Author: Aliona Yevtushenko, lawyer at F&P
Horticulture is not only a way to provide yourself with environmentally friendly products but also a promising business that can bring a stable income. To start or scale a horticultural business, many entrepreneurs seek additional sources of funding. One such tool is grants.
In this publication, we will discuss the conditions and features of obtaining grants for business gardens.
General provisions
The issues regarding the provision of grants for the establishment of horticulture are regulated by the Procedure for Granting Grants for the Establishment or Development of Horticulture, Berry Growing, and Viticulture, approved by the Resolution of the Cabinet of Ministers of Ukraine dated 21.06.2022 No. 738 (hereinafter – Procedure No. 738) and the Procedure for Making a Decision by the Ministry of Agrarian Policy and Food on Granting a Grant for the Establishment or Development of Horticulture, Berry Growing, and Viticulture, approved by the Order of the Ministry of Agrarian Policy and Food of Ukraine dated 12.07.2022 No. 447, registered with the Ministry of Justice of Ukraine on 19.07.2022 under No. 801/38137 (hereinafter – Procedure No. 447).
According to Order No. 738, grants are provided for the planting and establishment of a new orchard, berry plantation, or vineyard (hereinafter referred to as plantings) with an area of 1 to 25 hectares, with the creation of new jobs or the involvement of new members in the farm.
Grants are provided up to 70% of the cost of the planting project, but not more than 10 million UAH, according to the amount per hectare and on the condition that the recipient funds (own and/or borrowed) the difference between the cost of the planting project specified in the application and the amount of the grant. The recipient’s co-financing share must be at least 30% of the cost of the planting project specified in the application.
In accordance with current legislation, the grant recipient is obliged to create jobs and employ individuals on a full-time basis, ensuring that their wages are no less than the legally established minimum wage.
Additionally, it is worth noting that according to Order No. 738, the number of jobs for permanent and seasonal workers, as well as the planned areas for planting fruit and berry crops and vineyards, are determined.
Requirements for individuals who can receive a grant
Grant recipients can be individual entrepreneurs and legal entities engaged in agricultural crop cultivation activities, in particular those who:
- do not actually stay and do not conduct economic activities in areas of active hostilities or temporarily occupied territories, included in the list of areas where hostilities are (were) taking place or temporarily occupied, for which no date of completion of hostilities or temporary occupation has been determined;
- do not conduct economic activities on the territory of the Russian Federation and Belarus;
- not classified as legal or natural persons to whom special economic and other restrictive measures apply, in accordance with the Law of Ukraine “On Sanctions”;
- which are not credit or insurance organizations, investment or non-state pension funds, professional participants in the securities market, or pawnshops;
- do not engage in the production and/or sale of weapons, alcoholic beverages (except for the production (without the addition of alcohol) and/or sale of grape wines, fruit and berry wines, honey drinks), tobacco products, or currency exchange;
- regarding which bankruptcy proceedings have not been initiated and/or which have not been declared bankrupt, and/or which are not in the liquidation stage;
- regarding which there is no court decision that has entered into legal force on bringing to criminal responsibility for a corruption offense;
- do not have any debts to the budget.
Requirements for the land plot.
- The land plot must be classified as “agricultural land.”
- A plot of land with an area from 1 to 25 hectares.
- The implementation of the planting project by the recipient must be carried out on lands where the right of ownership and/or use is confirmed by the appropriate title documents for a period of no less than 7 years from the date of application submission.
The procedure for obtaining a grant for a garden.
- Document preparation.
To receive the grant, the recipient must prepare a planting project (example) and an irrigation project (in case there is no corresponding section with calculations in the planting project) indicating the water source for all crops except for grapes.
- Submission of the application.
The application is formed using the Diia Portal or through a selected systemically important authorized bank (their list is posted on the website) in any form, with the mandatory indication of:
- information from the State Register;
- name of the authorized bank;
- grant request amounts (in the national currency);
- shares of own and/or borrowed funds in the afforestation project;
- the total cost of the planting project taking into account the grant funds;
- the planned number of hired permanent and seasonal employees;
- locations of the planting project;
- cadastral number of the land plot(s) for which the right of ownership and/or use is confirmed by the appropriate title documents;
- lease term for the land (if applicable);
- name of the crop plantings;
- area of plantations (hectares);
- project implementation period (months);
- notes regarding the affiliation of the manager, founders, and ultimate beneficial owners with politically exposed persons;
- in cases where the manager, founders, and ultimate beneficial owners are founders of other legal entities, information about such legal entities is provided;
- in cases where the manager, founders, and ultimate beneficial owners are the founders of corporations, information about the corporation is provided.
- Checking the task.
The authorized bank reviews the application within five working days, enters it into the register of submitted applications, and submits it to the Ministry of Agrarian Policy. If this body identifies a discrepancy between the recipient and the requirements of Order No. 738, it informs the recipient within seven working days through the Diia Portal.
- Decision on receiving the grant.
The decision to grant or deny grants is made by the Ministry of Agrarian Policy in the manner prescribed by it within ten working days, formalized by an order, and sent through the Diia Portal. Additionally, the Ministry of Agrarian Policy informs the Ministry of Economy about the decision made regarding the granting or denial of grants.
- Conclusion of the grant agreement.
After the Ministry of Agrarian Policy makes a decision to grant the subsidy, the recipient must, no later than within seven working days from the date of receiving information about such a decision, conclude a grant agreement in the form of accession at the branch of an authorized bank, in the form approved by the Ministry of Agrarian Policy, and also open an account at the branch of the authorized bank with no right to use it for purposes other than paying bills for the implementation of the submitted planting project.
- Implementation of funds.
The recipient independently transfers the entire amount of funds (own/credit) of their co-financing share within 30 calendar days from the date of the contract. The unused balance of funds in the recipient’s account after 12 months from the date the grant is credited to such an account is returned to a special account of an authorized bank for further transfer of funds to the Ministry of Economy’s account for the purpose of returning to the state budget.
Conclusions
Receiving grants for horticulture is a promising tool for supporting the agricultural business, but the procedure requires precise adherence to requirements and a well-founded approach to planning. Legal support at the stages of application preparation, compliance verification, and grant agreement signing minimizes the risk of rejection and promotes the effective use of funding. We recommend that potential applicants seek professional legal assistance to ensure compliance with all regulatory requirements and optimize the grant acquisition process.
