On 13 March 2009 the president of Ukraine announced his signing of the law “On Amendments of Several Laws of Ukraine Relating to Preventing the World Financial Crisis From Having a Negative Effect on the Farming Industry” (the Farming Anti-Crisis Law). The Farming Anti-Crisis Law will be effective on the date that it is officially published.

Laws Amended

The Farming Anti-Crisis Law amends the following laws of Ukraine: “On State Support of the Farm Industry in Ukraine,” “On High Priority Measures to Prevent the World Financial Crisis From Having a Negative Effect and Amendment of Some Laws of Ukraine,” “On the Cabinet of Ministers of Ukraine” and “On Value-Added Tax.”

Liquidity Support by the National Bank of Ukraine

The Farming Anti-Crisis Law requires the National Bank of Ukraine (NBU) to support the liquidity of banks that have extended loans to farmers (agricultural commodity producers) through a variety of refinancing tools including stabilization credits granted by NBU to participating banks. The Farming Anti-Crisis Law requires the repayment terms in existing loan agreements between such banks and farmers to be extended (for periods of not less than one year) and prohibits such banks from increasing interest rates or including additional fees, commissions or penalties.

Payments to Milk and Meat Farmers

The Farming Anti-Crisis Law also requires that the value-added tax (VAT) paid by processing enterprises to the State budget be directed to meat farmers and milk producers. While it is unclear how this mechanism will work, it appears to be an attempt to earmark certain VAT payments to support milk producers and meat farmers.

Agricultural Land Moratorium Extended

Significantly, the Farming Anti-Crisis Law extends the moratorium on the sale of agricultural land until 1 January 2010. This potentially contradicts the Land Code of Ukraine, which requires the moratorium to be lifted after the laws on land cadastres and land markets are adopted.