As it happens, that Russia started a war with Ukraine at the beginning of the spring sowing campaign in 2022. This probably happened incl. to provoke a crisis in the country in addition to the war, which was supposed to lead to panic, food shortages, and further famine. Moreover, the food crisis will not be limited to the borders of our state, but will also affect the global food market. Back in December 2021, Defense Minister A. Reznikov wrote that a full-scale invasion would provoke a global food crisis.
The Ministry of Economy of Ukraine, quoted by the USDA, indicated that for 2019-2020 years in the ranking of the largest grain exporters, Ukraine took 2nd place in terms of barley supplies, 4th place in corn supplies, 5th place wheat supplies. This made our country a silver medalist (only the United States is ahead of us) in terms of exports of all grain crops. These are thousands of tons of grain, which are raw materials for such countries as Indonesia, Spain, the Netherlands, Iran, Pakistan, Libya, Tunisia, Egypt and other countries of Asia, Africa and Europe.
Predicting the most difficult seeding campaign since independence, Executive Director of World Food Program (WFP) David Beasley noted at a meeting of the UN Security Council that the war in Ukraine could lead to a large-scale food crisis since the Second World War. All of these concerns stem from:
- some areas and regions are temporarily occupied, seaports, roads, warehouses and granaries are blocked, which leads to significant problems with logistics and raw materials;
- fields and roads are mined or infested with unexploded ordnance;
- there is a significant lack of fuel and lubricants and necessary spare parts;
- destroyed and damaged farms along with equipment, in the south-east invaders are taking out agricultural equipment to the territory of Russia; lack of current assets and exorbitant prices for fertilizers, which are already in short supply.
We will add a ban on work in the evening and at night, drone flights, weather conditions – and as a result, the extremely difficult sowing is also delayed in time (behind schedule). Due to such force majeure, up to 30% of the country’s sown area will remain unsown.
War is war, but it is necessary to sow! Despite all the difficulties, the farmers, at their own risk, go to the sowing season and do everything possible to continue the planned work. Farmers count every day. But without additional guarantees, real support and legislative changes from the state, it is almost impossible to carry out the sowing campaign fully.
Learn more about state aid to facilitate the sowing campaign.
The Law of Ukraine No. 7178 “On Ensuring Food Security in Martial Law” deserves special attention. It is a complex law that:
- allows the use of all available agricultural land for the sowing campaign (simplifies the acquisition of rights to use agricultural land in martial law). In addition, conditions have been created for agricultural production on state-owned lands, which are in constant use by state-owned enterprises of the Ministry of Agrarian Policy, the National Academy of Sciences of Ukraine, educational institutions, etc.;
- land-lease relations are automatically extended for one year without entering information in the relevant registers;
- District military administrations may lease state and communal agricultural land plots for agricultural production for up to a year. The rent can not exceed 8% of the regulatory monetary valuation of plots. To calculate the amount of rent, the average NGO unit of arable land area in the region will be used. For such lands, there is a restriction on changing the purpose of the plots. Lease agreements for such land are concluded only for one year in e-form without bidding. One cannot renew or prolong it. The right to lease land ,which is leased by the military administration is not subject to state registration;
- the transfer of agricultural land that is in permanent use of state and communal enterprises, institutions, organizations and land without crops, is carried out by written agreement of the head of the relevant state, communal enterprise, institution, organization, and the right to permanent use of land plots does not end.
During the war, the law prohibits:
- unpaid transfer of state and communal lands to private ownership;
- formation of land plots (except for those leased by military administrations);
- land auctions for lease rights, emphyteusis, superficies for state-owned agricultural land, communal property.
At the same time, land plots of state and communal property for agricultural purposes, the rights of lease, emphyteusis for which were put up for land auctions, but the winner was not determined, are subject to lease by military administrations.
Unfinished land auctions for the acquisition of the right to lease agricultural land of state and municipal property are cancelled. It is forbidden to announce new ones.
