Government should create conditions to increase investment inflow to the agro-industrial complex of Ukraine - Tamara Kirik (Bleyzer Foundation)
Despite the agricultural complex of Ukraine is almost the only industry of the country's economics having the positive dynamics of development, there is the certain range of factors being under the state regulation and having the negative impact on its industrial attractiveness. As a result the state fact limits the industry access to the large-scale and cheaper financial resources. Thus, the expert on the agriculture issues of the International Fund of Bleyzer – Tamara Kirik to tell about the economic factors impact on the Ukrainian agriculture development.
The International Fund of Bleyzer is the international unprofitable non-governmental organization created in 2001 by Michael Bleyzer, the President and Chief Executive Director of SigmaBleyzer Company. The Fund' Mission – to provide the private economics development and the state managing improved methods application in order to create the favorable climate in order to realize the investment and economic activity.
- How did the economic situation in Ukraine impacted the agricultural complex development in 2013? What tendencies you can specify?
Despite the difficulties Ukrainian economics faced in total, the agricultural complex increased the production volumes and improved the export positions on the world markets. Unfortunately non-profitable prices did not allow to get the expected profit despite the record high crop. Thus the world prices decrease caused the essential lowering of the profitability of the products and total sum of the profit.
As for the tendencies being in 2013 they were the following.
First is the improving agricultural sector positions while forming the Gross Domestic Product of the country based on the positive dynamics of GDP of the agricultural complex. Thus the plant production industry faced the production volumes increase (+37%) and yield increase (+27%) of the grains and oilseeds, saved the high export ratings on the world markets. The success is provided by the process of the land using consolidation. Thus on the one hand they continue to increase the land banks through the consolidation or the merger, on the other – the optimization: quittance from the lands which are not in accordance with the parameters of the business dealing efficiency in the context of the geographical position. The achieved technical and organizational level of the essential part of the sector companies provides the production volumes and quality level stability. The availability of the growth potential owing the yield increase, infrastructure development, improving of the agricultural raw-material processing allows to hope for the further success in the agricultural sector.
Second is the old problems saving in the sphere of the agrarian business dealing. First of all it is about the process of the land matters adjustment, which has significantly slowed down. As for the range of the issues being main in the agriculture they have reached consensus on them, though there was no legislative consolidation for it. Thus, it was saving of the reduced tax, stating the minimum term of the rent (at least 10 years), simplifying, acceleration and cheapening of the registration procedures, cancellation of the double certifying and doubtful projects of the crop rotation, sales way limitation – it was the minimum list of the issues impacting on the business dealing quality.
As for the prospects for the agrarian sector of economics for 2014 I would note the macro economic factors which will have the most significant impact on the agrarian market formation – the world agrarian market conjuncture, political situation in Ukraine (the absence of the political stability causes the instability in the economics of the country).
- Further development of the agrarian sector of Ukraine needs the income of the more investments. What is your estimation of the investment climate of the Ukrainian agricultural complex as of the end of 2013?
Besides the foreign factors, the investment climate in agriculture depends on the common level of the country infrastructure. So our estimation of it is as the insufficiently attractive. First reason is that the legislative base is not finished causing the business dealing rules uncertainty, declarativity of the certain elements, the low level of the defense. Second reason is the high level of the state control causing the business competitiveness decrease.
- What is the position of the International Fund as for the investments into the agrarian sector of Ukraine?
The International Fund of Bleyzer is the international non-proftable non-governmental organization. The Fund position as for the investments in the agrarian sector including is the the socially responsible sector should not stay aside of the process of the economic policy formation in the certain sphere of activity. The Fund mission is to provide the private economics development and the state managing improved methods application in order to create the favorable climate in order to realize the investment and economic activity. The end aim of the mutual cooperation of the international experts, national and regional governments should be the investment climate improve which will cause the population life improve and have the positive influence on the foreign and domestic investors activity.
- What economic reforms on your opinion would stimulate the agrarian sector growth?
While having the realization of the economic reforms in the agrarian sector it is necessary to define few important parameters of development: principles and priorities.
As for the first parameter, the investment is the process connected to the market economics so the investments attraction is possible only on the base of the entrepreneur principles, private property defense.
As for the second, the priority changes are the regulating of the land matters (property and land use) and investments defense, specifying of the role and rate of the government impact. Meanwhile the land matters need the clarity for the forms of the business (property, lease). It is important to provide the legal guarantees of the defense of rights of the owner and leaser. Meanwhile it is important to remember the governmental role should not be the direct regulation but the creating of the conditions stimulating the investments income and sector development.
- In 2013 the Minister of Revenue and Duties of Ukraine used to state it is necessary to reform the system of taxation. Thus it was offered to cancel the benefits of agricultural complex. How did the statements impact on the investment into the industry and how did the tax regime change for agricultural complex to impact on the industry?
Of course these statements destabilize the situation in the industry because they touch the important parameters of the investment managing decisions grounding.
The current benefits have already proved their productivity. Note the benefits stimulate the taxation in comparison with other methods of business regulation. The possible cancellation of the beneficial taxation in the industry with the high natural risks is able to decrease the investment attractiveness.
- In order to finish the interview please give your wishes to the agrarian business in 2014
First of all I would like to wish health and well-being to all the agrarians. Let the work going well. Have the favorable weather conditions influencing the crop. Be patient and firmness. Have a faith in yourself. Wish you the active interest to life and to open new possibilities.
Interviewed by Elena Cherednichenko
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