Russia’s large-scale aggressive war against Ukraine has significantly affected our country’s economy, in particular its agricultural sector. According to the Ministry of Agrarian Policy, due to the war, the area under arable land in 2022 decreased by 3.5 million hectares in the zone of active hostilities. However, the aggressor did not and will not be able to stop the work of agribusiness in Ukraine. And it’s not just words, because a lot has already been done for the sustainability of agribusiness in wartime. This was reported by ZN .UA
Export Moratorium
A ban on the export of certain types of agricultural products: oats, millet, buckwheat, sugar, salt, rye, cattle – was a necessary measure to meet the food needs of the state and the population. It is also allowed to export wheat, meslin (a mixture of rye), corn, sunflower oil, meat and eggs of chickens only with prior information to the government and obtaining a license.
In addition, in early March, the Cabinet of Ministers set a zero quota, i.e. a complete ban on the export of nitrogen, potassium and phosphorus mineral and chemical fertilizers. At the end of March, the government lifted a ban on the export of nitrogen fertilizers, setting a quota for their export of up to 210,000 tons, but not more than 70,000 tons per month.
Such restrictions will be able to guarantee a stable food supply to Ukrainians, which is an undisputed priority in wartime. However, they could result in a food crisis in import-dependent countries if export transactions are blocked during the calendar year.
Logistics under port blockade
The military aggression of the Russian Federation made it impossible for the seaports of Ukraine to function, through which about 90% of agricultural exports were carried out. According to the Ministry of Agrarian Policy, today up to 20,000 tons of grain a day are transported by rail, while earlier about 150,000 tons passed through seaports.
Therefore, the key issue to support the economy is the creation of an alternative logistics network for exports, which is currently being actively worked on by the government and the business community. In the current conditions, the following two options are optimal:
– exports through the seaports of neighbouring countries (Romania, Bulgaria);
– use of railway connection.
The implementation of the first is a serious diplomatic work, while the second option requires significant funding to expand the network of railway infrastructure in both Ukraine and neighbouring countries (dry transhipment points / ports).
Sowing Campaign Issues
While work is underway to address the issue of agricultural export logistics, the government is working to minimize bureaucratic procedures for agribusiness, in particular, requests from producers to obtain the necessary licenses and certificates will be processed for a maximum of 24 hours.
In addition, changes have been made to facilitate the import of agricultural plant products, including seeds. Thus, the principle of extraterritoriality has been introduced in the work of the State Food and Consumer Service. If a phytosanitarian certificate is available, phytosanitarian control will be carried out only in the form of inspection without phytosanitarian examination, as well as through requests from the State Food and Consumer Service for information (but not more than once a month).
The issue of shortage and high cost of fuel for the sowing campaign and other transport needs of farmers has been resolved through the introduction of significant tax benefits. In March, a law was passed providing for a zero rate of excise tax and a reduction in VAT to 7% on fuel. It is also allowed to put into circulation gasoline and diesel fuel of environmental classes Euro-3 and Euro-4, which aims to expand the fuel base for its use for sowing purposes.
It has also simplified the work with pesticides and agrochemicals, in particular, extended the validity of work permits related to their transportation, storage, use and trade for the period of martial law and for 90 days after its abolition / expiration.
An important aspect for farmers is the use of the required amount of agricultural machinery, so for the period of martial law, the Ministry of Agrarian Policy provided for the possibility of operating tractors, self-propelled chassis, etc. without their registration. However, within 90 days after the abolition / end of martial law, the owners of the equipment will have to register (re-register) it.
These innovations will certainly have a positive impact on the sowing campaign, but work to ensure the functioning of the agricultural sector must remain systematic and systematic. In particular, the issue of a sharp rise in fuel and fertilizer prices remains relevant and requires additional measures from the state to address it.
