Ministry of Agrarian Policy should form the rules, to be understandable for the market – I.Shvaika
The new Government of Ukraine faces rather difficult task - to restore order in the country, stabilizing the economic situation first of all. It is no secret that to date the agro-industrial complex is, in fact, the single steadily developing sector of the economy of Ukraine. However, there are many factors constraining the further development of the Ukrainian agro-industrial complex. Ihor Shvaika, Minister of Agrarian Policy and Food of Ukraine, kindly agreed to talk on the current situation, prospects of the industry development and the government policy.
- Ihor Alexandrovich, what are the first steps you as the Head of the Ministry of Agrarian Policy want to do? Will you realize any personnel changes, and on what basis will you choose new employees?
Certainly, the personnel changes will take place. I should note that they will relate to individual spheres of work. To date we still hold meetings on the subject, whether the personnel is distributed in right way, what changes are required. The Government of Ukraine took the initiative on the need to reduce the ministry employees. In particular, there is observed the possibility of reduction at the level of 10-20% - or 10 -50 people, which we can now fire. The Ministry structure can be actually reduced, because there are many subdivisions that carry out some duplicate functions. Controlling and writing of formal assignments and its formal realization should not be the main criterion of work of the Ministry of Agrarian Policy. Our main goal is formation of such rules, which will be accessible and understandable for the market, and also ensure the food security in Ukraine.
First steps - in any case, it is fact-finding work, making acquaintance with the officials of the Ministry, realization of meetings with the branch associations and business representatives. For example, on March 5 I had a meeting with representatives of business, March 6 - with the branch association of the sugar industry, there is also scheduled to meet with representatives of the seed association. I.e. we need to establish normal contacts with representatives of the sub-industries. It is done, in order to clearly define the direction of legislative work of the Ministry, determine the further actions of the Ministry, and it is important that the market recognizes our work as the prepared position, but not as some attempt to persuade the market to do something.
- To date Ukraine already began planting spring crops. Quality of the realized works influences on the country's food security. During his recent interviews your predecessor Nikolai Prysyazhnyuk assured that agrarians were provided with all necessary resources for holding the spring field works. However, some mass media, referring to agrarians, report that "It's not cut and dry". What is the real situation with preparations for the field works? Do agrarians have enough necessary resources for holding the works, in particular monetary resources? Is the government is ready to provide assistance to agricultural producers, especially in the case of increasing of fuel prices?
You know the agricultural sector is as any coal mine, as any producing enterprise - there cannot be everything smooth inherently. In any case, there are always some questions on how to perform each contract and for each change in the contracts, and also emergency situations can happen. Generally to date agrarians already planted spring crops throughout more than 30 thsd ha. Most of the field works were done in the Autonomous Republic of Crimea (over 25 thsd ha). To date agrarians realize the works according to the schedule. The problems that may happen include the issue of fuel, more precisely, not its provision, but the price of such provision, because to date the fuel prices are rising much more as opposed to last year. Of course, the prices still vary within reasonable limits, but there is the tendency for its further growth. As a result, the situation on the market was the topic of the meeting held on March 5 in the Ministry of Energy and Coal Industry. We agreed to regularly coordinate our efforts, to primarily supply the agricultural sector with fuel. As for monetary resources, then the situation is quite calm, i.e. the reserves are available for the first time. But if not, we will come with certain proposals for funding to the Ministry of Finance and the National Bank of Ukraine.
- The Government promises that the state budget in 2014 will be revised. Whether the changes will affect the funds, provided to finance the agricultural programs?
To date we are reconsider those programs which were previously approved as they actually never had 100% financing. So, on March 5 at the government session there was canceled 15 special-purpose programs, three national projects. The reason is simple - they formally exist only. The Ministry of Finance is looking to its parameters that it does not allocate money for the reporting programs. Therefore, to date there is the task to form one program from several dozens of sub-sectoral programs, to incorporate and distribute funding not only from the state budget, but also investment funds. So, we left the program of modernization of agricultural machinery, but it is possible that the Ministry will revise it and scale up with similar programs, in order not to produce formal documents, but to work on the certain strategic directions.
