Ukraine does U-turn on state support of livestock industry

By Vladislav Vorotnikov

- Last updated on GMT

Part of the funds will be used to reimburse the cost of rearing animals including sheep and goats
Part of the funds will be used to reimburse the cost of rearing animals including sheep and goats

Related tags: Livestock, Ukraine, Beef, Lamb, Pork

The Ukraine government has reinstated state support for the livestock industry, which was cancelled in 2014 amid an acute shortage of money in the state budget.

The forms of support will reportedly be changed as the authorities are currently seeking ways to improve the sector’s efficiency and eliminate the possibility of corruption.

Firstly, the government will grant tax benefits on the payment of value added tax (VAT) to farmers and meat processors.

"We voted for a return of the special taxation regime on VAT payment for livestock producers. Such a regime has been operating since 1998, but the mechanism to allocate funds will be changed,"​ said Roman Nasirov, head of the Verkhovna Rada (Parliament) Committee on Taxation and Customs Policy. According to Nasirov, subsidies in this form will be granted to, among others, private farmers engaged in the processing of meat and dairy products.

Meanwhile, it has still not been decided whether farmers and meat processors will be completely, or only partly, exempt from VAT payment. Also, the government will allocate support in the form of direct payments to farmers to the tune of UAH250 million (US$12m) in total.

"Half of this money will be spent to fund the construction of new and reconstruction [modernisation] of old farms. The remaining funds will be used to reimburse the cost of rearing animals, including cattle, pigs, sheep and goats, for meat,"​ stated Ukraine’s First Deputy Minister of Agrarian Policy and Food Yaroslav Krasnopolskiy.

He added that, in order to ensure a transparent and fair implementation of the program, the mechanism to allocate the funds had been developed jointly with industry associations and producers.

"The amount is quite modest and, frankly, it is obvious it will not meet the needs of our farmers. So, given the limited financial resources, our primary concern was its most efficient use,"​ added Krasnopolskiy.

A distinct feature of the new program is that state support will be granted to farms of any size.

"This is a fundamental point. We have removed restrictions on the capacity of livestock producers, in order to equalise the rights of all market participants and to overcome the monopoly for public financing of the large agricultural holdings. Now, funds reach those who really need them – particularly, small and medium-sized enterprises,"​ he stated.

Thanks to state support, the Agrarian Ministry plans that 190 livestock farms and production units will be put into operation in Ukraine by 2017. These will include 105 businesses for the production of beef and dairy products, 57 pig breeding farms, 23 poultry farms and two lamb farms. It is expected that Ukraine farmers will receive the first funds from the new program this summer.

Related topics: Meat

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