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In August 2012, the Ukrainian government introduced a new financial assistance to agricultural producers.
On August 15, 2012, the Cabinet of Ministers of the Republic of Ukraine approved Resolution No. 813 on state support to agricultural commodity producers (in particular cereal and grain producers) in the form of a compensation of up to 50% of insurance payments. This partial compensation of insurance payments will be activated in the event of crop loss. Insurance of crop with state support can be applied for all cultivation periods.
The compensation adversely affects commerical interests of foreign competitors who do not receive such support and thus provides a competitive advantage to Ukrainian producers of cereals and grains.
Furthermore, this state measure reinvigorates the Ukrainian agricultural insurance market, which according to Oleksiy O. Demyanenko, is rigid and underdeveloped. Local compared to foreign insurance companies may thus be able to provide better conditions to their customers and as a consequence foreign providers are likely to face difficulties to enter the Ukrainian market.
The measure is a first implementation of the 'On Peculiarities of Agricultural Products Insurance with State Support Act' of Ukraine (adopted on February 19, 2012 by the Ukrainian Parliament). The act introduces the general framework for state support for Ukraine's agricultural producers on insurance-related matters (natural disasters, losses, or damages, provoked by humane activity).
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