Concept project

1
Concept project
National Complex Programme Supporting the
Development of Ukrainian Rural Areas
2
Goals

• To preserve peasantry as a bearer of Ukrainian
  identity, culture and spirit of the nation.
• Complex development of rural territories and
  solving social problems of the villages.
• Making agriculture highly effective, competitive
  at internal and external markets sector of
  Ukrainian economy.
• Ensuring food security of the country.

3
Tasks

• To ensure stable development of the agrarian
  sector of national economy
• To ensure stable development of rural areas and
  communities

4
Methodology
State programme DAR Ukraine
Agroindustrial markets
Land relations
Education
Budget
Science
Quality, Safety
Information
Integration
Public administration
Social sphere
Human
Land
Production
5
Methodology
Standard of living
Land quality
BRAND OF AGRICULTURAL UKRAINE
Quality product
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Methodology

• Working out success criteria in two main areas
• 1 Development of the agro-industrial complex
  (AIC)
• 2 Development of rural communities and areas
• Analysis of factors of influence
• Exerting influence on 10 main areas groups of
  factors
• Working out requirements for program activities
  as to their compliance with requirements of WTO
  and EAP
• Elaborating a plan of action within RADU
• Activities efficiency analysis and their
  correction by means of feedback

7
Tasks success criteria
Success criteria Present situation Desirable figures
Profitability in agroindustrial complex 4-6 18-20
Export share of agroindustrial complex commodities 9,8 20-25
Level of direct foreign investments into agroindustrial complex 120 mln USD per year 1 bln. USD per year
Ukrainian share at international markets of agroindustrial commodities 2,8 6-8
Level of income per capita employed in agroindustrial complex 50 USD 300 USD
Level of employment in rural areas 54,7 85
Level of income per one household in rural areas 80 USD 480 USD
Level of social infrastructure objects availability in rural areas 42.5 50
Level of youth employment 54,2 80
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Methodology
Stabilization
Raise
Republic of South Africa
Europe
Malaysia
Ukraine
Recession
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Main problems

• Public administration and branch-wise policy
• The strategy of agroindustrial complex
  development is based upon the criteria of
  increasing production volumes in all branches
• The concept of food security assumes satisfying
  95 of own consumption with the help of own
  production
• Outcome
• Wrong priorities and inconsistent state
  policy in rural areas and agroindustrial complex

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Main problems

• Land relations
• Social strain and lack of trust between the
  subjects of the market
• Lack of measures and stimuli which could
  contribute to joining of land share owners
• Nonoptimal public administration, lack of
  effective state control over quality and the
  state of land resources
• Outcomes
• Fear to loose land property from the side of
  peasants and public opinion based on the fear of
  agriculture capitalization
• Difficulty of practical problem solving in the
  sphere of rent relations in rural areas
• Disastrous decrease in land fertility and
  increase of soil erosion processes

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Main problems

• Social and economic development of rural areas
• Nonconsistent policy and state support of rural
  areas development
• Not identified sources and mechanisms of funding
  for the realization of the state policy in the
  sphere of rural areas development
• Outcomes
• Low level of life, unemployment, decrease birth
  rate in rural areas, ageing of rural population
• Threatening decrease in the number of rural
  population, village depopulation, loss of
  national traditions of village life, family
  values
• Rural population lives in a limited informational
  space, very low level of knowledge about rights,
  possibilities and innovative technologies from
  the side of peasants lack of knowledge how to
  implement their rights to protect own interests

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Main problems

• Agroindustrial markets
• Products and branches of international
  competitiveness are not identified
• No branch priorities outlined
• No balance between demand and supply,
  unorganized market with low level of
  infrastructure development and elements of
  command and administration system
• Lack of organized sales channels with transparent
  pricing mechanisms and mechanisms stimulating
  production
• Outcomes
• Predominating unprofitableness of agricultural
  production
• Lack of structural balance in the export of
  agricultural commodities with prevailing export
  of raw materials
• Failure of agricultural commodities to meet
  international standards of quality and safety
• Increase of expenses on consumption of
  non-recoverable resources and decrease of
  competitiveness of agricultural enterprises
• Deficit of food consumption in comparison with
  the level of rational consumption norms
• Decrease in the value added production

13
Main problems markets of agroindustrial complex

• Lack or weakness of market infrastructure
  wholesale markets of agricultural commodities

Agroindustrial markets
14
85

• Result lack of pricing transparency, unorganized
  markets, unsatisfactory quality level

