Order No. 168 of the Ministry of Agrarian Policy regarding development of agricultural servicing cooperative societies

1. To affirm the Program of becoming and development of agricultural servicing cooperative societies as no organizations .

2. To department of development of business and infrastructure of the agricultural markets (Lyashok), Department of development of agrarian economy (Drobot), Department of scientific-technical policy (Sachenko), Department of t production of animal industries with Main state breeding inspection (Melnik), Department of the markets production of and developmentof seed-growing (Soroka), State department of the foodstuffs (Svatkov), State department of v (Verbitskiy), Department finance-credit and fiscal policy (Nikolayenko) together with National union of the agricultural c of Ukraine (Zinovchuk, under the consent) in two months term to develop measures on fulfilment of the Program bec development of agricultural servicing cooperative societies as non-profitable organizations.

3.To department of development of business and infrastructure of the agricultural markets. To legal management (B together with National union of the agricultural cooperatives of Ukraine (Zinovchuk, under the consent) to con concerning the analysis of efficiency of the current legislation on regulation of activity of agricultural servicing societies and generalization of the offers till the purpose of his(its) improvement. To develop model chart of agricultur cooperative society.

4. To department of finance-credit and fiscal policy to conduct work concerning organization of credit lines for becoming and development of agricultural servicing cooperative societies, to launch the offers to the project of the Ta other normative-legal acts concerning a possibility of granting of the financial help to agricultural servicing cooperativ on preferential bases, to introduce the offers of the Cabinet Ministers of Ukraine about allocation from a public Finance financing for support of becoming and development of agricultural servicing cooperative societies.

5. To department of international integration, investment policy and development of agrarian business (Netesa) grantings of international technical help for becoming and development of agricultural servicing cooperative societies.

6. To department of development of business and infrastructure of the agricultural markets, Department of finance fiscal policy together with National union of the agricultural cooperatives of Ukraine (Zinovchuk, with the consent) to in offers of the Cabinet Ministers of Ukraine on creation of Fund becoming and development of agricultural servicing societies.

