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Ukraine’s agricultural subsidies under scrutiny

Unfair and non-transparent. These are the words being used to describe how the Ukraine is distributing its European Union subsidies in the agricultural sector

By: EBR - Posted: Wednesday, March 07, 2018

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by Antonio W. Romero

It’s an issue slated for discussion in the European Parliament on March 7. Tabled by MEPs Fulvio Martusciello and Alberto Cirio, who will lead a roundtable discussion, the goal is to sound an alarm about the apparent opacity of government subsidies distribution in Ukraine’s agricultural sector.
 
According to Cirio, agriculture in Ukraine has always enjoyed support of the state but recent changes in government subsidies are raising doubts about fairness.

“Today, in particular, we are concerned about the distribution of government subsidies in Ukraine for the development of the agricultural sector, being one of the most important industries of Ukrainian economy, the leading export industry and having the significant development potential,” said Cirio.

The MEP’s concern is timely. The European Commission last month prepared a new package of macro-financial assistance for Ukraine worth €1bn. If the European Parliament and the Council of Europe back the Commission’s proposal, the first tranche could be released as early as this summer. 

Approval, however, will hinge on several conditions, namely the Ukraine’s implementation of anti-corruption reform measures and related legislative initiatives.

“The new EU requirements will also be related to the fight against corruption in Ukraine,” said Martusciello. He stressed that the funds transferred to Ukraine from Brussels include contributions from EU taxpayers. This is why “we watch closely how Ukraine fulfils its obligations and the state policy in the country in general.”

According to Cirio, the signs of corruption are visible. “We call on the state authorities of Ukraine: the President, the Prime Minister, the profile committees of the Parliament to focus on the schemes of the government subsidies formation in the agricultural sector as well as on the principles of their distribution in 2018 and in future,” he said. 

Critics point to the subsidy distribution for 2017 as proof the situation needs to change. Ukraine’s lawmakers approved a €130m budget, a third of which went to one company, PJSC Myronivsky Hliboproduct.

What is more, a third (35 percent) of the total subsidies was allocated to just one company, PJSC Myronivsky Hliboproduct. It’s the country’s largest industrial company monopolist in Ukraine. CEO and chief beneficiary of the company is oligarch- billionaire Yuri Kosyuk- one of the richest people in Ukraine, according to Forbes Ukraine. Myronivsky Hliboproduct is the most highly profitable company in the Ukrainian agribusiness.

The remaining 65 percent of the subsidies was distributed to tens of thousands of other agricultural companies across Ukraine. 
 
“Today, in particular, we are concerned about the distribution of government subsidies in Ukraine for the development of the agricultural sector, being one of the most important industries of Ukrainian economy, the leading export industry and having the significant development potential,” said Cirio.

At the same time, there are tens of thousands of small and medium-sized enterprises that are badly in need of the government support. Among them there are enterprises of the grain sector that were not even included in the list of enterprises eligible to receive subsidies.

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