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Agricultural Trends in Ukraine: Challenges, Policies, and Market Outlook

Learn about the recent agricultural and policy trends in Ukraine, main challenges and constraints, commodity market outlook, focus on Ukraine's agricultural situation, and support policies in place. Explore the progress in WTO accession and the main challenges ahead in sustaining growth and easing social pressures. Stay informed about Ukraine's agricultural landscape and future prospects.

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Agricultural Trends in Ukraine: Challenges, Policies, and Market Outlook

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  1. TRENDS IN AGRICULTURAL MARKETS AND POLICIES IN UKRAINE by Olga Melyukhina OECD, Directorate for Food, Agriculture, and Fisheries Berlin, 5 May 2006

  2. Outline • OECD-FAO Agricultural Outlook • Recent agricultural and policy trends in Ukraine • Main challenges and constraints

  3. Agricultural Outlook 2006-15:Main Assumptions • Macroeconomic setting – sustained optimism • robust output growth, most dynamic in large developing economies; contained inflation • Current agricultural policies continued • but uncertainties: DDA outcome; bilateral trade; new US Farm Bill; policy changes in BRIC • Other uncertainties • disease outbreaks; impact of biofuel

  4. Agricultural Outlook: Trends in Commodity Markets • Developing and transition economies increasingly shape world demand and trade • Moderate trade growth – trade barriers persist • Cereals: trade strongly driven by livestock expansion; biofuel becomes important factor, but impacts are difficult to predict • Oilseeds: strong demand for oil and meal; high rates of trade growth, China main driver

  5. Agricultural Outlook: Trends in Commodity Markets • Sugar: trade increasingly dominated by Brazil; Russia, EU, and China largest importers • Dairy: demand growth mainly in dev and transition econ, prices firm, OECD countries remains main trader • Meat: prices to stabilise after disease shocks; main consumption and production growth in developing countries, which expand their exports and absorb 2/3 of import increase

  6. Agricultural Outlook: Focus on Ukraine Ukraine emerges among important non-OECD exporters • Coarse grains → EU and North Africa and Asia • Oilseeds → diversification from sunflower; oil exports • Dairy: butter and SMP → Russia and other CIS

  7. Agricultural Situation in Ukraine

  8. Ukraine’s Agricultural Trade USD mln

  9. Commodity Composition of Ukraine’s Agricultural Exports $ 4 310 mln $ 3 473 mln Other Meat Confectionery Beverages Dairy and eggs Sunseeds+oil Cereals

  10. Ukraine’s key exports by destination

  11. Support Policies • Border protection: simplified and lowered • Series of “commodity” laws • 2000: Sugar Law / sugar quota • 2001: Grain Law / intervention purchases • 2004: Meat Law and Milk Law / minimum prices • 2005: Grape and Grape Wine law • Tax concessions • Fixed Tax (as % of land value) until 2010 • VAT subsidy • Processor VAT refunded to milk and meat producers • Subsidised credit and debt restructuring • 2005: Law on State Support to Agriculture

  12. Ukraine’s Producer Support Estimate

  13. Progress in WTO accession • In 2005 – active harmonisation of national legislation with WTO requirements • Bilateral protocols signed with majority counterparts (US recently, Australia and Colombia ?) • Issues remain • AMS amount (treatment of tax exemptions) • Base period 1994-96 vs 2000-02 • VAT regime (10% domestic vs 20% on imports)

  14. Main Challenges and ConstraintsSustaining Agricultural Growth • Development of infrastructure, information, and risk management systems • Improvement of standards and quality • Land and labour mobility • Terms & availability of credit • Investment and modernisation • More policy stability • Resolving mismatch between emerging market regulation and WTO commitments

  15. Main Challenges and ConstraintsEasing Social Pressures • Agricultural growth is necessary, but not enough • Social policies • Integration of small-scale farming into markets • Rural economy diversification • Enhanced labour mobility • Investments in human capital: health, education, and extension

  16. THANK YOU! www.oecd.org

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