7. The control of fulfilment of the order to put on the deputy of the minister Shmidt R.M. The minister I.Kirilenko AFFIRMED By the order of the Ministry of agrarian policy of Ukraine 31.08.2000 N 168 THE PROGRAM OF BECOMING AND DEVELOPMENT AGRICULTURAL SERVICING COOPERATIVE SOCIETIES PROFITABLE ORGANIZATION Section I ROLE AND PLACE OF SERVICING COOPERATION IN FORMATION AND FUNCTIONING OF THE AGRARIAN MA 1.1. The subsstantiation of necessity of development of servicing cooperation The important compound accomplishment of agrarian transformations is the development of cooperative movement o The cooperations are a logic stage of the further development of reforms, which becomes possible due of rising of a f of the independent private commodity producers of the proprietors, which have general economic interests in accomp market activity. It is opening the possibilities of formation of new organizational structure constructed " from below to to fundamental bases of market economic system and democratic company, as confession of exclusive importance of in private property the leading role of individual material interest, realization of a possibility of an economic choice, develo healthy competitiveness, limitation of state interference and administrative regulation in agriculture. The servicing cooperation consolidates the commodity producers in their market activity on the basis of voluntary e processes of vertical integration on the basis of mutual aid and economic complementation. It invoked to grant them a to receive the profits not only directly from agricultural production, but also from the further stages of movement of produced by them to participate in large-scale business to use professional managers to distribute hazard, to co channels of production and logistics, to influence the prices by formation of the large consignments of production and of modern marketing methods and technologies, to be the equal in rights partners in competitive market environment. The important problem of servicing cooperation of the agricultural commodity producers is an opposition to distribution unproductive trade- intermediary business, which "dilute" the agriculture, promoting outflow of financial reso agroindustrial production and strengthening a problem of disparity prices through establishment is unreasonable of st material resources and is groundless of undercharges of agricultural production. The most effective method of st intermediary is a development of alternative structure of service of agriculture on cooperative bases, which will contr which those will possess who will use it, that is agricultural commodity producers, but without removal of intermediaries in general, as without them impossible existence of market economic system. It is necessary only t influence with the purpose of establishment of market balance and development of a competitiveness in interests o agriculture. The development of servicing cooperation is by a logic stage of development of market economic system in an agric extremely important role of servicing cooperation confirmed by experience of the advanced countries and own ex collectivizational period. The activization of cooperative processes is by adequate reaction to reduction of a regulating executive authority, which is by the natural phenomenon in conditions of market transformation of national economy of The complexity of process creation of cooperative organizations that can not take the state and government in ca participation in it. The cooperative societies can arise and begin the work only then, if the participants of cooperation w the desire and will carry out the appropriate organizational measures. Nevertheless the state can not be aside of deve cooperative processes in an agriculture and should assist them by creation of the appropriate conditions and com encouragement. By that it will realize the real and effective policy of economic support of agricultural commodity pro their social protections. For coordination of efforts concerning state support of development of agricultural servicing cooperation necessary c complex of acts , that stated in this Program. It can supply the system approach of assistance to development of movement in an agriculture, define directions and priorities of state support of development of cooperation. 1.2. State and problems of becoming of servicing cooperation in an agriculture in AIC The cooperative idea finds the increasing distribution in an agriculture of Ukraine, in particular after acceptance in Law of Ukraine " About agricultural cooperation ". But it is necessary to take into account, that this process can pa consciousness of the people, as it impossible without their own belief, mutual trust and uncommon personal feedback, requires(demands) the certain time. Even in the advanced countries of becoming of the cooperative enterprises some Nevertheless in many regions of Ukraine already based the first agricultural servicing cooperative societies also known of them are cooperative society " Globinskiy Pool " Globinska region of the Poltava area, "Bratkovetska" region and "Tesarivskiy" of Zhidachevska region of the Lvov area, "Agrocom" of Lyubashivska area and " Budzhatskiy Arcziska region of the Odessa area, "Prostranstvo" of Zgurivska region of the Kiev area, "Zapadniy" of the Rovno re Rovno area and other. Cooperative societies of a corn-processing direction, from general using of engineering cooperative societies of milk processing and successfully develop that grant information-consulting service. Cooperative processes among the proprietors of personal part-time farms recently have quickened. For example, in the is created more than 10 cooperative societies on milk processing.Traditional, but is undeserved the forgotten form of of the Ukrainian peasants. Benefit from it bvious: the stable channel of realization of production, possibility to acceptable prices for milk to concentrate more attention on production and home facilities, to escape of time on re production, to begin own processing of milk, to improve breeding business. The creation of cooperative socie proprietors of personal