An open appeal to the President of Ukraine Poroshenko P.A.

An open appeal to the President of Ukraine Poroshenko P.A.

The country has an extremely difficult economic and explosive social situation. This is the result of gross miscalculations in the management of the economy committed by the previous government.

Arseniy Yatsenyuk together with the deputies of the Supreme Council of Ukraine led to the fact that virtually no industry is functioning normally and the agro-industrial sector that is profitable before the beginning of 2016 has been put into a difficult economic situation. When the budget was adopted in 2016, the government of A.Yatsenyuk canceled the benefits for the agro-industrial sector that existed in Ukraine for more than 20 years, which allowed gradually, overcoming great difficulties, to raise agricultural production to the highest level for all the years of Ukraine’s existence, not only as an independent state, but and for all the years in the Soviet Union. Although, it should be noted that such outstanding successes have been achieved, mainly in the crop and poultry industry, with regard to livestock, its state was much more developed in the Soviet years than it is today. For example, it can be noted that in 1986 in Ukraine the number of cattle was 26 million 600 thousand head of cattle. Pig breeding also had a maximum number of livestock, estimated at tens of millions of heads. For today in Ukraine there were only 2 million 400 thousand heads of large horned livestock. And this is in view of those animals that are kept in households. The livestock sector is constantly losing productive livestock and, if this trend is not immediately stopped, then in the next 2-3 years, Ukraine from the exporter of dairy products will be among the 10 countries importing milk and products made from it. A similar situation is observed in such an industry as pig production. Such sad results of work in the cattle-breeding industry of our country in the coming months will find their repetition in the agricultural sector as good as this year, such as plant growing. What are the reasons for this deplorable situation in the agricultural sector of Ukraine?!!

Pursuant to the requirements of the International Monetary Fund, the government of A. Yatsenyuk and the Supreme Council of Ukraine abolished the privileges for agriculture on the return of value added tax, which provided for the investment of these funds in the further development of agricultural production. In parallel with this, a value-added tax was imposed on all imported from abroad and having no analogues in domestic production, agricultural aggregates (combines, tractors, seeders), plant protection products (herbicides, insecticides, fungicides), newest hybrids of seeds corn, sunflower, and other crops), for zap. parts for imported machinery and other consumables that are necessary components for agricultural production. Parallel to this, the previous government repeatedly increased the fixed agricultural tax for all farmers.

Not limiting to this, A. Yatsenyuk and his ministers almost 7 times increased the rent for the use of state lands, if counted from 2010. A parallel increase in the prices of natural gas and electricity, which are used in large volumes for the production of mineral fertilizers (for example, in the production of carbamide and other nitrogen fertilizers, 95% of the cost is natural gas). As a result of the increase in the price of gas, prices for all mineral fertilizers, which are one of the most important components in the production of all crops, have increased manifold. Also, a large amount of gas and electricity are used by all farmers in the collection and drying of corn, sunflower and, if necessary, other crops. In addition to the sharp increase in the cost of all agricultural products, the abolition of government benefits for VAT, which also greatly increases the costs of farmers, increasing the fixed agricultural tax, raising the rent for the land to 3,5 thousand UAH per hectare leads to the fact that the costs of agricultural producers to October-November 2016 will exceed the incomes of agrarian enterprises, both small and medium-sized farming. Large agro-holdings also bear huge losses and, mainly, are saved by using crop production as a feed base for poultry farming and egg production.

In parallel with this, large agroholdings withdraw their capital abroad, where they create their own new agricultural production. This leads to capital flight from the country, loss of jobs and loss of value added that could remain in Ukraine and be the basis for the growth of effective demand for people working in the agro-industrial sector, which in turn would be one of the main triggers for the revival of the entire Ukrainian economy. Thus, undermining the economy of the agro-industrial complex, abolishing the benefits of the value-added tax, as well as increasing the fixed agricultural tax, raising rent for land, raising prices for gas and electricity will ultimately lead to the death of the Ukrainian agrarian sector, which could be the locomotive in the process of reviving the domestic Ukrainian economy and raising social standards of life to a level worthy citizen of Ukraine, which would correspond to European and world standards safely th and prosperous life of citizens of the advanced countries of the world.

What needs to be done to the President and the Government of Ukraine to prevent deepening of the gravest crisis developing in Ukrainian agricultural production:
1. Immediately return the benefits of the value-added tax to agricultural producers of all forms of ownership.
2. To abolish the value-added tax for all components vital for agricultural production, namely: all plant protection products (herbicides, insecticides, fungicides); for all types of agricultural machinery, which have no analogues in Ukrainian industry; on all spare parts for imported equipment from all over the world, including Belarus, Russia and other CIS countries; on all the newest hybrids of seeds of corn, sunflower and other crops.
3. Lower the fixed land tax rate to the level of 2013.
4. To lower the rate of rent for the land of state property to at least 3% of the cadastral value of the land.
5. If possible, lower the price of gas and electricity to the level of 2013.
6. To introduce excises on imports of foreign meat of cattle and pigs to a level that will exceed the average cost of one kilogram of cattle meat and pork in domestic agricultural production. The
7. Create favorable conditions from the point of view of minimizing taxation for agricultural enterprises that develop irrigated agriculture. The
8. Ensure the provision to agricultural enterprises of profitable, long-term loans for 5-10 years at no more than 10% per annum for the development of cattle breeding, dairy and meat, and for the development of pig production. The
9. At the governmental level, to ensure the return of the markets of the CIS countries for the sale of dairy, meat and other agrarian and food products of Ukrainian origin.
10. In parallel, it is necessary to seek EU countries to increase quotas for the export of Ukrainian agrarian and food products to European countries to objectively acceptable volumes, which enable them to sell at least 20-30% of all Ukrainian agro products in European countries, that is, the activity of agro-exporters should be improved by adopting the multi-vector principle in the economic strategy of Ukrainian agribusiness.

Dear Mr. President! I ask you to take seriously the above-mentioned agro-industrial problems of Ukraine in the most serious manner and take all the measures that are in your way, for the return of the status of an agrarian superpower to Ukraine!

Public figure, academician and vice-president of the Academy of Economic Sciences of Ukraine

Anatoly Peshko

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