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08/02/2016

New united forestry entity of Ukraine: what should it be?

Kiev, Ukraine – On January 18, FLEG II experts discussed the reform of the forest sector with the top management of the Ministry of Agrarian Policy and Food and State Forestry Agency.

The topic of the new united forestry entity (or entities) spurred the most discussion. It is one of the points of the Coalition Agreement approved by the Parliament. This entity will help increase the efficiency of management in state forests and boost its economic indicators.

Alexander Kovalchuk, the head of the State forestry agency of Ukraine, gave his assessment of the situation in the forest sector, which he called “very complicated” – in particular, because of the lack of appropriate funding. In these circumstances, Mr. Kovalchuk believes that the creation of the united forest enterprise is inevitable.
 
The participants of the meeting see this entity differently. In particular, they discussed its form: a single enterprise or a company (or companies) and whether forestries should remain legal entities (independent business units) or they should be simply merged into the new united enterprise. The participants also discussed whether the forestries of southern and eastern Ukraine should be included in the new entity. These regions have almost no production forests: their forests have mainly protective, ecological functions.

According to the State Forestry Agency, the new entity will include forestries of both forest and non-forest regions. It will be funded by forestries of forest regions, and will redistribute the income to fund the forestries of non-forest regions. Therefore, forestries of non-forest regions as well as institutions responsible for state planning, protection and conservation of forests on the national level (scientific institutions, etc.) will become the responsibility of the new entity and will no longer get the state budget support. FLEG II experts don’t agree with this decision. They believe that the forestries of non-forest regions and forest protection and conservation institutions face serious challenges, which require integrated and large-scale solutions from the government, and cannot be solved by the new forestry enterprise only.
 
FLEG II experts also emphasized that the future forest entity should be as independent from the influence of government officials as possible. According to them, it must be controlled by the Supervisory Board formed by the Minister of Agrarian Policy and Food. The head of this entity must be appointed by the Cabinet of Ministers. This person should hold full responsibility for managing the state property, as well as for recruitment and placement of personnel.

However, the Ministry and the State Forest Agency believe that the new united enterprise should report to the Agency. Also, the Agency wants to retain the authority for property management and personnel recruitment for the united forest enterprise.

The participants of the meeting agreed to exchange the results of their research on possible forms of the new forestry entity. FLEG II experts highlighted the importance of detailed justification of the reform, including economic calculations, draft legal documents, etc., and the importance of a public debate on these proposals.

First Deputy Minister of Agrarian Policy and Food Yaroslav Krasnopolsky instructed Alexander Kovalchuk to take into account all FLEG II suggestions and conclusions regarding the forestry reform, and to ensure transparency of the work on the creation of the forestry entity, in particular, disclose all documents and action plans on the Agency website.

FLEG experts have researched forestry problems in Ukraine since 2009, and the forest sector reform has constituted an important part of FLEG II work since the inclusion of FLEG II recommendations in the Coalition agreement in December 2014. During the whole of 2015 the Program organized several events where it presented the recommendations of FLEG experts regarding the forest sector reform, including two round tables with the participation of leading experts from Sweden and Latvia. The round table discussions with a wide participation of key stakeholders are an important heritage of FLEG program, which became the first platform for open discussion of forest sector problems in Ukraine.

All reports, research and recommendations of FLEG, information on its activities are published on the Program website in Ukraine www.fleg.org.ua and other forestry websites.



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