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”.