In 2016, a total of UAH 1.7 billion was allocated to agricultural industry, according to official request from the Ministry of Agrarian Policy and Food of Ukraine (further referred to as the Ministry) to the Ukrainian Stock Breeders Association (“USBA”)
Below is the first publication from the publishing series “Agricultural Finance” established under the framework of the USBA’s monitoring project on the effectiveness of public expenditures in the agricultural sector.
Pursuant to the Law of Ukraine On the State Budget of Ukraine for 2016, the expenditures of the Ministry’s expenditures allocated from general and special state budget funds totaled UAH 1,731 billion. Allocations from the general fund of budget amounted in UAH 1,69 billion (97,7 % of the total amount) for the items presented below, referred to as Classification of Expenditures and Loans of the Budget (“CELB”):
- CELB 2801010 General management and control in the agricultural industry – UAH 85,869 thousand (5% of the total amount). According to the budget program’s passport, its objectives are to expand the supply to the world agricultural market; to increase the competitiveness of domestic agricultural products; to promote the efficiency of various sectors within the industry; to ensure market stability; and to guarantee food security of the State.
- CELB 2801030 Financial support of the programs in agricultural industry via providing access to cheaper funding – UAH 279,814 thousand (17% of the total amount). The objectives of this expenditure are to guarantee food security of the State; to increase competitiveness of domestic agricultural products andefficiency within various industry sectors; to ensure market stability; to expand the participation of Ukraine in global agricultural markets. This CELB also envisage partial coverage of the interest rate for the loans issued in local currency in order support market participants in the agricultural industry. In 2016, according to the distribution of the described budget allocations the largest recipients were Kyiv Region (UAH 30079017 thousands) and Vinnitsa Region ( UAH 32930238 thousands), respectively.
- CELB 2801050 Research and development (“R&D) programs in the agricultural industry, scientific workshop and trainings, developments in standardization and certification of agricultural products, research and experimental development in the agricultural industry – UAH 50,503 thousand (3% of the total amount). The expenditure should be allocated to guarantee food safety of the State; to increase the competitiveness of domestic agricultural products and efficiency within various industry sectors; and to ensure market stability.
- CELB 2801130 Increase in technical competency of the agricultural industry experts – UAH 5,682 thousand (0,3% of the total amount).
- CELB 2801160 Liquidation and ecological rehabilitation of the operations of State Enterprise «Solotvynskyi salt mine» (Zakarpattia Region) – UAH 3,004 thousand (0,1% of the total amount).
- CELB 2801310 Organization and operation management of the public bodies and institutions within the agricultural industry of Ukraine, as well as the Agrarian Fund of Ukraine – UAH 48,686 thousand (3% of the total amount).
- CELB 2801540 State support for the livestock breeding industry – UAH 29,985 thousand (2% of the total amount). According to the January 2017 report that was based on the on the budget program’s passport, 4,737 animals were purchased and this expense has been partially reimbursed by the government of Ukraine.
- CELB 2804010 General management in the fishing industry – UAH 116,710 thousand (7% of the total amount).
- CELB 2804020 Operation management of enterprises in the fishing industry and other state institutions – UAH 38,340 thousand (2% of the total amount).
- CELB 2804030 R&D programs and public purchasing in the fishing industry - UAH 745 thousand (0,04% of the total amount).
- CELB 2804090 International activity in the fishing industry – UAH 4,491 thousand (0,2% of the total amount).
- CELB 2805010 General management in the fishing industry – UAH 49,229 thousand (3% of the total amount).
- CELB 2805020 R&D programs and staff trainings in forest industry - UAH 5,122 thousand (0,3% of the total amount).
- CELB 2805060 Operation management in forestry and hunting, conservation and protection of forestry – UAH 66,163 thousand (3,9% of the total amount). It should be noted that according to the Law of Ukraine on the State Budget for 2016, state support is not rendered for enterprises operating in the forest industry; public funds are allocated only to the operation of public institutions in the forest industry.
- CELB 2807010 State control in agricultural industry – UAH 79,315 thousand (4,6% of the total amount).
- CELB 2809010 Management in the sphere of food safety and consumer protection – UAH 634,625 thousand (37,5% of general amount). This, most likely, refers to operation of the State Service of Ukraine for Food Safety and Consumer Protection.
- CELB 2809020 Relevant animal disease situation and membership in The World Organisation for Animal Health (OIE) – UAH 56,476 thousand (3,3% of the total amount).
- CELB 2809030 Operation management of public bodies operating under the authority of the State Service of Ukraine for Food Safety and Consumer Protection – UAH 134,838 thousand (8% of the total amount).
- CELB 2809040 Laboratory testing, measurement, research and expertise during state control – UAH 1,251 thousand (0,07% of the total amount).
Special Fund of the State budget allocated UAH 40,278 thousand (2,3 % of the total amount), to the following CELB items:
- CELB 2801250 Expenditures of the Agrarian Fund of Ukraine related to price control activities of the Intervention Fund of Ukraine - UAH 25,395 thousand (63% of Special Fund of Budget).
- CELB 2801460 Financing rendered to farmers – UAH 14,810 thousand (37% of Special Fund Budget).
- CELB 2801560 Formation of the State Intervention Fund by the Agrarian Fund of Ukraine; expenditures procurement of inputs for the needs of agricultural producers – UAH 72 thousand (0,004% of Special Fund of Budget).
As such, in 2016, the general and special funds from the State Budget provided the expenditures for state institutions in the agricultural industry, i.e. Ministry of Agrarian Policy and Food of Ukraine, the State Service of Ukraine for Food Safety and Consumer Protection, etc., in the amount of UAH 1,281 billion (74% of the total amount of expenditures).
However, only about 20% of the expenditures are aimed to develop the agricultural sector. As little as 3.7% was allocated to R&D activities and workshops and trainings to increase the technical skills of the industry stakeholders. The minuscular 3% of the budget was allocated to disease control measures, while there is an ongoing threat of the African Swine Fever (“ASF”) virus epidemic, as well as nodular dermatitis and other animal diseases.