Mykola Azarov: Agricultural production develops rapidly - it should be protected under the free trade conditions

Prime Minister Mykola Azarov stressed on risks in agriculture under conditions of FTA with the EU. This was started by him at a meeting of the Cabinet of Ministers on January 15, 2014.

“The Cabinet completed simulation of practical scenarios of action of a free trade area with the EU. There were held numerous meetings with representatives of various business sectors of industry and agriculture. Previous sectoral risk analysis for the national economy in these terms carried out. It follows certain conclusions on what condition the implementation of the Agreement, we must agree with the European partners,” Mykola Azarov said.

According to him, first of all, it is necessary to resolve the situation with agricultural products "agricultural production in our country develops dynamically, figuratively speaking, "chip" it we can not."

Prime Minister explained that Ukraine reduces fees from average 9.24% to about 1% (ie, more than in 6 times), but Ukrainian agrarian producers will not be able to immediately experience the benefits of reduction of duties in connection with the incompatibility of their products to EU standards on quality and safety. According to him, particularly sensitive areas are the production of meat and meat by-products, milk and dairy products, fruit and vegetable production, food product groups.

So, as Mykola Azarov stressed, “first, we must determine: where to get the resources and support for the rapid modernization of production.”

The Prime Minister said that between the EU and Ukraine, there is asymmetry in the volume of state support for agriculture. He said that agricultural subsidies in the EU are about in 10 times larger.

He stressed that in order Ukrainian products to compete with European the subsidies should increase about in 10 times. "This, by the way, is the salary of million people. Ukrainian producers simply can not compete with cheap products through grants from the European Union," Mykola Azarov emphasized.

Therefore, secondly, "we must reach an understanding of how to use additional protective measures and the terms of trade, for example, the use of input prices that is stipulated in the contract as the right of Ukraine. Does it compensates for this gap in competitiveness?".

He gave the example of Bulgaria, which had been recognized as a leader in the production of tomatoes and peppers, and after joining the EU, it completely lost this industry.

The Prime Minister stressed that even zero rates from the EU side, duty-free export of grain, pork, beef, poultry, etc. is possible only within quotas. " Given the significant potential of Ukraine in increasing crop production and livestock products, these quotas are actual barrier to export to the EU and a direct constraint to the development of relevant domestic industries," Mykola Azarov noted.

According to him, Ukraine reduction of export duties on sunflower seeds, raw hides definitely reduce the export of finished goods and increase exports of agricultural products.

“Domestic processing industry may lose some of the manufacturers and the leading positions on the world market. And it may be completely destroyed. We need protection from such a scenario,” PM stressed.