Ukraine’s agricultural policy inconsistent

18.03.2009 |

According to a report issued by the OECD [Organization for Economic Cooperation and Development], Ukraine’s agricultural policy is the most inconsistent of all countries with a transitional economy.

The report states that the main condition for ensuring food supplies during times of economic crisis is free trade and support for local producers. According to OECD specialist Andzei Kwecinski, “In such a crisis situation agriculture can play an important role, reducing social tension.”

Taxes instead of support

According to the report’s finding, among all countries with a transitional economy, Ukraine has the most inconsistent policy as regards supporting agricultural producers. Back in 2003, instead of providing support, the government imposed taxes. Furthermore, over a long period of time, it created better conditions for those who imported food products from abroad and limited those who wanted to sell Ukrainian goods abroad.

Huge potential

Ukraine’s agriculture has enormous potential for promoting general development of the economy, and Ukraine could become an important food supplier on the world market. However constant political instability is contributing to negativity spreading in the business sector and uncertainty about the future. All of this, the report adds, has been exacerbated by the economic crisis.

Prices on food items in Ukraine have risen more than in any other CIS countries, this being attributable to a rise in world prices, a bad harvest in Ukraine last year, and increase in consumption and of budgetary spending. Among negative factors, the OECD also point to the continuing ban in Ukraine on the sale of land. In fact, the memorandum between the IMF and the Ukrainian Government in October 2008 envisages, among other things, the creation of a functional market for selling land.

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