A new political season begins in Ukraine - this week the sixth session of the Verkhovna Rada of Ukraine of the ninth convocation begins its work.

Agricultural producers expect the legislative and executive branches of government to adopt a list of bills and decisions that will help to bring the agricultural sector to a qualitatively new level.

Irrigation development

Agrarians of the south have been waiting for the adoption of the bill 5202-d "On the Water Users’ Organization and the Promotion of Hydrotechnical Land Reclamation" for a long time.

Parliament has failed to vote in the first reading twice, although the document is important for the development of irrigation.

Currently in Ukraine about 500 thousand hectares of land are irrigated. This is despite the fact that at the beginning of independence Ukraine had 2.3 million hectares of such a land.

The document envisages the creation of Water Users’ Organizations (WUOs) - non-profit organizations of agricultural producers, which will be able to take on their balance the objects of the reclamation system of lower level and modernize them.

Invest their money and attract investment for the development of irrigation systems. Thus, the adoption of the bill 5202-d will make it possible to revive the irrigation system of Ukraine.

Land consolidation

Solving the issue of land consolidation in the condition of land market is particularly relevant. In fact, this is a continuation of land reform and one of the important points of its further success.

The formation of strip farming in the fields or the so-called "chess" (when shareholders cultivate their plots, which are located in several places in the field) makes it difficult to cultivate the land and makes it more expensive.

The law on land consolidation, which was adopted in 2018, is unfortunately ineffective. Its rules provide for the need to resolve problematic issues in court with each landowner who does not agree to exchange it for another.

But this method just complicates the situation and doesn’t solve it. Currently, the Verkhovna Rada has registered a bill №5438-1 "On Amendments to Certain Legislative Acts of Ukraine on Land Consolidation", which aims to simplify the issue.

According to him, the issue of land consolidation, no matter how many owners it concerns, should be considered within one case.

However, the bill takes into account the interests of landowners: land plots can be exchanged only for equal ones.

Introduction of a new NME methodology

Nominative monetary evaluation of land (NME) is the basis on which many calculations are made in the agricultural sector, in particular, taxes. The cost of agricultural land also depends on it - the price cannot be lower than the NME which is set in the region. At the same time, the method of calculating NME is irrelevant and needs to be updated.

For example, in Odessa region there is one of the largest NME in the country - UAH31,000. Taking into account the droughts that have occurred there for two years in a row (which has led to a crop failure) it is greatly inflated.

However, the minimum tax liability will be calculated of this amount, in case the parliament approves amendments to the Tax Code of Ukraine.

The Ministry of Agrarian Policy and Food of Ukraine should start to work on development of a new methodology for calculating NME, which will take into account the real amount of moisture, soil quality, their fertility and will correspond to the real land value.

Ukrzaliznytsia reform

The logistics issue has long been acute for farmers, especially during the harvest. Due to the shortage of locomotives and wagons, low speed of trains, agricultural producers cannot deliver the products to the ports on time.

This leads to the termination of contracts and large losses. We had such a situation in 2019 and may well happen this year, as we have a record harvest.

The subject of the reform is in the division of the railway into an infrastructure operator and transport companies. The infrastructure operator must be responsible for the maintenance of the tracks and the establishment of a single tariff for all. Transportation companies must work separately.

At the same time, the key laws designed to reform Ukrzaliznytsia (№1196-1 "On Railway Transport of Ukraine" and № 3927 "On the National Commission for State Regulation of Transport") have been in parliament for two years without changing.

The SACI (the State Architectural and Construction Inspection) reform termination

The whole business community is waiting for changes in the work of the SACI. After all, anyone who has ever encountered the work of this institution knows how difficult it is to obtain various permits.

For example, the UAC participant AE "Adelaida" for half a year unsuccessfully fight for the issuance of a permit for the construction of a potato storage. Only after the intervention of the Ministry of Agriculture the situation was resolved.

Currently, the bill 5655 "On Amendments to Certain Legislative Acts of Ukraine on Reforming the Sphere of Urban Development" has been adopted in the first reading, and experts from an advisory center “Smart Country” (which was found by the UAC) have joined its development.

The document envisages digitalization of permitting procedures, alternative choice of the subject of town-planning control, strengthening of responsibility of town-planning subjects for offenses, etc.

Although, there are many norms in the bill that need to be amended, the reform of the SACI has to be completed.

This is not all the urgent problems of the agricultural sector. Licensing of fuel for own needs, equalization of requirements concerning the maximum load of a transport, establishment of the maximum term for payment of trade networks to suppliers of food, etc. That are the questions which also need attention.

At the same time, the successful solution of mentioned points will give an impetus to the agricultural sector to be developed and qualitative, progressive changes.

Blog for the publication "Economic Truth"

Tuesday, 7 September 2021


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