The UCAB Association in cooperation with Union of poultry companies, Ukrainian agro association, National Agriculture Council of Ukraine and Land Union of Ukraine stand for law act project # 4010 “On development of law regulation of land usage for agricultural purposes (emphyteusis)”, registered in Supreme Council of Ukraine on July 15, 2016.

Business representing NGOs have announced a common view to support adoption of the law project aimed to stimulate land and credit markets development in the country.

Economical and political turbulences, world prices decline and narrowing of markets have caused 5% agro GDP decline first time in 5 years retrospective. Also, from 2016, VAT tax burden has increased in agriculture due to changes related to special regime. Considering mentioned above, agricultural entities have to attract more external financial resources for operational and business development purposes.

Presently, banks’ credits are major financial source, nevertheless agro credit market suffers macroeconomic crisis and as a result companies face high barriers of capital access. During last 5 years credits’ amounts granted to agro entities have increased by 66%, but inflation rate reached 96% meaning that purchase power of allocated credits lost 30% and this happened when total credit amounts estimated at 56.7 B UAH.

In case of #4010 law project adoption, banks operating on agro credits market will have an option to get mortgage which minimize payback risks. Currently, real estate and other property of agro entities do not possess required dimensions for mortgage purposes in most of cases due to its depreciated state. Most valuable asset of agro entities is land, but considering land market moratorium, agro lands are not useable for mortgage purposes the same as lease rights derived from ownership.

“Voting for and adoption of mentioned above law project will open an option of lease right usage as mortgage in agro credit’s operations. Adopted law will help agriculture to raise capital for purchases of new machines, technics and installations and also to balance operational capital. Emphyteusis will become liquid asset for agro companies allowing banks to simplify credit conditions, to low credit rates fortifying agro industry development, yielding and GDP growth”, said Taras Vysotskyi, General director at Ukrainian Agribusiness Club.