Traditionally agriculture plays a strong roll for Ukraine’s economy. At the moment it is still hard to forecast which impact the WTO membership will have for which parts of the Ukrainian farming industry. The door opened now a bit wider for Ukrainian farm produce exports to the close EU markets. Surely unproductive companies will encounter harder competition. Farmers where used so far to receive direct and even more indirect subsidies, which have to be reduced after all WTO rules will be implemented. Therefore production might shrink in the first years slightly. Anyhow this might turn out to be actually a long term advantage since reforms and investments will be forced. Politics are still very reluctant on reforms since more than a forth of the workforce is employed in agricultures.

As a big grain producer, Ukraine profits at the moment on the high grain market prices. Especially the most common grain sorts, sunflower seeds and rape seeds seem promising. The reform process initiated by the WTO opens chance for foreign investors to invest and profit on the world wide price hikes. Especially in the grain and corn sector the least risky impacts are to be expected. The WTO
does not change the amount of farmers subsidies. Anyhow depends a lot on the implementation of the new rules by the Ukrainian government.

Positive, the government has more obstacles to implement grain export stops. Those keep the bread grain wheat prices artificially down, without having actually any noticeable effect on prices of the stables for the Ukrainian consumer. J&L Lviv (www.j-l.com.ua) encounters recently more requests on foreign farms which want to start up business in the grain sector. Reasons therefore are the increase in demand of bio energies and demand in Asia. With a thorough planning and information research on accounting and legal requirements for agriculture investments recent stories of success can be told. German and Danish farmers give good example in Western Ukraine. J&L learnt herby it is crucial to keep track not only agricultural experience but keep a close eye on the legal and accounting frame work from the very beginning.

It is important for a foreign direct investment to take care about:

• Checking legal status of the land and farm building where to invest
• Planning time frame of registration for a own company on farming entities
• Calculating the reporting requirements costs of the state bodies
• Organizing duty free import of equipment from abroad and its registration
• Implementing tax optimization and profit transfers
• Aligning the deductibility of expenses from abroad to the Ukrainian standard
• Receiving state support for farmers

The smart implementation on the above mentioned bullet points are especially in the beginning of highest importance for a successful grain farm start up.

Patrick Jung
Project Manager
J&L Consulting LTD
Sholom-Aleykhem Street, 11
Lviv, 79007, Ukraine
Tel. +380 32 297 05 97/96
Mob.+380 67 350 2700
Fax. +380 32 297 05 95
www.J-L.com.ua