Policy

Ukrainian agriculture is one of the most attractive sectors for investments due to fertile soil, which covers more than 60% of the territory of Ukraine.

The cost of labor in the sphere of agriculture is comparably low, however the workers are skillful and qualified.

Ukraine is producing a significant amount of agriculture products for export, while the internal consumption is also stable.

The main acts governing agriculture sector are the following:

·             The Land Code;

·             The Laws of Ukraine:

§  On Land Lease

§  On State Support of Agriculture of Ukraine

§  On Technical Regulations and Conformity Assessment Procedures

§  On Standardization

§  On Wholesale Markets of Agricultural Products

§  On Safety and Quality of Food

§  On Production and Circulation of Organic Agricultural Products and Raw Materials

§  On Milk and Milk Products

§  On Veterinary Medicine

·             Decree of the CMU:

§  On Standardization and Certification.

Regulator

CMU

·             Approves the list of licensing authorities, term of licenses;

·             Approves the procedure of issuance of special permits and other by-laws.

Ministry of Agrarian Policy and Food of Ukraine

·             Main body in the industry responsible for the formation and implementation of the state policy in agrarian, farming, and food safety sectors;

·             Approves procedures, technical requirements, methodologies and other by-laws in the industry;

·             Provides performing of land-surveying works, assessment of lands;

·             Issues licenses allowing sale of pesticides and agrochemicals, plant fumigation, etc.

State Service of Ukraine on Food Safety and Consumer Protection

·             Certification of seeds and planting material;

·             Issues licenses regarding veterinary practice.

State Service for Surveying, Mapping and Cadastre

·             Provides land survey;

·             Keeps Land Cadastre;

·             Disposes of land in state property.

State Agency of Fisheries of Ukraine

·             Issues licenses regarding activities related to industrial fishing

State Environmental Inspection

·             Supervises compliance with the land legislation, use and protection on lands

Municipal Councils

·             Disposes of land in the municipal property

State Administration

·             Disposes of land in the state property

Agricultural Land Lease / Ownership

All agricultural land plots have a normal designated purpose which is binding while using a land plot.

The designated purpose of a land plot is specified in the land allotment projects and title documents. 

Particular designated purposes of agricultural land usage may be as follows:

Ownership

Only Ukrainian companies and citizens may own agricultural land. Foreign companies and individuals may not acquire agricultural land for ownership.

Transactions regarding alienation (with the exception of inheritance) and change of the designated purpose of private, state or municipal agricultural land (with the exception of land designated for gardening, vegetable gardening, pasture) are currently restricted due to a moratorium aimed at providing a secure legal environment for launching the agricultural land market.

The moratorium cannot be lifted before Jan. 1, 2016.

Lease

Lease of state or municipal land is subject to specific restrictions and requirements. A public auction must be held to grant the right of lease of state or municipal land. The most common exception to this rule is when the respective land plot underlies buildings or other real estate owned by the potential lessee.

Contrary to the ownership, lease right may be freely acquired by foreign companies and individuals without restriction.

Land lease agreements are concluded in writing. The lessee must register their lease rights with the Property Rights Register. The lease rights arise only upon such registration.

A land lease agreement must contain all essential terms and conditions envisaged by law. Otherwise, the lease agreement may be recognized invalid or not-concluded in court.

Land lease cannot exceed 50 years.

Licensing and Permits

The following agricultural activities require obtaining a license (also see "Regulator" above):

·             Manufacturing, as well as wholesale and retail sale, of veterinarymedicines and drugs;

·             Sale of pesticides and agrochemicals;

·             Veterinary practice;

·             Activities related to industrial fishing;

·             Sale of bred (genetic) resources, examination of genetic abnormalities and origin of animals;

·             Plant fumigation (disinfection),seeds transported across the stateborder of Ukraine.

As a general rule, a license is issued for an unlimited term. However, the CMU can limit the term of a license (not less than five years), which is the case for most of licenses.

The company pays for the license once a decision has been taken to issue one. The license may be cancelled if the company does not comply with the laws while conducting its business activity.

In case of performing certain agricultural activities, a legal entity must hold appropriate permits issued by governmental bodies. Below is the list of the most common permits and some other requirements in agricultural business:

Name of permit

Issuer

Permit for hazardous work

State Service of Ukraine on Labor Issues

Permit for operation of hazardous vehicles, machinery, equipment

Permit for air emission

Ministry of Ecology and Natural Resources of Ukraine

Permit for removal of topsoil

State Environmental Inspectorate of Ukraine

Special water use permit (for use of water wells or natural water resources)

For water well or resources of national value - state administrations, for local water well or resources-executive bodies of the municipal councils with approval of the respective state administration

Subsoil permit (for use of artesian water wells)

State Geology and Subsurface Service of Ukraine

Waste disposal permit

Ministry of Ecology and Natural Resources of Ukraine, State administrations

Assessment of a commercial activity's environmental impact

Certified individual or legal entity

Ecological audit (for operation of a cattle-farming complex, for manufacturing food products, for processing waste of animal origin)

Certified individual or legal entity

Some permits require payment of a fee while others are issued free of charge and maybe issued for limited or unlimited periods. In case of performing business activity without required license or permit, the legal entity may undergo penalties and/ or confiscation.

Import and Export of Agricultural Products

The list of products subject to import and/or export licenses is set annually by a resolution of the CMU for the next year.

In 2015, with regard to the agricultural sector, only chemicals for use on agriculture were included in the list of products subject to import licenses. The importer must still receive prior authorization from the competent administrative body - the SSUFSCP - before obtaining an import license. Unlike the import license, such prior authorization is not granted automatically.

At the same time, tax legislation envisages a possibility of introducing additional import duties of 5-10 % on all the goods imported to Ukraine.

Advertising and Certification of Agricultural Products

Advertising

The advertisement of diet food products cannot contain reference to the medical features of such products.

The advertisement of food products that require certification and are not certified is prohibited. The distributor of the advertisement must review and keep the copy of such certificate of compliance.

Certification

Certificates of compliance must be obtained for the listed food products.

Certificates of compliance are mandatory for some types of baby food, wines, champagne, vodka, Cognac, brandy drinks and ethyl alcohol.

The import of the above mentioned products is subject to the mandatory certification in Ukraine. The sale of the above mentioned products in Ukraine is permitted only on the basis of the certificate of compliance.

The certification is performed by the designated state enterprises. Certified food products may be labelled by the special mark.

The food producers may perform the voluntarily certification for the products that are not listed for mandatory certification.

Contemplated Reforms

·             Land reform, introducing the land market allowing the alienation of agricultural land;

·             Deregulation and decreasing the number of licenses and permits;

·             Decrease/elimination of import/ export custom duties with the EU; 

·             Gaining uniformity with the EU legislation, in particular, regarding food safety.

The information contained herein is not a legal advice or clarification of the current legislation. 

If you need more information, please refer to Lavrynovych & Partners:
www.lp.ua | office@lp.ua

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