If the society cannot start field work, agricultural land users are given the right to transfer their land use rights to other agricultural producers that are provided with the necessary material, technical, financial and labor resources. District military administrations are given the authority to register agreements on the transfer of land use rights by maintaining appropriate registration books.
According to preliminary estimates, all this will make it possible to additionally attract about 20 thousand hectares of communal land and 300-400 thousand hectares of state-owned land for cultivation.
The most acute problem of all owners of agricultural societies is the safety of workers during field work. Even if the field does not appear to have dangerous objects (mines, unexploded ordnance or shells), this does not mean that mines of various types will not be buried in fertile land, so they cannot be detected without special instruments or appropriate equipment.
To ensure the safety of workers in the fields, company Feodal, together with the Ministry of Agrarian Policy of Ukraine, launched the Military.feodal.online project, which helps farmers promptly transfer information about mined fields to the State Emergency Service and the Armed Forces of Ukraine in order to neutralize abandoned dangerous objects as soon as possible. “For this, the applicant leaves an application on the basis of the Feodal service, in which, in the accompanying interface, he indicates information about the state and problem of the field and the coordinates where verification and neutralization of the object is necessary,” the company said.
The Law of Ukraine No. 2120-IX “On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine on the operation of norms for the period of martial law” was adopted, establishing:
1) temporarily, for the period from March 1, 2022 to December 31 of the year following the year in which the martial law will be terminated or revoked, no land fee (land tax and rent for plots of state and land) shall be charged or paid. communal property) for land plots (shares) located in the territories where hostilities are being conducted (conducted) or in the territories temporarily occupied by the armed forces of the Russian Federation, and are owned or used, including on lease terms , natural or legal persons, as well as for land plots (shares), determined by the regional military administrations as clogged with explosive objects and / or on which there are fortifications;
2) temporarily, for the 2022 and 2023 tax (reporting) years, the total minimum tax liability is not accrued and paid for land plots located in the territories where hostilities are (were) conducted, or in territories temporarily occupied by weapons of the Russian Federation, and / or areas identified by regional military administrations as contaminated with explosive ordnance and/or where there are fortifications.
The Cabinet of Ministers is entrusted with the duty to determine the list of territories in which hostilities are being conducted, or temporarily occupied by the armed formations of the Russian Federation.
In addition, single tax payers of the 4th group have the right to change to single tax paying in the amount of 2%.
To provide agricultural producers with credit funds, the Resolution of the Cabinet of Ministers of July 14, 2021 No. 723 was amended as follows:
1) establishing the period of validity of the state guarantee to ensure partial fulfillment of debt obligations on the portfolio of loans of creditor banks and on loans provided to business entities – agricultural producers for 1 year;
2) lending to business entities-agricultural producers exclusively as a credit (does not apply to a credit line);
3) a new purpose of lending within the portfolio is provided – to finance the provision of agricultural crops, incl. purchase of agricultural products (agricultural goods) falling under the definition of groups 1-24 of the Ukrainian classification of goods of foreign economic activity, as well as fertilizers, plant protection products, pesticides and agrochemicals, fuels and lubricants, spare parts, fixed assets and intangible assets, wages, rent of real estate and movable property, other goods (works, services) used by business entities-agricultural producers in the course of operating activities;
4) for loans provided to business entities – agricultural producers, the maximum term up to 1 year is set up, as well as the maximum total debt of the borrower and members of the group of related counterparties – UAH 1,500 million;
5) the amount of commissions to cover the expenses of the creditor bank (not counting the fee for providing a state guarantee) for servicing the loan – no more than 1% per year of the loan amount (for loans with a term of less than a year – up to 1% at once).
In order to support agricultural producers, the government supplemented the well-known state program “Affordable loans 5-7-9%”, and now its are available for medium-sized enterprises with an annual income of up to EUR 50 million and large enterprises with an annual income of more than EUR 50 million, regardless of the number of employees the following:
1) the maximum loan amount for all business entities is UAH 60 million, taking into account groups of related companies;
2) interest rate – 0% per year;
3) purpose of lending:
- investment loan for the purchase of agricultural machinery,
- a loan to replenish the current assets for the purchase of seeds, fertilizers, fuels and lubricants;
4) loan term – 6 months;
5) the deadline for submitting an application for participation in the program is until May 31, 2022;
6) the size of the loan guarantee – 80% of the loan amount of a micro, small and medium business entity (except for large business entities).
