Will 2006 be the “Year of the Countryside?”
Experts in the field think so
2005 was proclaimed the Year of Microcrediting in Ukraine, although experts believe that practically nothing has been done to this end. Next year will be the Year of the Ukrainian Countryside, but experts are afraid that this spells more of the same: empty promises.
The government’s intention to solve rural problems would come in handy now as never before, says Leonid Kozachenko, president of the Ukrainian Agrarian Confederation and advisor to the president of Ukraine, who says there are many problems in the agrarian sector. Even agrarian reform, instead of showing predicted progress, remains in the red; the material base of most structures does not meet the requirements of a market economy, and salaries in the agrarian sector are still the lowest of all industries.
According to Kozachenko, the government could solve these problems with a coordinated agrarian policy. So far, the cabinet, parliament, and president’s aspirations not only differ in certain aspects, they are also often contradictory. The main stumbling block is the allocation of budget funds. The saga of next year’s budget bill, with different faction and political forces unable to agree on how much the countryside needs to feel comfortable, is not over. Kozachenko believes that, although our agrarian sector has departed from the planned economy, it is still a long way from a market one. Budget money is still being spent on food just to get by rather than system restructuring and creating a competitive sector, no matter how much “advanced” agrarians may want this. Member of Parliament Valeriy Martynovsky says that budget funds are still being allocated unsystematically, with producers of certain types of products receiving some funds without channeling them into investment or new technologies. However, the biggest problem is that few agrarians receive budget funds: 75 percent of state aid is received by 6 percent of producers, despite all the declarations about equal opportunities.
In view of this, the Ukrainian Agrarian Confederation has worked out its own concept of an agrarian policy, in which the main priorities will be increased competitiveness and development of rural areas. Kozachenko says this concept has the support of professionals. The only thing left to do is obtain the government’s approval. The confederation will submit its plan early next year, and if it is approved, the 2007 budget bill will incorporate its main theses.
While backing its agrarian development project, the Ukrainian Agrarian Confederation does not intend to wait until 2007. A real step in this direction was a memorandum recently signed between the confederation and the European Fund for the Development of Polish Villages. According to this document, an International Fund for the Development of Ukrainian Villages will be set up in our country. It will be sustained by international and domestic investments to support the development of health care, cultural and sports facilities, and to lower the cost of private housing loans in the countryside. A similar fund exists in Poland where, according to Kozachenko, some 150 million euros are channeled every year. The European Fund is expected to start by giving the International Fund for the Development of Ukrainian Villages half a million euros.
The confederation believes that this financing will be more effective than state subsidies. Its vice president, Natalia Pohozheva, says that this nuance in the budgetary policy will help to increase the competitiveness of Ukrainian agricultural products, thus considerably reducing the threat that Ukraine’s future membership in the WTO may pose to the agrarian sector. Martynovsky says that excessive subsidization of agriculture, albeit accepted international practice, by no means indicates profitability. He adds that in Poland, four times less money is spent on average per hectare than anywhere else in Europe, whereas the profitability level is three to four times higher. Ukraine, with its land resources, would not be any worse. So far, says Kozachenko, “these alms [state subsidies — Auth.] must still be given until we manage to attract investments.” Therefore, before our agriculture becomes competitive, it will still need budget support. But funds must be allocated reasonably.
When asked what the state should do for agriculture, the president of the Ukrainian Agrarian Confederation replied, “Change its attitude to this sector,” in other words, stop viewing it as an innately unprofitable and stop adopting new rules every six months without first consulting experts.