part-time farms is considered as integral compound process of becoming cooparative mo agriculture. Nevertheless on ways of becoming and development of servicing cooperation in our country there are certain encu among which there is an inadequate understanding of essence of agricultural servicing cooperative societies, which c beginning from times collectivization of an agriculture. The identification of collective farms with cooperative societies h what even today many people do not understand a basic difference between these by two forms of managing. The ove this stereotype of thinking is by a very difficult problem, as collective farms is valid in the activity had the certa cooperative organization. Misunderstanding of essence, the assignment and international principles of cooperation results that in Ukraine have mass distribution of the enterprise, which overwhelming majority registered as agricultural servicing cooperative discredits the idea of cooperation as the form of mutual aid of the people, derivates their despondency in policy reforms and essentially constrains development of real cooperative processes in an agriculture. Thus, the revival and development of agricultural servicing cooperation in Ukraine is a difficult socially economic pro has and many other aspects:organizational, economical, psychological, legal and even political. The decision of th impossible without precise understanding of essence and principles of cooperative organizations, development of coo a village as compound agrarian policy of the state, creation of the appropriate legislative base and accomplishments o organizational measures. 1.3. Interaction of servicing cooperative societies with other compound infrastructure of the agrarian market For realization of the authorized problems the agricultural servicing cooperative societies should actively interact compound infrastructure of the agrarian market, creating it deeply-integral and stably working mechanism. For realization of production and vaterial-technical provision the cooperative societies can participate in work of the trading turn during creation or reorganization of the trading houses the possibility of their functioning on cooperative bases considered. The cooperative societies should widely use possibilities of exchange trade. This channel of realization of production enables to realize one of mainest assignments of servicing cooperative society - engaging of the agricultural producers to large-scale business operations. It is expedient to cooperative societies to have own broker places on exchanges, and with the course of time to create own broker offices. The important significance has cooperation of agricultural servicing cooperative societies with the enterprises of a con operative society. It will supply stable and rhythmic receipts of agricultural raw material to the processing enter consumer's co-operative society, high-grade and effective uses of its commercial network, will assist rational use o and technical base (structures, transport, the equipment etc.) and will create additional jobs. Such cooperation pos form of general packer-marketing activity and processing of agricultural products, lease by the servicing agricultural c of property objects of a consumer's co-operative society, creation of associations of the enterprises and general ent favourable interaction in borders of authorized problems of the organizations. Servicing cooperative societies and the companies can execute problems, identical or close on sense, in formation and functioning of the agrarian mark difference, which by the subjects of cooperation in an agriculture necessarily is the agricultural commodity produce consumer companies consolidate the consumers behind their interests. Perspective is also integration processes between servicing cooperative societies and credit unions. Having identical and methodological bases, these organizations will cooperate in overcoming deficiency of financial resources for deve servicing cooperation, which will provide in turn necessary turn-over of a means of credit unions as it is required the the investors. It will assist formation of an essentially new source of investment of development of agroindustrial produc 1.4.The maintenance of state support of development of agricultural cooperation Question of acceleration of cooperative processes and their organic coordination from other compound agrarian reform by such, as reforming of the collective agricultural enterprises and the formations of the agrarian market, were emphasized by the President of Ukraine. The Cabinetof Ministers of Ukraine has acted with the legislative leadership development of agricultural cooperation. July 17, 1997 the accepted Law of Ukraine " About agricultural cooperatio given time the work concerning its improvement is carried out. A question of development of agricultural cooperation are under the control of the Ministry of agrarian policy. The development of cooperative movement in an agriculture of Ukraine largely depends on its support by public an state non-profitable organizations, first of all theme, that enter into structure of the Ukrainian agrarian confeder (National union of the agricultural cooperatives of Ukraine, Association of the farmers and private landowners Ukrainian league of the businessmen of AIC and other). In turn village cooperators take an active part in work of diffe organizations in The basic bases of functioning of agricultural servicing cooperative societies are adjusted by the Law of Ukrai agricultural cooperation " appropriate by normative- legal acts of the President of Ukraine and Cabinet council of Ukrain 1.5.The purpose and problem of the program The purpose of the Program is concentration and mobilization of efforts of all agricultural servicing cooperative interested in development, of the parties by definition of the contents, basic directions and priorities of work concerning development of cooperative movement in agriculture of Ukraine on a basis of well-founded , consecutive and effectiv organizational measures. According to a definite purpose the Program has such problems:

