrainian farmers, and how does the state support the agricultural sector at the legislative level? "Comments" sought answers to these questions together with Denys Marchuk, the UAC Deputy Chairman.

According to the expert, last year the agricultural sector received many important changes in the legislation governing agricultural activities.

The most significant event, according to the expert, was the introduction of the land market

2020 has become "productive" for the agricultural sector for important legislative decisions. I would like to note that the key bills that will further determine the development of the industry were developed with the participation of the UAC experts. Its key provisions satisfy the requirements and interests of medium and small farmers, who cultivate up to 80% of agricultural land in Ukraine," the expert said.

One of the main provisions of the land market, according to the words of Denys Marchuk, is that:

• from July 2021 the land market begins to operate only for individuals with a limit of 100 hectares in one hand;
• legal entities are allowed on the market from 2024 with a restriction on the purchase of land of 10 thousand hectares. Only Ukrainians can own a land plot;
• foreigners will have the right to buy agricultural land if such a decision is made at All-Ukrainian referendum.

Revolutionary Law "On Agricultural Cooperation"

According to the words of UAC Deputy Chairman, another important event for the agricultural sector of Ukraine was the adoption of the law "On Agricultural Cooperation", which entered into force in November 2020.

"For Ukraine, it is revolutionary, because it is based on a progressive model of the cooperative, operates in developed countries. What is the point: before the adoption of the new law agricultural enterprises as legal entities could not sell their products to the cooperative. At the same time in the developed countries, on the contrary, the cooperative is a strong trading base for producers. They sell it their products at the price that was set, and he sells them on behalf of itself. Ukrainian farmers now have the same right. This means that they can form a large shaft of products - vegetables, fruits, grains - and sell them in one lot. Therefore, we can open new markets, because it is better for the buyer to deal with one representative, which will be a cooperative, rather than dozens of small ones. By the way, if similar conditions existed in Ukraine before, vegetable growers would not be forced to throw their products because of closed markets during the spring lockdown, but would have a better chance to use other sales channels – for example the same supermarkets," Denys Marchuk said.

Legalization of all parts of the agricultural sector

Denys Marchuk also spoke about the adoption of a law that reduces the VAT rate on certain types of agricultural products. According to the expert, this will help not only in farmers’ activity, but also bring a positive result for the Ukrainian economy as a whole, because this law leads to the legalization of all parts of the agricultural sector.

"A law, which reduces the VAT rate on some types of agricultural products from 20% to 14%, was also passed in the second reading. This law is beneficial to farmers and to the economy. Farmers will have more working capital due to lower VAT rate, which is especially important during the sowing period, when it is needed to buy big volume of seeds, fertilizers, plant protection agents. As for the economy, such a step leads to the legalization of all parts of the agricultural sector. It makes less attractive various illegal machinations during the of illegal grain sale - the so-called "twisting", in which the state annually loses tens of billions of hryvnias. Now farmers are waiting for the signing of the law by the President, we hope it will happen very soon," Denys Marchuk said.

Changes involving the allocation of funds from the budget to the agricultural sector

According to the expert’s words, there are a number of changes adopted in various laws, which provide for the allocation of funds from the budget to the agricultural sector, which were not allocated previously. Therefore, last year farmers of the South, especially from Odessa region suffered from a drought. Up to 90% of winter crops were lost in Bessarabia district. Farmers needed financial assistance. However, under that legislation it was impossible to provide funds from the budget on a non-refundable basis. Now the law on the state support takes into account the amendments of the UAC.

Due to this, for the first time in the state budget provides expenditures to help farmers and agricultural cooperatives that have lost their crops as a result of man-caused and natural emergencies. Also, agricultural cooperatives will be included as recipients into all state support programs. In addition, funds are provided for the development of agricultural insurance.

The law "On the peculiarities of insurance of agricultural products with state support" includes the proposed by the UAC changes about the insurance of agricultural producers income.

Abolition of a number of initiatives that harmed the agricultural sector and threatened greater losses

However, besides the adopted laws that will affect the development of the agricultural sector, the joint efforts of farmers have achieved the abolition and prevention of a number of initiatives that harmed the agricultural sector and threatened it with great losses. The so-called "soybean amendments" were abolished - amendments to the Tax Code, which abolished VAT refunds for farmers on soybean and rapeseed exports. As a result, small and medium-sized agricultural producers were at a disadvantage position and were forced to sell their products at reduced prices, and as a result - had great losses. Farmers have been fighting for the abolition of these discriminatory amendments for two years, and finally they were abolished in 2020,” Denys Marchuk said.

The expert also emphasizes the non-admission of fertilizer import quotas, which the Interdepartmental Commission on International Trade wanted to introduce. He claims that this decision could lead to the final monopolization of the fertilizer market in Ukraine by a group of companies “Ostchem” of oligarch Dmytro Firtash and their significant rise in prices.

"In addition, obtaining a permit for the movement of large machinery was revoked, due to their long-term registration it was difficult to carry out agricultural work. Simplified conditions for obtaining licenses for fuel depots. Preliminary conditions required farmers to make a large number of documents and significant financial costs," Denys Marchuk said.