Farming as a business: who are Ukrainian farmers and what problems do they face?

Submitted by bashun on Wed, 09/27/2017 - 10:26

Behind general term "farmer" there are different groups of agricultural producers in Ukraine who have different needs and face different problems. How can the state help the development of farming and do all such small farmers need such help?

This is written on in Serhii Bilenko’s blog who is a member of the council of the association "Land Union of Ukraine" and an expert on the development of agrarian legislation.
Recently, at the state level, much has been said about the development of farming. This became especially important in the light of the preparations for the opening of the agricultural land market. On the protection of farmers as a key condition for lifting the land moratorium has been repeatedly stated at the governmental level. On September 13, the Cabinet of Ministers of Ukraine adopted a resolution "On the approval of the Concept for the Development of Farms and Agricultural Cooperatives for 2018-2020." I do not want to analyze the entire document, I will focus only on some of its aspects.
Firstly, the terminology should be agreed. What do we mean by the expression "farmer" ? In fact, this is not such a simple question.
Today there are about 30,000 officially registered farms. In fact, we are talking about 3 categories of participants in the agrarian market, each of which has diametrically different interests.
The first category is the owners of land shares and land plots intended for personal farming. These are people who "come out" of lease agreements and use their own plots on their own. In addition, they often use the land plots of family members, as well as rent land plots of neighbors (with leases in most cases not formally formalized).
Such farms are rapidly developing and sometimes bring a good profit. There are certain agricultural products, the lion's share of which is produced precisely in these farms. This, in particular, 98% of potatoes, 70% of cattle, 86% of vegetables, 86% of vegetables and fruits.
However, the big problem with the functioning of these farms is that they work mostly completely in the shade. Neither FLP nor the legal entity is registered, no taxes are paid. In the land sector, these farms also often work in the shade. The right to use land that peasants rent from other people is often not formally formalized. The lease contracts are not concluded, the rent calculations are "cached". What is interesting is that recently this has become a problem for medium and large agricultural producers. Due to non-payment of taxes and the possibility to pay a rent in a larger amount than that offered by the main tenant of the array, the land plots are "pulled out" from its use. If these areas are located in the middle of the array, this creates additional problems associated with the need to lay a field road to them.
Despite these problems, the development of personal peasant farms is an unambiguous positive. Firstly, all the same, the activities of personal peasant farms provide employment for the population. Secondly, any business goes through a period of initial accumulation of capital, where not everything is always working in a legal channel. In the future, the entrepreneur will be interested in legalizing his position.
Therefore, the state should help accelerate this process and create comfortable conditions for those who will direct their activities to the legal channel. After all, the development of these farms has great potential. The approved concept provides for the creation by the state of favorable conditions for the transformation of households into farms.

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