The agrarian sector during the war became the second front of the struggle of our people for food and financial independence, so for its full functioning there is an opportunity to book agricultural enterprises workers during the mobilization period. Subject to quality preparation of the package of documents and proper justification, a deferral of conscription for up to six months is provided, confirmed by an extract from the deferral order.
Financial support
In addition to minimizing bureaucratic procedures in conducting agribusiness operations, the government is also working to improve lending conditions for farmers. Under the state program “Affordable loans 5-7-9%” during martial law and within a month after its completion / cancellation, agricultural producers can get a loan at 0% of up to UAH 60 million for up to six months for agricultural activities (purchase of equipment , fuel, seeds, fertilizers, etc.).
The state provides additional financial support to small and medium agribusiness in the form of compensation for interest rates on loans up to UAH 50 million. The government has also set a maximum state guarantee on portfolio loans of up to 80%.
We also remind you of the existence of such a mechanism for financing agricultural producers as agricultural receipts, which makes it possible to obtain a loan for machinery, fertilizers or other resources necessary for farmers. The obligatory guarantee at registration is the future harvest. The Register of Encumbrances of Movable Property and the Register of Agrarian Receipts required for a credit receipt also function under martial law.
Tax Vacation
On March 15, the parliament passed Law №2120-IX, which provides for changes in the payment for state and communal land ownership during martial law.
Yes, from March 1, 2022 to December 31 of the year following the year in which martial law was terminated / abolished, land tax and rent for land plots of state and communal ownership located in the territories are not accrued and paid. , where hostilities are taking place (conducted), or in the territories temporarily occupied by the armed forces of the Russian Federation, as well as defined by the regional military administrations as those clogged with explosives and / or where there are fortifications.
To date, the list of such territories has not been determined by the Cabinet of Ministers, they will probably include Kyiv, Chernihiv, Kharkiv, Sumy, Mykolaiv, Kherson, Luhansk, Donetsk, Dnipropetrovsk, Zhytomyr and Zaporizhia regions.
Force majeure
The Chamber of Commerce and Industry of Ukraine on February 24 witnessed the onset of force majeure (force majeure) in connection with the military aggression of the Russian Federation against Ukraine.
In the context of land relations, the occurrence of force majeure is grounds for exemption from liability for late payment of land, in particular, the lease / emphyteusis agreement cannot be terminated or any penalties (such as fines) can be applied. However, unless otherwise provided in the contract, force majeure is not a ground for exemption from payment for land after their expiration.
Registration of agricultural land rights and their renewal
The imposition of martial law also made it impossible to operate key registers, SLC and SRPR, respectively, and the formation of land plots and registration of rights to them according to the general procedure. However, on April 7, Law №2145-IX came into force, the purpose of which is to ensure food security and sowing campaign and which provides for the possibility of issuing a lease of land for commercial agricultural production for no more than one year without the right to renew the contract. Such a plot is formed on the basis of technical documentation on land management for land inventory without entering information about it in the State Land Cadastre.
In addition, it is possible for users of agricultural plots to transfer land use rights to others without the consent of the owners of such plots for up to one year. This innovation will allow more efficient farmers to use agricultural land for their intended purpose, which will certainly have a positive impact on the results of the sowing campaign.
Please note that this law also provides for automatic renewal for one year of contracts for the use of agricultural land, which expired after the imposition of martial law, without the will of the parties. As a general rule, the law has no retroactive effect, so the automatic prolongation begins to operate from the moment the law comes into force, and not directly from the moment of martial law. However, there is a position that the provisions of the law on automatic renewal apply to all contracts that expired on February 24 inclusive. The issue is debatable, so we should wait for an official explanation from the Ministry of Agrarian Policy.
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War is a time for daily work on its challenges, which agribusiness continues to successfully tackle. The 2022 sowing campaign largely depends on the scale of hostilities and the development of public policy in support of agribusiness, so it is difficult to predict its results at the initial stage. But we all know for sure that farmers will continue to work tirelessly on the sowing front to ensure the food security of the people and the approach of victory of our state over the aggressor.