Workshop Enhancing Policy Dialogue in the Sunflower Oil Sector Kiev, 31 June – 1 July, 2004 Jean Balié FAO Policy Assistance Division Policy Assistance Division

Rationale and Justification Agriculture policies strongly influence sector performance Existing policies suffer from lack of consultation between sector stakeholders Inconsistent policy framework resulting in unstable environment for growers and crushers FAO is recognized as neutral partner to promote dialogue between sector stakeholders

Objectives Improve policy dialogue between stakeholders: Present a review of the oilseed production and processing sectorPresent a review of the oilseed production and processing sector Identify critical issues for the whole sectorIdentify critical issues for the whole sector Introduce current policy issuesIntroduce current policy issues Discuss main policy options /recommendationsDiscuss main policy options /recommendations Propose scenarios for the way forwardPropose scenarios for the way forward Enhance transitional impact of EBRD investmentEnhance transitional impact of EBRD investment

Expected outputs Diverse viewpoints presentedDiverse viewpoints presented Alternatives of stakeholders discussedAlternatives of stakeholders discussed Dialogue initiatedDialogue initiated Preliminary policy options proposedPreliminary policy options proposed

Proposed approach Gather all stakeholdersGather all stakeholders Provide a general overview of the sectorProvide a general overview of the sector Present critical issuesPresent critical issues Introduce each issue through:Introduce each issue through: – four background papers – extensive collective discussions – shared conclusions

People and institutions involved Stakeholders Ministry of Agrarian PolicyMinistry of Agrarian Policy Farmers’ organizationsFarmers’ organizations Crushers’ organizationsCrushers’ organizations CompaniesCompanies Traders/brokersTraders/brokers BanksBanks Partners/facilitators EBRD FAO UNDP UkrAgroconsult FAO EBRD Farming Community Policy Makers Agro-industry

Organization / Schedule 1.General introduction 2.Round tables involving: –Speaker/presenter –Moderator –Panelists –Participants 3.Specific issues 4.Wrap-up session 5.Synthesis and conclusions Prog_eng.doc

Conclusions 1/2 A two-days workshop to start a process....A two-days workshop to start a process.... Launch the second workshopLaunch the second workshop –present individual positions –adjust issues –seek in depth discussions –deliver common positions and options Prepare the third workshopPrepare the third workshop –build consensus –propose policy options –design a possible way forward

Conclusions 2/2 Our aim is to Facilitate the process of reformsFacilitate the process of reforms –Involve all stakeholders Shape a different policy frameworkShape a different policy framework –Give momentum to dialogue Support implementation of agreed policy optionsSupport implementation of agreed policy options Provide new opportunities forProvide new opportunities for –farmers –crushers –investors – and policy makers...

Thank you!

Annexes

Output Report prepared in English distributed to the Government (MAF), EBRD, processors and farmers’ representatives Issues raised for policy dialogue in Phase 1 Conclusions Farm level. Lack of working capital forces farmers to sell crop immediately after harvest at low prices Taxation. Export tax of 17% reduces domestic price of seed Crushers. Failure to reimburse VAT on exported oil products causes financial burden on crushers

Initial recommendations to Government improve law on warehouse receipts (so that seeds can be used as collateral)  improve farmers’ access to ST credit reduce gradually export tax  fairer seed prices Recommendations made in phase 1 Farmers Crusher Exports Domestic consumer disconnect VAT system from farm subsidy system, move towards direct payments  less distortion prompt VAT repayment to crushers  improve crushers’ margins

Ensure Government support Ukrainian MAF acknowledges FAO recommendations Next step for a better policy dialogue Next steps: moving towards phase 2 Raise donor support done Launch phase 2 Have phase 1 conclusions publicly discussed by all stakeholders. Have consensus solution endorsed by all parties to serve as basis for policy-makers (in collaboration with World Bank)