As of April 5 (excluding last year’s transitional loans), with the support of the government and thanks to the well-coordinated cooperation of the Ministry of Agrarian Policy, the Ministry of Finance of Ukraine, the Ministry of Economy of Ukraine with the support of the NBU and banking circles, more than 900 agricultural producers attracted loans from Ukrainian banks for a total amount for a total amount UAH 1 billion 785 million, under the 80% of portfolio guarantee program – for UAH 1 billion 494 million.
Due to the military and political situation, the occupation of ports on the Sea of Azov and the danger of cargo ships moving across the Black Sea, the destruction and damage of railway stations and tracks, insurance companies have suspended coverage of insurance payments for railway cargo and ships. This leads to increased risks for carriers not to receive compensation for possible damage to property due to hostilities. In order to maintain coverage of insurance payments and expand logistics, the Cabinet of Ministers issued Decree No. 255-r dated March 30, 2022. The Ministry of Infrastructure, together with the Ministry of Economy and the Ministry of Finance, should ensure the allocation of funds from the reserve fund of the state budget to compensate for the damage caused as a result of Russia’s armed aggression against Ukraine and hostilities on the territory of Ukraine in case of refusal by the insurers to provide insurance coverage for the following risks:
- charterers, operators and/or owners of sea vessels and inland navigation vessels sailing under the flag of Ukraine and the flags of foreign countries – if such vessels are located in the waters of Ukrainian ports in the Danube region;
- owners and/or operators of the rolling stock admitted to circulation on the railways of 1435 mm tracks, if such rolling stock is located on the territory of Ukraine.
Decree of the Cabinet of Ministers of March 16, 2022 No. 292 “On Amendments to the Technical Regulations Regarding the Requirements for Motor Gasolines, Diesel, Marine and Boiler Fuels” allows the sale of Euro-3 and Euro-4 fuels. It was intended for agricultural machinery that can run on such fuel to have more fuel resources for sowing.
Decree No. 154 of the Ministry of Agrarian Policy and Food of Ukraine “On the technical support of a complex of field works under martial law in 2022″ allows the operation of agricultural machinery (tractors, self-propelled chassis, self-propelled agricultural, road-building and reclamation machines, other agricultural machines and their components of domestic and foreign production) without registration. But after the end of martial law, farmers will have to register (re-register) agricultural equipment within 90 days.
The Decree of the State Center for Certification and Expertise of Agricultural Products No. 132 dated March 1, 2022 ensures: an unhindered process for the sale of seeds and planting material by seed of the 2021 harvest and residues of previous years required for sowing, without additional certification procedures; recognition of foreign certificates for imported seeds without the application of additional certification procedures. This will provide farmers with seeds for the spring sowing in 2022.
The resolution of the Cabinet of Ministers of March 16, 2022 No. 297 “Some issues of transportation, storage, use and trade of pesticides and agrochemicals” states that the license for the storage, transportation and use of pesticides has been extended for 90 days after its termination or cancellation for the period of martial law.
In general, the sowing season 2022 showed that in the conditions of martial law, farmers and the state, through the Ministry of Agrarian Policy and Food of Ukraine, accumulated efforts and work in a coordinated manner to ensure the highest possible harvest under such conditions. The Ministry of Agrarian Policy and Food of Ukraine has launched several online platforms to collect the actual needs of farmers for sowing in real time, and an online platform has also been created to improve the logistics routes of farmers under martial law.
The problem of labor force in agriculture industry is not ignored. The Ministry of Agrarian Policy and Food of Ukraine was the first to start reservation workers liable for military duty of agricultural producers to meet the needs of employers and prevent a shortage of workers.