14
Main problems

• Agrarian science
• Ukrainian agrarian science has a low level of
  integration into contemporary European and
  international science
• Low level of scientific base in some of the
  scientific investigation institutions of
  agroindustrial complex
• Lack of implementation mechanism between
  fundamental science and practice
• Outcomes
• Potential of scientific investigations is not
  implemented in the practice of agricultural
  production
• Brain drain of scientists to other countries or
  other branches of national economy

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Main directions of the programme

• Defining priorities of agroindustrial development
  of the country with the concentration of all the
  main efforts in competitive branches
• Intensive development of rural areas and local
  self-government, introduction of the
  participation strategy, which would help to
  consolidate efforts of the State and local
  communities

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Planned actions in the sphere of public
administration

• To adopt the Concept of the countrys food
  security on the level of legislation
• To decentralize management in agroindustrial
  complex and to introduce operational standards of
  taking state decisions, controlling the
  implementation of these decisions and assessing
  the results
• To start structural reorganization of state
  institutions in order to proceed from
  paternalistic principles of agroindustrial
  complex development to complex system of state
  support given to competitive branches
• To ensure the development of state system of
  special training and education of specialists to
  be employed in agroindustrial complex and
  Ukrainian rural areas

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Planned actions in the sphere of land relations

• Improvement of land legislative base and
  management system in the sphere of land relations
  (budget expenditures - 0,75 mln. UAH, effect
  value added increase by 53,0 mln. UAH. )
• Rationalization of the land tenure by way of
  organization of the land usage (budget
  expenditures - 516,5 mln. UAH., effect - value
  added increase by 1624,0 mln UAH)
• Recovery of soil quality and ensuring soil
  protection (budget expenditures 174,5 mln. UAH,
  effect - value added increase by 555 mln. UAH)
• Creation of conditions for agricultural lands
  market and the improvement of investment climate
  (budget expenditures - 225 mln. UAH, effect -
  value added increase by 365 mln. UAH )

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Planned actionsin the sphere of agroindustrial
markets development
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Seeds
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?
19
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Intensification of production, deepening the
level of processing, strategic export
Attraction of investments, sufficient state
support, creation of market infrastructure
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Attraction of strategic investments, branch
restructuring
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Planned actionsin the sphere of agroindustrial
markets development

• Priority development of production of sunflower,
  cereals and products of its processing. It is
  planned to increase production volume of
  sunflower from 3 mln. tones in 2004 to 4,5 mln.
  tones in 2010 cereals - from 38 mln. tones in
  2005 to 65 mln. tones in 2010
• It is planned to increase production volumes of
  poultry from 0,58 mln. tones in 2004 to 1,2 mln
  tones in 2010, pork from 0,46 mln. tones to 1,1
  mln. tones, milk products from 13,9 mln. tones
  to 18 mln. tones, eggs from 11,8 bln. eggs to 15
  bln. eggs, accordingly.
• Strategic focus on dairy farming with constant
  beef production on the level of 2005 based on a
  principle of derivative product. At the same time
  the demand for beef will also be present due to
  import.

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Planned actions in the sphere of agroindustrial
complex branch-wise policy

• To work out development strategies for branches
  of international competitiveness cereals,
  sunflower , confectionery, organic products,
  poultry
• To work out programmes aimed at competitiveness
  creation in potentially competitive branches
  pig-breeding, dairy farming, milk processing,
  eggs production
• To implement corporatization of the sugar branch
• To work out model investment projects for
  competitive branches
• To work out regional policies for agroindustrial
  complex based upon cluster models
• To form branch-wise investment proposals fro
  branches with capital payback over 20

22
Planned actions social and economic development
of Ukrainian village

• Creating favorable conditions for the development
  of private initiative and entrepreneurship in
  rural areas as basic mechanisms for the increase
  of life level in villages.
• Creating conditions and possibilities for rural
  communities to solve social and economic problems
  of rural settlements.
• Working out mechanisms of supporting social and
  economic development of rural areas.

