MEPs call for closer scrutiny of how farming funds are disseminated in #Ukraine

| March 7, 2018

The EU has been urged to ‘closely monitor and control’ the distribution of agricultural subsidies in Ukraine. The demand from MEPs comes with a decision imminent on the latest trance of EU farming subsidies to Kiev.

A new package of macro-financial assistance, worth some €1bn, has already been agreed by the European Commission but parliament and council but give the green light before the first tranche is released later this year.

Ahead of this, two Italian MEPs have called for closer scrutiny of how farming funds are disseminated in Ukraine.

EPP deputy Alberto Cirio

Speaking at an event in Parliament on Wednesday,  EPP deputy Alberto Cirio said, “The EU needs to closesly monitor and control the way these funds are being allocated in Ukraine. We need to be sure that this is done in a transparent and fair way.”

His comments were endorsed by his Italian colleague Fulvio Martusciello, who hosted the event and who believes the current way of handling financial assistance to Ukraine is open to corruption.

MEP Fulvio Martusciello

The process of how government subsidies are distributed in the agricultural sector could currently be deemed  as “unfair and non-transparent,” he told the hearing.

Martusciello said, “It is very important that we highlight these issues because, let’s remember, this is public money we are talking about. At the same time, there are tens of thousands of small and medium-sized enterprises that are badly in need of the government support. Among them there are enterprises of the grain sector that were not even included in the list of enterprises eligible to receive subsidies ”

Both were keynote speakers at a roundtable in parliament on agriculture in the central European country.

The meeting focused on the efficiency in the way EU monies are spent in Ukraine, particularly in agriculture, and the adequacy of such funding for farming SMEs.

The event heard that the EU had announced on February 28 that the next batch of financial support for Ukraine would be divided into two tranches of €500m each. The first tranche could be made as early as July.

Additionally, some €130m in agricultural support had been allocated by Ukraine’s government for 2017.

Some speakers, including Cirio, himself a farmer and a member of parliament’s rural development committee, denounced this sum as “extravagantly inadequate.”

He said, “It is far too small for what is one of the most important industries of the Ukrainian economy.”

It was also pointed out at the meeting that a single company receives 35 per cent, or about €45m, of this amount,while the remaining 65 per cent is distributed to support the ‘tens of thousands’ of other agricultural enterprises in the country.

Cirio, a member of the Committee on the Environment, Public Health and Food Safety, said, “Clearly, this is wrong and needs addressing. Financial support should be going to those who need it most – the SMEs upon which the agricultural sector relies so heavily.At present we cannot be sure that agricultural funding in Ukraine is disseminated in a fair and transparent way.

“It is for this reason that I am calling on the authorities in Ukraine, the government and agricultural sector itself, to focus on possible scams in the distribution of funding, both from the Ukraine government and EU.

“As this is public money, both have a direct responsibility to ensure the money is spent properly and Ukraine fulfils its obligations in this regards.”

Martusciello, an EPP deputy and member of the parliament’s committee  on budgetary control, agreed, saying the allocation of farming funds to Kiev should be linked to the ongoing fight against corruption in the country.

The EU is Ukraine’s largest trading partner, accounting for more than 40 per cent of its trade in 2016. Ukraine exports to the EU amounted to €13.1 bn in 2016.

EU exports to Ukaine amounted to over €16.5bn in 2016.

Last June, parliament adopted a resolution calling on the EU to offer more trade concessions to Ukraine, with the exception of a number of agricultural products.

Martusciello told the meeting that he had written to the authorities in Ukraine highlighing his concerns about the current system of distributing EU funds for the sector and the “opportunities that exist for corruption.”

He said, “The way funding is allocated is clearly not as effective as it should be and it is an issue that needs to be addressed by the EU.”

In his opinion, government subsidising of oligarchic structures and ignoring of small and medium-sized businesses is the case in point. Namely, in 2017, the Parliament of Ukraine approved the budget for the government subsidies for the entire agricultural sector of Ukraine in the amount of EUR 130 million. This is a trifling amount for the country, in which the agriculture is the major budget revenue generating industry. But even under these conditions, 35% of the government subsidies of the entire agricultural sector of Ukraine were allocated to a multibillion company ‘Myronivsky Hliboproduct’ (MHP). MHP is one of the largest industrial and most profitable agricultural holdings in the country, engaged in poultry production. CEO and the main beneficiary of the company is Yuriy Kosyuk, who ranks among the wealthiest people of the world (Forbes rating with the fortune of USD 1.2 billion).

One way of addressing the issue, he argued, would be to introduce a system of ‘direct contracts’ between agricultural producers and buyers.

Under such a scheme, the larger companies “would not have the same influence’ and it would also be a “fairer  and more transparent” way of distributing funds.

Another speaker, Pekka Pesonen, secretary general of Copa Cogeca, one of Europe’s largest agricultural NGOs,  seized on the call for more transparency, saying this was also necessary in order to bring  Ukrainian agricultrual practices more into line with European standards.

He said, “There needs to be more tansparency in the sector. This would benefit both the industry itself and also consumers.

Pesonen, whos organisation represents 70 national farming organisations, including in Ukraine, added, “The overall objective of farmers everywhere is to produce food – food production is their primary interest, of course. But the concerns raised today are legitimate and should be addressed.


































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Category: A Frontpage, Ukraine