What are our agrarian producers scared of?
Ukrainian farmers will be the first to feel the consequences of WTO membership, Ivan Tomych, president of the Association of Farmers and Private Landowners of Ukraine, told journalists. He noted that membership has certain advantages as well as significant drawbacks. It will certainly mean a better grain market. Given a clever approach to the grain issue by all government branches, Tomych believes that several years from now Ukraine will start producing between 60 and 65 million tons of grain a year. There is enough potential for such forecasts: increased harvest yields and the reintroduction into agrarian circulation of one-third of farmlands that today are being choked by weeds.
The agrarian sector is also receiving a fresh impetus for the production of biofuel. “Between five and seven percent of alternative kinds of fuels may appear on the Ukrainian fuel and lubricants market in the next couple of years,” predicts Ukraine’s number-one farmer. Right now, most crops that are grown for biofuel are exported as raw materials. In view of this, Ukraine may well receive as “prestigious” status as Europe’s raw materials supplier. To avoid this, experts in the agrarian field recommend building processing plants in Ukraine. Consumers will benefit the most from this because they will be supplied with less expensive wines, meat, and pasta products, said Alex Lissitsa, president of the Ukrainian Agrarian Business Club.
That’s it for the advantages, unfortunately. Tomych says that the arrival of foreign competitors will play into the hands of big agrarian market operators, whereas small- and medium-size ones will have to struggle to survive, even though they supply 70 percent of the raw materials in the meat and dairy sector. Their poor financial status makes it impossible for them to meet world quality standards. It stands to reason that this niche on the domestic market will be filled by less expensive imported sausages and other products. “Next year twice the amount of genetically modified products will hit the shelves of our stores,” Tomych said. Who needs this?
Domestic sugar suppliers are not happy about Ukraine’s WTO membership, either. The government’s acceptance of raw sugar supply quotas will play a role, so sugar beet plantations will shrink significantly, as will the number of jobs in this sector. In fact, people in this line of business talked to The Day and agreed with the above, saying that the government should take better care to protect them.
Andrii Tsykor, chairman of the board of the Financial Initiative Bank, points to another risk. He warns that before long small agrarian businesses will find it more difficult to obtain bank loans. Membership in the WTO means that expenditures involved in introducing international sanitary and phytosanitary standards and hi-tech equipment will make domestic agrarian businesses more expensive, so they will have to seek bank loans. “In view of the current realities, only big businesses with high liquidity and income indices, which are constantly upgrading their technologies, will be able to count on bank loans.” Tsykor believes that this easily foreseeable market risk will become a reality after cutting down lax budget credits in the agrarian sector, lowering subsidies for end products, and putting an end to writing off debts to the state.
How can these negative factors be avoided? Experts say that radical reforms in this sector are the first step, along with making decisions that will be anything but popular. The question is: will any brave individual have the nerve to assume such a responsibility now that the next presidential campaign will be upon us soon?