- Ihor Alexandrovich, experts and participants of the grain market are asking you not to cut bonuses for the agricultural industry. In particular, it is the VAT refund during grain exports and single agricultural tax. What is your position on the issue?
We fully agree with the people who formulate such questions. To date our policy focuses to ensure the work of the agricultural sector. I understand that there may be some urgent needs for budgetary funds, but when we negotiated with the business representatives on March 5, my position completely satisfied them. If it is decided that the VAT refund on grain exports is necessary to stop, we will speak honestly about the issue, and look for some other mechanisms for compensation. But if there is no money in the budget, and we have a stillborn rate, it is not exit out of the situation, as it will be the same situation as we had with Chernobyl and Afghan veterans. There is the populist law which forms the rules of compensation, but there is no cash for realization of the law. To date, we stand on the side of agricultural producers, who are directly involved in the business, on the issue of the single agricultural tax and the VAT refund.
- Ukraine is one of the largest exporters of grains in the world. Opening of the Chinese market became one of the most significant events to widen the export geography of Ukrainian grains. However, there is some information that in fact Ukraine failed to fulfill its obligations to supply maize to its partners in the People`s Republic of China. What is the actual situation with supplies of the Ukrainian grain on the Chinese market? If the previous Government really discredited on itself, how do you plan to restore the reputation of Ukraine?
In fact, back to the question of whether it is all rosy in the agricultural sector. Like in any coal mine, or during execution of any complex contract, and the contract between State Food and Grain Corporation of Ukraine and the People`s Republic of China is quite complex, and even more foreign economic contract, there will be always some disputable problems between the parties. I can say that to date all contentious issues are solved peacefully, by treaty. There are some inconsistencies related to harmonization of the protocols and separate areas of work. Someone calls the reporting process as the conflict, but to date there are no court disputes at all. The Chinese party already confirmed its intention to continue the relationship with State Food and Grain Corporation of Ukraine. To date we will also audit the corporation to evaluate and understand the real situation, as there is no reason to believe every word of one or the other party. If the audit points out that realization of the agreement was realized in quite excellent way, that is one thing. But if there is any problem, we will take personnel solutions, and bring to justice the guilty persons. As I previously said, from the point of view of global issues, China and Ukraine do not have any critical disagreements.
- By the way, to date only State Food and Grain Corporation of Ukraine can export maize to China, as well as the companies Rise and Rise-Maximco. Will be the list expanded in the nearest future?
We will study the issue. I think there is no problem with that. The more we will have opportunities for grain exports, the more we will be able to enter new foreign markets, not only the Chinese one, but also others - European and Asian markets. It is the formation of Ukraine's image as the exporter of food commodities.
- Exporters repeatedly drew attention to the scales of corruption during obtaining of the authorization documents. What steps do you plan to take to solve the problem?
You know we will not open any "hot" or "cold" lines, but we will respond to the complaints with certain facts that people will announce. As the argument I should say that I was appointed to work here. Previously was the deputy of the faction Svoboda. My party colleague Oleh Makhnitskyi is the Acting Prosecutor General. I do not think that there will arise any obstacles between us in relation the emergency response to corruption. Our task is to "clean up" the sector, for which we are responsible, but it can be done only if there is some feedback from the market participants. If there are cases when the money is taken for provision of authorization documents, I will respond to all these cases. What we can do on our market is one thing, but what we will provide the relevant materials to the prosecutor is another. We do not plan to hush up and justify these facts, and will not do it.
- Ihor Alexandrovich, let`s go back to China. Recently you told to journalists that China postponed the inspection of Ukrainian meat producers. What is the reason?
I do not remember saying that China withdrew the inspection of meat producers. We had some pause in international economic relations with many countries, due to aggravation of the political situation. We sent signals after formation of the new government to all our foreign counterparts that the new government already began fulfilling its obligations, and we are ready to continue dialogue with all our foreign partners. It is China and Saudi Arabia, and Iran, and European countries, and the Russian Federation. So, there are no critical issues. I think that the previously adopted schedule changed a bit, but we will rebuild it and know what visits and inspections are scheduled, which countries and in what period of time.
