Ukraine is among the 20 countries in the world that have the largest land bank for organic production. The area of certified organic land is more than 410 thousand hectares, which is only 1% of the total amount of agricultural lands. The Ukrainian market of organic products has enormous potential, but its development is hindered by the lack of effective regulation in the sector. The relevant Law has not been put into practice yet, so no domestic producer is certified in accordance with the Ukrainian legislation, and organic products often become counterfeit items.
Government and business representatives as well as experts discussed the ways of resolving the problems in the market during the roundtable “Organic Production: New Opportunities for SMEs and Sustainable Development of Rural Areas” held by the Better Regulation Delivery Office (BRDO) with the support of the EU4Business\FORBIZ project as part of the Public Dialogue #PRODialogue in Lutsk on November 30.
A positive message of the government is the adoption of the Concept of development of farm enterprises of 13/09/2017, which determines the priority of the organic production development and introduces local targeted support programs. In particular, in Volyn, Zhytomyr and Chernihiv regions. The purpose is to stimulate the transition of farms to organic production.
At the opening of the event, Oleksandr Stepantsov, the First Deputy Head of the Volyn Regional State Administration, emphasized, “Agriculture is one of the priority sectors for the Volyn region. Especially organic products, which have high added value, create new jobs and provide a better quality of life for our citizens. There is a support program for organic producers, under which entrepreneurs have 50% compensation for expenses related to certification for organic production, implemented in the Volyn region. Today, 17 local market operators have been already certified according to the international standard and are exporting to Europe.”
There is a positive dynamics in the market. The number of organic market operators increased by 65% – up to 400 entities compared to 2011. 210 of them produce the products. At the same time, the number of producers in Ukraine is only 0.61% of their number in Spain (more than 34 thousand) and 0.84% – in Germany (more than 25 thousand).
The Better Regulation Delivery Office (BRDO) analyzed the regulation in the sector and presented its results in the Green Paper. The Cabinet of Ministers adopted only 1/3 of acts envisaged by the Law of Ukraine “On production and circulation of organic agricultural products and raw materials”. Regulatory gaps in the organic market lead to numerous violations and hinder the development of organic production.
“The situation is unique, because the market is developing under conditions of absolutely inefficient current legislation in organic production. The relevant Law has not been put into practice and as a result – no Ukrainian producer is certified under Ukrainian law. 100% of the organic market are certified according to foreign standards, and so the State Service of Ukraine on Food Safety and Consumer Protection can’t control the conformity of products. Consequently, products sold in our stores often are counterfeit items,” the Head of the BRDO Agriculture sector Andriy Zablotsky said, when presenting the results of the analysis.
Moreover, the organic agriculture segment is not included in the state system of statistics. Gaps in the legislation make it impossible to create the body responsible for the conformity assessment (certification) in organic production. As a result, there is no register of organic producers.
At the same time, the demand for Ukrainian organic products is growing in foreign markets. Exports of our products reached 73 million euros in 2016 and demonstrated an increase of 20 million euros per year. Germany, Poland, Britain, Austria, Italy and Switzerland are the major importers of organic materials from Ukraine. 47% of exports are grain, and other important export articles include seeds, oilseeds, dairy products and honey.
Today, certification for exporters of organic products from Ukraine is a rather complicated procedure, which is carried out according to an equivalent standard, and a share of organic products in the total agricultural export is only 0.5%. If Ukraine achieves recognizing the equivalence of international standards in organic production and sales, this will significantly simplify the business environment and increase production and export opportunities of Ukraine.
Joshua Badakh, the key expert of EU4Business/FORBIZ projects, also emphasized this fact: “Given its natural environment, Ukraine has a huge potential in the market of organic products, which are very popular in Europe. It is necessary to create a clear regulatory environment and harmonize Ukrainian laws with European standards to realize existing opportunities. This will attract additional investments, have a positive impact on the employment of population and the development of rural areas. It is extremely important to create more favorable conditions to do business and involve entrepreneurs into organic production.”
In addition, the business case “Farm enterprises (Organic Plant Production)” developed and published among other 23 cases on the Platform for Effective Regulation PRO www.regulation.gov.ua was presented during the event.
The event was also attended by Mykola Moroz, the Director of Food Department of the Ministry of Agrarian Policy and Food of Ukraine, Yuriy Horbenko, the Director of Agricultural Development Department of the Volyn Regional State Administration, Bohdan Lozynsky, the Head of the Main Directorate of the State Service on Food Safety and Consumer Protection in Volyn region, Mykola Zinchuk, the Director of the Volyn branch of SE “Institute of Protection of Soils of Ukraine”, representatives of regional expert and business circles.