Wednesday 15 February 2017

Ukraine to compensate farmers for buying Ukrainian machinery

Yesterday the Cabinet of Ministers approved the decision to compensate farmers for buying Ukrainian agricultural machinery and equipment by 15% of the value.

The announcement is light on detail but it appears that farmers who purchase Ukrainian machinery in 2017 will be compensated 15% of the value if the 35% of their machinery is locally produced.

What is referred to in the announcement as the “localisation level” which I take to mean how much locally produced equipment you own, will rise to 45% in 2018, 55% in 2019 and 60% in 2020.

The Prime Minister said "We want to maximize equipment produced from Ukrainian components” and “This will enable us to create thousands of jobs in the sector and related sectors”.

I can already see a few holes in this policy, like the price of locally produced machine rising by 15% and the shifting ownership of imported machines between companies to hit the necessary “localisation level”.