Ukrainian winemakers calling on Ukraine's leadership to retain existing mechanism for supporting winegrowing

Kyiv, April 18 (Interfax-Ukraine) - Ukrainian winemakers have called Ukraine's leadership not to allow the cancellation of a 1.5% duty for the development of viticulture, horticulture and hop growing, the funds from which are also used to fund the planting and care of vineyards.

Representatives of the winemaking sector said at a press conference at Interfax-Ukraine on Tuesday that the cancellation of the 1.5% duty initiated by the Finance Ministry and some lawmakers will result in rather negative and irreversible consequences in the sectors that obtain such support.

Chairman of the supervisory board of Tavria Vintage Cognac House, Sevastian Ksendz, said that thanks to the duty, which has been in effect since 1999, (at first 1%), the state helped fund the planting of 44,600 hectares of vineyards in Ukraine, which today provide over 70% of the gross harvest in the country. He said that if the duty were canceled, the buyback period for investment in planting of vineyards will grow from eight or nine years to 16. The expert said that this would make investment in the development of the raw material base for winemaking unattractive.

The head of the department of horticulture, viticulture and wine of the Agricultural Policy and Food Ministry of Ukraine, Viktor Kostenko, said that thanks to the 1.5% duty, the state pays for 47% of the expenses on planting and taking care of vineyards to sector enterprises. He said that the ministry also supports the retaining of the said mechanism for viticulture, horticulture and hop growing support, as it stimulates the attraction of investment in the sectors.

"Ni winemaker can carry out planting and taking care of vineyards without this support… It's for sure that we'll be doomed to stop planting," said Marketing Director of joint-stock company Alef-Vinal Anatoliy Kohan.

Executive Director of private joint-stock company Odesavynprom Volodymyr Maslenkov also said he was convinced that the cancellation of the duty will lead to a stoppage of the planting of vineyards, a reduction in the production of domestic wine materials and an increase in their purchases abroad.

"If vineyards were not planted, around UAH 500-600 million per year would be sent abroad [to buy imported wine materials]," he said.

Board Chairperson of public joint-stock company Koblevo, Vira Kozlivska, said that the abolition of the duty would also cause a rise in production cost of grape and wine production.

"If we put the whole burden of planting vineyards or storing apples on enterprises, it would lead to a sharp rise in cash costs… [and] this will result in a loss of competitiveness of Ukrainian products," she said.

Deputy Director General of Masandra National Production Agrarian Association, Oleksandr Zarutsky, said that this year his company planned to spend UAH 26 million on planting new vineyards.

"If we don't obtain compensation, this will be included in cash costs, and we'll obtain a figure of plus almost 20% for each bottle of wine. This 20% would not give us a chance to compete with imported products," he said.