1. Through revival and development of agricultural cooperation to assist irreversibility of processes of agrarian refo transformation of an agriculture and revival of the Ukrainian village as first system of development of democratic c Ukraine.

2. To coordinate the activity concerning creation and support of a network of agricultural servicing cooperative societies of complete cooperative movement in an agriculture, interaction of cooperative societies with other subjects of m formation of the agrarian market in Ukraine.

3. To supply a formation of the subjects of an agriculture of Ukraine on cooperative bases, which will be under the possession and will act in interests of the domestic agricultural commodity producers. Section II MAINTENANCE OF DEVELOPMENT COOPERATIVE MOVEMENTS IN AN AGRICULTURE ACCOR INTERNATIONAL COOPERATIVE PRINCIPLES 2.1. Concept of the cooperative enterprise as non-profitable organization in sphere agrobusiness.During the native bor transformations in our country of concept "cooperation" and "cooperative society" acquire of the new contents, whi conditions of formation of market economic system. According to the Law of Ukraine " About agricultural coope agricultural servicing cooperative society is an agricultural cooperative created including of the agricultural commodity for granting of services mainly to the members of cooperative society and other persons with the purpose of realiza agricultural activity. The agricultural servicing cooperative society should have the status of non-profitable organiza requires entering of respective alterations into the current legislation.. To non-profitable agricultural servicing societies it is expedient to relate only that: 1) in the charter of the organization put the purpose of granting of serv members, instead of receiving of the profit; 2) Among the members have only agricultural commodity producers; 3) s members; 4) distribute a means, which in the usual enterprises can receive the form of the profit, between the m proportional their participation in economic activity of cooperative society. Such status is well-founded if to consider cooperative societies as "continuation" of facilities of its members - propriet for maintenance of effective work of these facilities, instead of for receiving profits, as it have for the purpose enterprises. The status of non-profitable organization concerns not an overall performance of servicing cooperative s the distributions of a means, which at other subjects of managing are considered as profit. These means in agricultur cooperative societies must divide between its members proportionally their participation in economic activity of the en cooperative payments (extra charge to selling prices on production or discounts on the prices of supply or services). of the enterprise, such as participation during an exchange, use of employed work and its financial incentives, cooperative societies remain constant. Confession of the non-profitable status of agricultural servicing cooperative society necessary for formation of the attitu on the part of company, as to unique organizations of self-help of the agricultural commodity producers. This statu basis of creation of such working conditions of servicing cooperative societies, that by the most effective grade its sec aggressive market environment assist to support of the domestic agricultural commodity producer. At the same necessary to control, that those enterprises, which name themselves as servicing cooperative societies, ans assignment, realized the activity on a non-profitable basis and adhered to international principles of cooperation. 2.2. International principles of cooperation and necessity of their observance The concept of the cooperative enterprise constructed on the special requests of organizational character - f principles of cooperation, which have international confession, as they are tested by years and enriched by experie cooperators of all world. To international principles of cooperation is refering:

1. Voluntary and open membership. The cooperative societies are voluntary agencies open for any persons irrespec man, social derivation, religion, political convictions, national and race, which wish to use of the given organization and to undertake the responsibility connected to membership.

2. Democratic management. The cooperative societies are democratic organizations, which are controlled by thei which actively participate in formation of their policy and acceptance of the administrative decisions. The persons, ele managing position, accountable to the members of cooperative society. In primary cooperative societies the members equal right in voting (one member of cooperative society - one vote). The cooperative societies of other levels a organized on democratic bases.

3. Economic participation of the members. The members of cooperative society have of the equal right in formation an the capital of the organization. As a rule, they receive the limited dividends on account capital, if at all their payment The profit of cooperative society is distributed on development of cooperative society or between the members of society according to their participation in activity of the organization, or for support of other activity, if on it there is a co members of cooperative society.

4. Independence and independence. The cooperative societies are independent organizations for mutual aid and are by their members. At establishment of the contractual attitudes with other organizations irrespective of a pattern of ow engaging of the capital from external sources, it is made on the basis of the warranty of the democratic control and p of independence of their organization.

5. Education. The cooperative societies provide training the members elected administrative board, managers and em for effective development of the organization. They inform a public, in particular youth, on the nature and adv cooperation.

6. Cooperation among cooperative societies. The cooperative societies work on the members most effectively and cooperative movement, acting through local, national, regional and international structures.

