Yesterday, December 27, during a briefing Minister of Economic Development, Trade and Agriculture Tymofiy Milovanov stated that the payment of state aid in the amount of UAH 1 billion to agrarians was blocked due to a court decision on a lawsuit filed by the Ukrainian Agri Council (UAC) to the government of Volodymyr Groysman.

In its lawsuit, UAC demanded that the government's decisions on the allocation of state support funds that led to the payment of “Mironovsky Khliboprodukt” UAH 968 million in 2018, is about a quarter of all the agrarian payments paid, were invalidated. In turn, the repeal of these regulations enables the government to try to repatriate about UAH 750 million paid to MHP in the budget and send them to support small and medium-sized farmers.

The Ukrainian Agri Council states that the responsibility for stopping the payment of state support to agrarians at the end of the year lies with the government. In order to avoid blocking the payments, the government had to legally adopt new regulations on the distribution of state support funds. However, the lawyers of the new Cabinet of Ministers continued to argue in court that the rulings of the government of Volodymyr Groysman are legal, and, therefore, MHP became the main recipient of state support legitimately.

In addition, over time, the Cabinet made a decision that reduced the amount of compensation for the construction of livestock complexes to 18% of the cost already after MHP compensation was paid at the rate of 30% of the cost. We also emphasize that the government has not fulfilled all its obligations. Tymofiy Milovanov assured that "there is money and the government is ready to pay it", however, many farms have not received the funds for the program of partial compensation of the cost of agricultural machinery and equipment of domestic production, which are stipulated by the Cabinet of Ministers Decree No. 130 of March 1, 2017. This ruling was not appealed in court.

It should be noted that the government did not review the disputed rulings, despite even the statement of President Volodymyr Zelensky, who in July this year stated that “during the 2017-18 years “ Myronivsky Khliboprodukt” received almost 2.5 billion hryvnias from the state budget. In fact, it does not need state support, because it has extra profits and annually pays dividends to its shareholders. ” The President also instructed law enforcement agencies to check the amount of budget support and the amount of dividends paid to shareholders.

In the current situation, UAC calls on the government to:

1. Agree to the terms of the reconciliation agreement offered by the UAC and acknowledge that the abolition of the restriction on payment of more than UAH 150 million in one hand was unlawful and, on this basis, to require MHP to repay the state more than UAH 750 million;

2. Prepare and submit to the Verkhovna Rada a draft of changes to the budget for 2020, which will increase the amount of state support of agrarians by the amount that they were not paid this year. And also to provide that if MHP returns money to the budget, they will also be directed to state support of agrarians;

3. Adopt new regulations on the distribution of state support funds.

Note

In 2017, the government of Volodymyr Groysman, despite the objections of all key agrarian associations, approved such a mechanism for the distribution of grants, which resulted in the payment of UAH 1.9 billion to “Myronovsky Khliboprodukt” and “Ukrlandfarming”, owned by oligarchs, out of 4.95. billion UAH paid to all farmers.

In 2018, against the backdrop of a scandal that erupted, the principle of payment of state support funds was formally changed. The bulk of the funds intended to support livestock production was used to compensate for the construction of livestock complexes, although it was clear that no one except MHP plans to commission large-scale facilities in 2018. As a result, UAH 968 million out of 4 billion allocated for this program was again received by MHP. This became possible due to the fact that the government removed from the resolution No. 107 restrictions in the amount of UAH 150 million for payment for one livestock complex.

In August 2018, the “Ukrainian Agri Council" Public Union filed a lawsuit with the Kyiv district administration, the defendant of which was the Cabinet of Ministers of Ukraine, seeking recognition of CMU resolutions of 07.02.2018  No.86, No.106 and  No.107 as illegal and their cancellation. However, in May 2019, the court dismissed the UAC’s claim.

On July 22, 2019, the public union filed an appeal and on December 10, 2019, the Sixth Administrative Court of Appeal partially upheld the lawsuit of UAC, finding it illegal and quashing the Cabinet of Ministers' Decree No. 106 and No. 107 of February 7, 2018.