Agri­cul­ture Min­is­ter Taras Ku­toviy puts fo­cus on small farms

Kyiv Post Legal Quarterly - - Contents - BY ISO­BEL KOSHIW and ILYA TIMTCHENKO KOSHIW@KYIVPOST.COM AND TIMTCHENKO@KYIVPOST.COM

Taras Ku­toviy, Ukraine’s new agri­cul­ture min­is­ter, says he will be a cham­pion for small farm­ers in a coun­try where big agro­hold­ings dom­i­nate. By con­trast, pre­de­ces­sor Olek­siy Pavlenko de­voted much of his time to pro­mot­ing larger agribusi­nesses.

“Say­ing ev­ery year: ‘We are the cham­pi­ons, we have 50-60 million tons of grain, we ex­ported 35 million’ – yes, this is very good, but it’s not the only way,” Ku­toviy told the Kyiv Post in a May 14 in­ter­view.

In­stead, he points to coun­tries like Den­mark, in which 2.6 million hectares of farm­land pro­duces €24 bil­lion worth of crops, com­pared to the €12.5 bil­lion pro­duced by Ukraine’s 26 million hectares. “They have 10 times less land, but they make twice the money,” Ku­toviy said. “So this is the way the agri­cul­tural sec­tor should go.”

And he is con­fi­dent that his “3+5 strat­egy,” as he calls it, will move Ukraine in that di­rec­tion. The “3” refers to three strate­gic ar­eas: al­low­ing sale of land, in­creas­ing state sup­port to help small en­ter­prises and ru­ral de­vel­op­ment. The “5” refers to de­vel­op­ment pri­or­i­ties: new mar­kets, niche pro­duce such as or­gan­ics, state en­ter­prises, ir­ri­ga­tion and food qual­ity.

State fund­ing for SMES

Ku­toviy wants to in­crease state grants for small farm­ers for equip­ment and other needs. To­day, the min­istry has Hr 15.6 million ear­marked for this. He wants it hiked to Hr 200 million this year and “sub­stan­tially big­ger” in 2017, Ku­toviy says.

Ul­ti­mately, the bud­get in­creases de­pend on the Fi­nance Min­istry.

In the past, most state sup­port ben­e­fit­ted large agro­hold­ings, Ku­toviy says.

Farm­ers must de­cide

One way to do this is to change the way the money is dis­trib­uted and let farm­ers de­cide how to spend it.

“I want farm­ers’ as­so­ci­a­tions to de­cide how they will dis­trib­ute this money,” Ku­toviy said. “It could be ( pur­chase of) a cold ware­house for veg­eta­bles, grain wag­ons – any­thing that they can de­cide for them­selves,” Ku­toviy said.

Land sale mora­to­rium

An even more im­por­tant is­sue for farm­ers might be the can­cel­la­tion of the mora­tori- um on the sale of land. It has been one of the sources of con­tro­versy for the min­istry since the ban was put in place in 2004.

The In­ter­na­tional Mon­e­tary Fund and other fi­nan­cial in­sti­tu­tions are keen for the mora­to­rium to be lifted. They say this will al­low farm­ers to use their land as col­lat­eral to ac­cess bank loans. In turn, this will cre­ate a ma­jor new as­set class for Ukraine.

But oth­ers ar­gue that, with­out an ef­fec­tive ju­di­cial sys­tem, lift­ing the ban will only have neg­a­tive ef­fects.

Daniel Sweere, an Amer­i­can farmer who has been in Ukraine since the 1990s, said that with­out a proper court sys­tem, the banks still wouldn't nec­es­sar­ily be able to re­cover as­sets in the event of de­fault. More­over, Ukraine's lack of

(Volodymyr Petrov)

Taras Ku­toviy, who took over as agri­cul­ture min­is­ter on April 14, says that help­ing small farms will be his pri­or­ity.

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