The crucial bill t will save farmers about $300
million in overhead costs each year, reduce opportunities for corruption,
streamline logistics and make certain food products cheaper.
Ukraine’s policymakers in the economy and
agricultural ministries along with key sector industry groups praised the bill
for slashing or limiting 22 permit procedures that its co-authors – Deputy Agriculture Minister Vladyslava Rutytska
and Maryan Zablotskyy – deemed were either obsolete or duplicate.
“There were situations when one procedure was
conducted at various permit agencies formally for reporting reasons (up to)
four times, which created opportunities for corruption… The market was waiting
for (the bill),” said Oleksandr Zhemoida, the executive director of the
Ukrainian Agribusiness Club.
One measure will “break” the grip on the nitrogen
fertilizer market that tycoon Dmytro Firtash has, according to
Zablotskyy, the deputy head of industry group Ukrainian Agrarian Association.
Firtash’s Vienna-registered Ostchem holding company
runs four of the nation’s six nitrogen fertilizer plants. Bilionaire ex-governor of
Dnipropetrovsk Igor Kolomoisky runs Dnipro Azot, while the sixth plant is state-owned.
As a result, “oligarchs (now will) lose between $50
and $260 million in excessive markups on fertilizer yearly,” Zablotsky said.
Specifically,
registration is no longer required for common types of imported fertilizer like
ammonium nitrate and urea. Previously, it usually took up to 500 days for
foreign-produced fertilizers to get registered, and the procedure would cost
about $100,000 because testing andanalyses in Ukrainian research fields, as well as other procedures,
were required, according to Zablotskyy.
The huge market-entry barrier left cash-strapped
Ukrainian farmers with little choice in a field that lacked competition. On the
average, Zablotskyy said, farmers paid some $100 more than the export price of
$200 per ton. This year he expects Ukrainian farmers to overpay $224-$249
million for fertilizers.
“I expect more players, especially from the European Union, to
enter the fertilizer market. There won’t be many, but in the future this will
force local producers to keep prices (at least) at export levels,” he said.
Prices for imported fruits and nuts should also drop,
according to Rutytska. Approximately 15 percent of food in Ukraine is imported.
Mandatory quarantine permits from the state food
safety and consumer protection agency werecancelled for fruits that were
either imported or transiting through the country.
Association members told Zablotskyy that
importers had to pay a bribe of $15-$35 per ton for the permit.
Another cost-saving measure is the cancellation
of veterinary certificates for transporting grain internally between regional
oblasts. Three other permits for internally transporting grain were removed in
the past 18 months. This should further improve logistics and save time and
money.
Zablotskyy said this also eliminates opportunities for corruption, since 3.5 million such
certificates were issued last year. Moreover, some 30,000 farming enterprises
won’t have to get licenses to apply crop protection agents. These and other
measures will make it easier for new farmers to enter the market, according to
the Agricultural Ministry.
Over the last year, lawmakers, together with industry
groups, the agriculture ministry, state consumer rights agency and fishing
agency worked on the bill.
They analyzed 110 permit procedures, eventually
selecting 22 for deregulation. Eleven laws were amended as a result. Decisions
were made to strike the right balance between food safety and freeing up
agricultural enterprises, Rutytska said.
“This means that the government must find a ‘decision
worthy of Solomon’ that will give maximum freedom to business (while) ensuring
the most security for people and the environment,” she said.
Ukraine’s agriculture industry accounts for 14 percent
of the nation’s gross domestic product, according to Rutytska. The Agriculture
Ministry estimates that because of deregulation over the past year, the
industry saved about $200 million and reduced the logistic chain by almost 10
days.
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