WorkshopWorkshop Enhancing Policy Enhancing Policy Dialogue in the Dialogue in the

Sunflower Oil SectorSunflower Oil Sector

Kiev, 31 June – 1 JulyKiev, 31 June – 1 July, , 20042004

Jean Balié Jean Balié FAOFAO

Policy Assistance DivisionPolicy Assistance Division

Rationale and Rationale and JustificationJustification

• 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

ObjectivesObjectives

Improve policy dialogue between Improve policy dialogue between stakeholdersstakeholders::

• Present a review of the oilseed production Present a review of the oilseed production and processing sectorand 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 Discuss main policy options

/recommendations/recommendations• Propose scenarios for the way forwardPropose scenarios for the way forward• Enhance transitional impact of EBRD Enhance transitional impact of EBRD

investmentinvestment

Expected outputsExpected outputs

•Diverse viewpoints presentedDiverse viewpoints presented•Alternatives of stakeholders Alternatives of stakeholders

discussed discussed •Dialogue initiated Dialogue initiated •Preliminary policy options Preliminary policy options

proposedproposed

Proposed approachProposed approach• Gather all stakeholdersGather all stakeholders• Provide a general overview of the Provide a general overview of the

sectorsector• Present critical issuesPresent critical issues• Introduce each issue through:Introduce each issue through:

– four background papersfour background papers– extensive collective discussionsextensive collective discussions– shared conclusionsshared conclusions

People and institutions People and institutions involvedinvolved

StakeholdersStakeholders• Ministry of Agrarian Ministry of Agrarian

PolicyPolicy• Farmers’ Farmers’

organizationsorganizations• Crushers’ Crushers’

organizationsorganizations• CompaniesCompanies• Traders/brokersTraders/brokers• BanksBanks

Partners/facilitatorsPartners/facilitators• EBRDEBRD• FAOFAO• UNDPUNDP• UkrAgroconsultUkrAgroconsult

FAO

EBRD

FarmingCommunity

Policy Makers

Agro-industry

Organization / ScheduleOrganization / Schedule

1.1. General introductionGeneral introduction

2.2. Round tables Round tables involving:involving:

– Speaker/presenter Speaker/presenter – ModeratorModerator– PanelistsPanelists– ParticipantsParticipants

3.3. Specific issuesSpecific issues

4.4. Wrap-up sessionWrap-up session

5.5. Synthesis and Synthesis and conclusionsconclusions

Prog_eng.docProg_eng.doc

Conclusions 1/2Conclusions 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 positionspresent individual positions– adjust issuesadjust issues– seek in depth discussions seek in depth discussions – deliver common positions and optionsdeliver common positions and options

• Prepare the third workshopPrepare the third workshop– build consensusbuild consensus– propose policy options propose policy options – design a possible way forwarddesign a possible way forward

Conclusions 2/2Conclusions 2/2

Our aim is toOur aim is to• Facilitate the process of reformsFacilitate the process of reforms

– Involve all stakeholdersInvolve all stakeholders• Shape a different policy framework Shape a different policy framework

– Give momentum to dialogueGive momentum to dialogue• Support implementation of agreed policy Support implementation of agreed policy

optionsoptions• Provide new opportunities forProvide new opportunities for

– farmers farmers – crusherscrushers– investorsinvestors– and policy makers...and policy makers...

Thank you!Thank you!

AnnexeAnnexess

Output

Report prepared in English distributed to the Government (MAF), EBRD, processors and farmers’ representatives

Issues raised for policy Issues raised for policy dialogue in Phase 1dialogue 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 1Recommendations made in phase 1

Farmers CrusherExports

Domestic consumer100+20

200+0

200+40

• 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 Next step for a better policy dialoguedialogue

Next steps: moving towards phase 2

Raise donor support

doneLaunch 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)