7. Care of company. Simultaneously with a concentration of attention on satisfaction of needs and wishes of the me cooperative societies work on development of those communities, which surround them. International cooperative principles mirror the special social- economic nature and role of cooperative society in company and market economic system. Infringement or ignoring of cooperative principles dangerous through loss of e advantages of cooperative cooperation. Nevertheless principles is not by dogma, for them the inherent evolution in with development of cooperative movement and accruing of cooperative experience. 2.3. Logic of development of organizational structure of an agriculture of a cooperative type Functioning of the cooperative enterprises in market economic system based on organization-economic bases st international principles of cooperation. Among them main are construction of cooperative society " from below to provides an effective control of its members behind activity of the organization and subordination of maximum org formations with lowest. The mainest part in cooperative system is the agricultural commodity producers, which fo (local) cooperative societies, which can for the territorial or branch (branch-functional) sign to create association of societies. Association of cooperative societies with the course of time should form representative (interregional and i organization, which can coordinate development of cooperative movement in an agriculture as systems and will re interests on national and international *Principes of cooperation indicated in a formulation of an International cooperat levels. Higher body of management of cooperative society are the general(common) taxes. To bodies of management are board of cooperative society. In case of necessity the cooperative society employs the executive director, forms the council. 2.4. Perspective organizational patterns of servicing cooperative societies The agricultural servicing cooperative societies can form by the agricultural commodity producers - proprietors ( irrespective of their organization-legal form and pattern of ownership for the decision wide focus of economic problems to service of their basic activity - by management of agricultural production. The servicing cooperative societies are n in agricultural production directly, except for cases, if it is by servicing function in the attitude to the basic production. The association in one the person of the proprietor and client of the enterprise is by obligatory difference of agricultur cooperative society. This difference does(makes) to logic receiving by servicing cooperative societies of the stat profitable organization, which to the full answers the concept of the cooperative enterprise in market economic system compliance of the given difference is presented by the sign of pseudo-cooperative character of the enterprise also de status of non-profitable organization. Most perspective are the servicing cooperative societies, which form: а) for preparation, preservation, processing and of agricultural production; б) of a logistics; в) granting technical, technological, transport, information-advisory, auditor of services. Perspective also there is a creation by the agricultural commodity producers on a cooperative basis o technological stations (cooperative societies from general use of engineering), auctions, trading houses, fund assoc et... The special significance acquire servicing cooperative societies, which form by the proprietors of personal part-tim the certain cases the agricultural cooperative can be organized as multifunctional, that is to grant some kinds of serv members - clients. Nevertheless creation of multifunctional cooperative society should occur developmental, pa comprehension by its members of the cooperative nature of the enterprise, provide democratic management and org construction " Section III PROBLEM CONCERNING FORMATION OF NORMATIVE-LEGAL BASE OF DEVELOPMENT OF S COOPERATION 3.1. Basic directions of formation of a legal field of agricultural cooperation It is necessary to the ministry of agrarian policy together with National union of the agricultural cooperatives (under th to continue work concerning the analysis of efficiency of the current legislation on regulation of activity of agricultur cooperative societies and generalization of the offers till the purpose of its improvement. To develop a Model agricultural servicing cooperative society. To the ministry of agrarian policy to introduce the offers in Supreme Soviet of Ukraine about including the provis concern agricultural servicing cooperative societies, for the account them by consideration of the projects of the Ci codes of Ukraine. With the purpose of unequivocal understanding of the Law of Ukraine " About agricultural cooperation " to entrust consent) Institute of agrarian economy UAAS in interaction with National union of the agricultural cooperatives appropriate the scientifically practical commentary. 