Who will take 7 billion? Three Hosts – Three Strategies

In October 30, 2018 UAC organized conference «Who will take 7 billion? Three Hosts – Three Strategies» in the frame of 12 International exhibition of agricultural machinery and equipment «InterAgro-2018». It was presented  «The Concept of the State Policy of Structuring and Development of Agricultural Enterprises of Ukraine».

It was mentioned that at this moment there are three groups of agricultural enterprises – small, medium-sized and large, which it is advisable to consolidate at the legislative level, but the state applies the principle of a unified approach to them. It is necessary to consider the assessment of the role and place of different enterprises and to differentiate approaches to their development.

The first group includes small agricultural enterprises with a land bank up to 200 hectares, with a profit of UAH 2 million, which involves the farmer, his family, and temporary workers. These enterprises cannot exist without significant stable state support. They will have the greatest prospect if they focus on satisfying regional needs. The most profitable for this group is the production of "niche" products (fruits, vegetables, honey, etc.).

The second group includes the medium-sized agricultural enterprises with a land bank from 200 to 10 000 hectares, with a profit up to UAH 5 million. These enterprises have the opportunity to process the raw materials that they have produced, as well as sell products at the national level, partially exporting them.

The third group includes large agricultural enterprises with a land bank more than 10,000 hectares. They are vertically integrated agro-industrial structures that have the opportunity to diversify production with the aim to obtain the maximum amount of products for their further export and realization on the domestic market.

According to the potential of the three groups of agricultural enterprises, the state should differentiate its policy for supporting their functioning.

Small agricultural enterprises should have a simplified taxation system; the state should give them subsidies, in addition to current subsidies, as well as to compensate for interest on loans and purchase of equipment.

For medium-sized enterprises at this stage, zero VAT rate (accumulation system) should be applied; the state must compensate for interest on the loan, the purchase of equipment and pedigree animals.

Large agricultural enterprises should be able to create clusters (industrial parks); for large enterprises a tax on retained earnings (a tax on "withdrawn capital") should be implemented; the state must compensate for interest on the loan, the purchase of equipment and pedigree animals.

IC UAC