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  • 25.11.2010

    Argiculture Guide

    The agriculture of Ukraine has become of traditional importance for the country’s economy, which is also highlighted by the national flag (the blue sky over a yellow cornfield). Until the year 1991 Ukraine was regarded as the «bread basket of the Soviet Union». Over the following years, the agriculture had been affected by overall economic decay. However, a clear upward trend has been observed in the past few years, as the core implications for the high-yield agriculture – the climatic and soil conditions (the vast black earth terrain) – have remained unchanged. Meanwhile, the sector is also of interest for financial institutions and equity providers which is illustrated by allocation of credits and IPOs amounting to millions. For the time being, giant agro holdings have been formed by means of these and own funds. The constant intensification of agriculture has of course been accompanied by increase in yields. Step by step Ukraine has changed from a net importer to a net exporter having become one of the largest suppliers of agricultural products worldwide. Yet, the animal production cannot reach the efficiency level of the time prior to 1990.

    Furthermore, the agricultural conditions provide for an additional market: the energy market. In this respect, biogas and biofuels are the key words. So far as the EU countries can also reach their goals set forth in the Renewable Energies Directive (RED; 2009/28/EG) via importing from third countries, the RED is becoming an interesting link between Ukraine and the EU countries.

    At the same time, one of the biggest concerns for agro companies and investors in Ukraine is the moratorium on sale of agricultural land plots, which is valid until January 1, 2012 and until the law on land market and the law on land cadastre (land registry) will be passed by the Ukraine’s parliament. As of this report date, both laws have not been passed by the Parliament, which increases the chances of further extension of the moratorium, and impedes further investments in Ukraine’s agriculture sector.

    This Guide provides the foreign investors with a general overview of the Ukrainian agro market. With regard to this we have also covered the respective legal and economic aspects. The survey on evaluation of the potential (Part II) was drawn up by the Institute for Economic Research and Policy Consulting. Our special thanks go to Dr. Heinz-W.Strubenhoff who took the lead in the preparation thereof. In addition, we would like to thank our staff members Iryna Lishchuk, Olena Verba, Oleksander Plotnikov and Olena Bondarenko who have contributed to Part I of this book.

    The Guide does not claim to be complete and is in no case intended to substitute professional counseling on a case-by-case basis.

     

    Table of Contents

    Introduction
    I. Legal Environment
      1. Rights to Agricultural Land Plots
      2. Taxes and Duties
      3. Financing of Agricultural Business in Ukraine
    II. Agricultural Environment
      1. Introduction
      2. Appendixes
         a) Establishing a legal presence
         b) Investment and registration procedure
    Appendix 1 - Potential of Bioenergy
    Appendix 2 - Sustainability Requirements for Biofuels in the EU: Implications for Ukrainian Producers of Feedstocks
    Appendix 3 - Biogas and «Green Tariffs» in Ukraine – A profitable investment?
    Appendix 4 - Straw Use in Ukraine: Opportunities and Options
    Appendix 5 - The EU Dairy Market – Real Opportunities for Ukraine?
    Appendix 6 - European Markets for Meat: Real Opportunities for Ukraine
    Authors:  Strubenhoff Heinz-Wilhelm, Wolfram Rebbock, Anna Pogrebna
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