3.2. Coordination of the tax and antimonopoly legislation of Ukraine with the concept of non-profitable agricultura cooperative society It is necessary to the ministry of agrarian policy to prepare the offers concerning binding in the projects of the Tax cod normative-legal acts, wich regulate activity of agricultural servicing cooperative societies and. Their associations, co servicing cooperative societies as non-profitable organizations (enterprises). To entrust to National union of the agricultural cooperatives (under the consent) to prepare the appropriate e concerning specificity of activity of agricultural servicing cooperative societies. Section IV THE MECHANISM AND PRIORITIES OF FINANCIAL MAINTENANCE OF CREATION AND FUNCTIONING OF AGRICULTURAL SERVICING COOPERATIVE SOCIETIES 4.1. Problem concerning financial maintenance of development of agricultural servicing cooperative societies Priority sources of financial maintenance and support of agricultural servicing cooperative societies in a part of c service of an own material and technical base, maintenance by a circulating asset are the own means of cooperativ attracted means, means of the local budgets and Public finance of Ukraine. 4.2.The finance-credit maintenance of creation and development of agricultural servicing cooperative societies It is necessary to leave with the petition in a national Bank of Ukraine concerning organization of demand lines o support of becoming and development of agricultural servicing cooperative societies. To recommend to ministerial Independent Republic of Crimea, regional and regional state administrations to provide in the local budgets of a support of creation and development of agricultural servicing cooperative societies. To develop the offers to the projec code and other normative-legal acts concerning a possibility of granting of the financial help to agricultural servicing societies on preferential bases. 4.3. Creation of Fund of support of development of agricultural servicing cooperative societies To the ministry of agrarian policy to consider the problem and to introduce the offers of the Cabinet council of Ukraine of Fund of support of development of agricultural servicing cooperative societies, which would grant the help cooperative societies in receiving the credits of business banks, warranty of their returning, payment in part o payments and other financial help. Besides to consider the problem on annual allocation of means at the expense finance for maintenance of activity of Fund. Section V COORDINATION of the PROJECTS of the INTERNATIONAL TECHNICAL HELP of DEVELOPMENT of SERVICIN COOPERATION 5.1. Priorities of international cooperation in development of agricultural servicing cooperation in Ukraine To offer to the donors of the international technical help to direct the efforts to granting of the help at creation of societies in the most perspective regions and areas, and also on creation of regional centres of development of cooperation, which with the course of time should be transformed into regional associations of servicing cooperative so To regard necessary to put a request to work of the new foreign projects concerning association at support of the cooperatives of the technical and financial help for formation of a material and technical base of cooperative so updating of their circulating asset. 5.2. Organization of monitoring, generalization and distribution of positive experience of the foreign projects of the tec of development of cooperation To national union of the agricultural cooperatives (under the consent) to develop a technique of realization of monit working foreign projects of the technical help of development of agricultural cooperation. Section VI EXPECTED RESULTS of the PROGRAM The development of agricultural servicing cooperative societies is by one of key elements of policy of the Cabine Ukraine in sphere of agroindustrial production. The fulfilment of the Program of becoming and development of servicing cooperative societies as non-profitable organizations will enable: - To increase efficiency of agricultural production through reduction of the industrial costs of the commodity pro introduction of new technologies; - To assist increase of merchantability of personal country facilities, filling in deficiency of services, which were granted of a consumer's co-operative society earlier; - To generate to the commodity producers own channels of connections with the market and to win strong items on i need of the consumers concerning quantit) and quality of production; - To the agricultural commodity producers successfully to adapt for conditions of market economy to defend the interests from influence of mediatory structures. Section VII ORGANIZATION of MAINTENANCE FULFILMENT of the PROGRAM For guarantee of fulfilment of the Program of becoming and development of agricultural servicing cooperative societ profitable organizations it is necessary:

1. To develop measures on fulfilment of the indicated Program.

2. To supply favorable organizational, economic, legal and social settings on the part of government bodies.

3. On the basis of National union of the agricultural cooperatives of Ukraine to create the appropriate structural sub regions, which would be granted with the help to agricultural servicing cooperative societies, assisted their cr development, provided government bodies and local governments with the objective operative information development of agricultural servicing cooperative societies, interaction and feedback between bodies of a local gove agricultural cooperatives on bases of understanding and decision of other vital questions of becoming and d agricultural servicing cooreratives.