Review and Update of the AgroInvest Project’s Agriculture Policy Priorities

This report reviews and updates the AgroInvest Ukraine Project’s Strategic Policy Priority Needs paper (Brown 2011). AgroInvest Ukraine has done very significant work to advance policy reform in the agricultural sector of Ukraine and, with some minor changes, can do even more and better.

This review and update performs three tasks. First, it articulates Project goals that shape a positive agenda of policy reform work and presents an initial version of that agenda. Second, it revises the policy “filters” developed in the 2011 paper to make them more useful for sorting through the many requests for policy support that AgroInvest Ukraine, as a successful policy effort, receives from its client, partners and other stakeholders. Third, it considers some issues of how to make AgroInvest Ukraine’s assistance to policy reform and provision of policy advice more successful.

Box 1: Summary of Policy Reform Priorities for AgroInvest Ukraine (See Section C for detailed explanation of the stated priorities)

I. Improve market-based incentives for small and medium farmers to survive and prosper by increasing profitable production and sales

  1. Ensure fair competition
  2. Eliminate price controls
  3. Make certain that grades and standards are in harmony with international ones
  4. Promote the growth and development of household farms
  5. Improve agricultural finance for small and medium farms
  6. Develop market infrastructure

II. Guarantee farmers’ property rights and security of contract

  1. Continue work on land tenure and farm size
  2. Examine issues of land use and conservation regulations
  3. Improve security of farmers’ contracts

III. Promote the shift from governance suited to a command economy to that appropriate for a market one.

  1. Consider the appropriateness of special tax, legal and other regimes for agriculture
  2. Facilitate improvements in the structure and functioning of public administration
  3. Assist the development of an appropriate agricultural knowledge system

The development hypothesis of AgroInvest Ukraine is based on the general international experience that, all other things being equal, farms that are no larger than what a family can operate and manage with limited hired labor are much more efficient than farms that rely on hired managers and workers. Management is the scarce factor in agriculture everywhere, and family management in agriculture has indisputable advantages over hired management. This assumption is congruent with the perception that the prospects for stable democracy are best when property ownership is widespread and most families are middle class.

So AgroInvest Ukraine aims to facilitate the development of a vibrant, prosperous and growing social group of small and medium farmers and to help them organize in civil society to defend their own interests. This is the key to further agricultural development in Ukraine, to increasing the prosperity of Ukrainian society as a whole, and to allowing Ukraine to make the contribution it should to improving the world’s food security.

The Project has done and is doing very useful policy work. The quantity of requests for assistance on policy issues it receives demonstrates its success. However, to avoid purely reacting to events and ad hoc requests for policy analysis, AgroInvest Ukraine should continue to apply the filters outlined in Section E of this document.

AgroInvest Ukraine should concentrate on facilitating policy reforms that advance the three priorities. Section C of the review presents a detailed agenda of activities flowing from those priorities. Box 1 above summarizes that agenda.

Point I in the box, improving incentives for small and medium farmers, is most important. Success there will drive demands from Ukrainian society for reform on the other issues. Within the USAID Ukraine portfolio, point I is purely AgroInvest. Points II (security of tenure and contract) and III (improving governance that affects agriculture) are cross-cutting issues that affect all economic sectors. But they are especially important for the agricultural sector, and AgroInvest Ukraine and its partners should work on them in collaboration with other USAID projects and other stakeholders beyond the sector.

Policy reform is sparked by successful policy advice, which changes what policy is and how policy is implemented. It affects not only policy makers’ statements and national laws, it also changes administrative practice and citizens’ activities.

Policy advice includes two activities: policy-oriented research, understanding the facts and trends of the situation, and offering advice based on that knowledge to a principal with direct influence on policy such as government officials, parliamentarians, or leaders of civil society organizations.

Three qualities are critical to successful policy advising:

  • Access to policy-makers
  • Policy-makers’ trust
  • Vision and knowledge

These qualities take time and effort to develop, as discussed later in this report.

Additionally, the Ministry of Agrarian Policy and Food of Ukraine has asked AgroInvest Ukraine for assistance in doing a new strategy for the sector, which would replace the 2007 “State Target Program for the Development of Rural Areas.” The officials concerned have asked specifically for help from AgroInvest and its partners. The request in itself demonstrates that the Project’s policy advice is respected, listened to and effective. AgroInvest should work closely with the Ministry to develop the country’s next multi-year sectoral strategy. This is an opportunity to have a major policy reform impact.

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