- By the way, at what stage of cooperation is the cooperation agreement with Saudi Arabia?
We can talk on the issue next week, as now we are analyzing the previously collected information. We will say what subjects will comply with the terms of cooperation. There are some ideas, but they need be observed not to become hostage of the yesterday's all sorts of possibly corrupt arrangements. The task is very simple - to agree, where we can supply the goods, who can be credited the on transparent and understandable terms, to provide normal conditions, including exports on various markets.
- In addition to trade relations, China is also interested in investing to the infrastructural objects. In particular, N.Prysyazhnyuk stated that it is necessary to create one more state corporation at the territory of southern oblasts of Ukraine for realization of the project to restore the irrigation systems. What is your position on the issue?
I am not ready to answer, because it will depend on the audit of State Food and Grain Corporation of Ukraine. If we decide that it is possible to realize the project through the state-owned corporation, it will be so. But as a person with a legal background, I can say that for each task we will find the appropriate form of solution. If the state corporation can do it, it will do so. But if any commercial enterprise can solve the task, it will do so. If there is a direct relationship between the Ministries of Ukraine and China, and then commercial structures will work under that "umbrella", so be it. Our challenge is to find the optimum form of cooperation. The irrigation systems are really required, especially in southern oblasts, as well as in other regions. It will significantly increase the harvest of not only grains, but also vegetables.
- Another idea of the previous Government, which was very skeptically met by experts and members of the agricultural market, is foundation of the State land bank of Ukraine. In fact, the financial institution still did not start working. Do you plan to make changes to the bank activity, and what they will be?
The issue is under consideration now. I talked with Svetlana Skosirskaya, Chairman of State land bank. She presented her vision of the situation. There are materials worked out by our departments. There will be all answers, I think in one week or two. We will attract bankers, financiers to consider principles of work of the financial institution. If the bank is needed, it will work, no – we will reject the idea and go to some other format of work. To date, there is no decision on the situation, as I already said, it is under consideration. Actually, we plan to use the resource that was spent for foundation of State land bank, and if it can be properly used for the economy, we will do it.
- Ihor Alexandrovich, will the activity of the Agrarian Fund of Ukraine and its subsidiary enterprises Agrofond-zerno and Agrofinfondzerno be reconsidered?
The Agrarian Fund, State Food and Grain Corporation of Ukraine and other structures will come under the audit. Depending on its results, there will be make decisions about continuation or suspense of the activity of one or another structure, maybe, about their enlargement or liquidation in general. I think that during 10-15 days we will get results of the audit, and can say in what way some structure will work. So, while this questions are premature. I hold the position only for several days. We found out more about the structure, we spoke practically with all market participants. The main challenge is to readjust the dialogue. Particularly, at the meeting with sugarmen we brought up the question about introduction of the quotas on sugar production.
- Generally, would you say what steps do you plan to take to stabilize the sugar industry, which is now going through rather difficult period?
In general, the industry needs rather honest conversation. The Ukrainian sugar market is closed. The export trading of sugar is so insignificant, so we can say that it is the market of domestic consumption. At the time when the quotas are fixed, and sugar producers looking honestly in the eye, break them (either over-fulfill, or fail to reach the target production), they knock down the market. The situation on the market looks in the following way. We agreed in a week or 10 days, approximately on March 18, to sign the decree for the quotas on sugar production for the next marketing year, there may be changes made in the decree for 2013/14 MY, and simultaneously signing of the memorandum with the state association Ukrcukor and sugar producers on the rules of activity on the market. It is just a declaration, but the Ministry, the association and sugar producers bind themselves with public and political obligations. So, we will do such steps in all sectors, as the main task is to establish a dialogue between the producers and the Ministry on the state policy in each of the branches.
Interviewed by Alina Styozhka
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