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Planned actions agricultural science

• Increase in the gross value added in agriculture
  by 30 due to more effective usage of plants and
  animals genetic potential ( increase from 50 to
  70) and complex implementation of Ukrainian
  technologies in production (from 20 to 50) and
  in processing from 60 to 80
• Bringing the share of GDP spent for scientific
  investigations from 0,16 to 0,5 percent
• Creating national banks of genetic resources of
  plants, animals and microorganisms
• Creating national fund of science intensive
  products

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Planned actions Budget regulation
Directions of budget usage and usage of international funding 2005 2006 2007 2008 2009 2010 Total
Support and restructuring of agriculture and agroindustrial complex 2435,4 5186 5760 5348 6976 7449 33 154,4
Including the yellow basket 1061,7 2280 2534 2351 3068 3277 14 571,7
green basket 1373,7 2906 3226 2997 3908 4172 18 582,7
Management and upkeep of budget institutions 562,2 570 580 580 580 590 3 430,2
Science and education 618,5 1053 1520,6 1761 1692 1902 8 547,1
Social sphere in rural areas 721,9 2900,46 3036,56 2865,86 2957,46 3079,6 15 561,84
TOTAL 4 338,05 9 709,46 10 897,16 10 554,86 12 205,46 12 520 ,66 60 225,65
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Planned actions finance and investments

• To ensure attraction of funds amounting to
• 16 bln. UAH per year into agroindustrial complex
  on the basis of short-term credits
• To ensure attraction of funds amounting to 10-12
  bln. UAH per year into agroindustrial complex on
  the basis of long-term credits
• To ensure attraction of funds amounting to 5 bln.
  UAH per year due to introduction of leasing

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Planned actions International integration

• Receiving the status of the country with market
  economy
• Becoming a member WTO
• Creating a free trade area between Ukraine and
  the EU
• Defining perspectives and realization of measures
  aimed at regional integration
• Realization of an Agreement about free trade
  within the CIS

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Planned actions products qualityand safety

• Forming a unified state policy in the sphere of
  quality and competitiveness of agricultural
  commodities
• Bringing National normative and legislation
  system in the sphere of agroindustrial products
  quality and safety in accordance with the
  requirements of WTO and EU
• Entering external markets with Ukrainian
  agricultural commodities being of the high
  quality and ecologically clean

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Planned actions Information and monitoring

• Finalizing the development of automated system
  of land cadastre of Ukraine containing new data
  about the quality of soils
• Creation of the automated system of agro-market
  monitoring
• Creating the system of agricultural knowledge
  management and distance learning

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Planned actions education in agriculture

• Development and implementation of the effective
  system of personnel management and personnel
  development for agroindustrial enterprises
• Reforming the system of agrarian education
• Introduction of the system of business education
  as the basic factor of entrepreneurship
  development in rural areas
• Development and implementation of the system
  designed to stimulate the desire to learn and
  receive education

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Expected results

• Creating institutions and mechanisms of social
  protection of rural population at the level of
  standards typical for highly-developed European
  countries
• Creating developed and secure internal agrarian
  market
• Creating agroindustrial production with high
  profitability
• Creating the image of Ukraine a s a country with
  highly developed agroindustrial sector
• Forming ecological brand of Ukraine
• Creating internal stock market
• Sufficient increase in the incomes to the state
  budget

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Expected effects

• Increase in value added gained as a result
  of the planned actions implementation will amount
  to
• - in the sphere of land relations and land
  preservation - 2 529,0 mln. UAH
• - in the sphere of education and management of
  human resource - 1 500 mln. UAH
• - in the sphere of science 13 760,0 mln. UAH
• - in the sphere of branch-wise and regional
  development of agroindustrial complex - 11 200
  mln. UAH
• - in the sphere of investments up to 100 bln.
  UAH

32
Expected effects
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Summary

• The success of all changes in rural areas depend
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34
Action plan
1. To approve the complex development programme
for rural areas and agroindustrial complex till
01.07.05. 2. To develop branch-wise policies and
strategies for agroindustrial complex. To
identify as top-priority the following branches
cereals, sunflower, poultry, pig-breeding,
cattle-breeding, dairy farming and sugar
production to develop policies and strategies
till 01.08.05. 3. To implement restructuring of
state expenditures for agroindustrial complex in
2005 and to develop the budget for 2006 with
redistribution of expenditures aimed at the
development of branch-wise priorities and
attraction of investments into processing and
intensive production of cereals, sunflower,
pig-breeding, milk farming, dairy production and
processing, sugar branch restructuring. To
declare changes in the concept of food security
and refuse from the subsidy policy in
agroindustrial sector till 01.09.05. 5. To
develop investment proposals and the programme of
investments attraction and improvement of
funding conditions for agroindustrial complex
until the end of 2005 till 01.09.05. To start
purposeful negotiation process with investors
from 01.07.05.
35
Action plan
6. To declare political will of the government to
improve the investment climate in the form of
addressing to World Bank and European Commission
for technical help and international credits
till 01.07.05. To use funds in the form of
international credits and technical help in 2005
for the development of programmes, agroindustrial
complex restructuring and for the participation
of model branch-wise and cluster regional
projects ???? ?? ???????? ???????,
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