Arzinger in cooperation with the Institute for Economic Research and Policy Consulting
with the Institute
Kyiv | 2010
I. LEGAL ENVIRONMENT
1. OVERVIEW OF LEGISLATIVE DEVELOPMENTS:
FROM KOLKHOZ TO PRIVATE FARMS AND HOLDINGS
2. GENERAL LEGAL FRAMEWORK FOR INVESTMENT
a) Establishing a legal presence
b) Investment and registration procedure
3. RIGHT TO AGRICULTURAL LAND PLOTS
4. TAXES AND DUTIES
a) Lease payments
b) Land tax
c) Fixed agricultural tax
5. FINANCING FOR AGRICULTURAL ENTERPRISES
II. AGRICULTURAL ENVIRONMENT
Appendix 1 — Potential of Bioenergy
Appendix 2 — Sustainability Requirements for Biofuels in the EU:
Implications for Ukrainian Producers of Feedstocks
Appendix 3 — Biogas and “Green Tariffs” in Ukraine –
A profitable investment?
Appendix 4 — Straw Use in Ukraine: Opportunities and Options
Appendix 5 — The EU Dairy Market – Real Opportunities for Ukraine?
Appendix 6 — European Markets for Meat: Real Opportunities for Ukraine
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The agriculture of Ukraine has become of traditional importance for the country’s economy,
which is also highlighted by the national flag (the blue sky over a yellow cornfield). Until
the year 1991 Ukraine was regarded as the “bread basket of the Soviet Union”. Over the
following years, the agriculture had been affected by overall economic decay. However, a
clear upward trend has been observed in the past few years, as the core implications for the
high-yield agriculture – the climatic and soil conditions (the vast black earth terrain) – have
remained unchanged. Meanwhile, the sector is also of interest for financial institutions and
equity providers which is illustrated by allocation of credits and IPOs amounting to mil-
lions. For the time being, giant agro holdings have been formed by means of these and
own funds. The constant intensification of agriculture has of course been accompanied by
increase in yields. Step by step Ukraine has changed from a net importer to a net exporter
having become one of the largest suppliers of agricultural products worldwide. Yet, the ani-
mal production cannot reach the efficiency level of the time prior to 1990.
Furthermore, the agricultural conditions provide for an additional market: the energy mar-
ket. In this respect, biogas and biofuels are the key words. So far as the EU countries can
also reach their goals set forth in the Renewable Energies Directive (RED; 2009/28/EG) via
importing from third countries, the RED is becoming an interesting link between Ukraine
and the EU countries.
At the same time, one of the biggest concerns for agro companies and investors in Ukraine
is the moratorium on sale of agricultural land plots, which is valid until January 1, 2012 and
until the law on land market and the law on land cadastre (land registry) will be passed by
the Ukraine’s parliament. As of this report date, both laws have not been passed by the Par-
liament, which increases the chances of further extension of the moratorium, and impedes
further investments in Ukraine’s agriculture sector.
This Guide provides the foreign investors with a general overview of the Ukrainian agro
market. With regard to this we have also covered the respective legal and economic aspects.
The survey on evaluation of the potential (Part II) was drawn up by the Institute for Eco-
nomic Research and Policy Consulting. Our special thanks go to Dr. Heinz-W.Strubenhoff
who took the lead in the preparation thereof. In addition, we would like to thank our staff
members Iryna Lishchuk, Olena Verba, Oleksander Plotnikov and Olena Bondarenko who
have contributed to Part I of this book.
The Guide does not claim to be complete and is in no case intended to substitute profes-
sional counseling on a case-by-case basis.
We hope that you will enjoy reading it!
Wolfram Rehbock, Attorney-at-law
Head of the German Desk
Anna Pogrebna, Attorney-at-law
Head of the Agriculture practice group
Business Centre Eurasia
75, Zhylyanska str., 5th floor, 01032, Kyiv, Ukraine
tel: +38 044 390 55 33; fax: +38 044 390 55 40
West Ukrainian Branch
6, Generala Chuprynky str., office 1, 79013, Lviv, Ukraine
tel: +38 032 242 96 96; fax: +38 032 242 96 95
South Ukrainian Branch
Pokrovsky Business Centre
33, Zhukovskogo str., 6th floor, office 601, 65045, Odessa, Ukraine
tel / fax: +38 048 711 74 74
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