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Regulatory: New Regulatory Framework of Ukrainian Seed Industry
According to recent World Bank data1, among major factors, which slow down development of the seed sector are official red tape, redundant requirements for registration of plant varieties and certification of seeds. This, in turn, results in the raised costs of seed producers coupled with serious delays in the introduction of new plant varieties. Namely, costs for registration of plant varieties in Ukraine are the highest by comparison with all the countries analysed by World Bank experts2.
The Ukrainian seed industry could be one of the most attractive agricultural sectors for foreign investments and can meet both domestic demand for high quality seeds and unleash the export potential of our country considering the vast use of seed products in food, feed, chemical and energy industries. The creation of high quality plant varieties is a rather complex task requiring a scientific approach and an in-depth focus on the seed production. However, due to the obsolete legal framework it has been impossible to fully unleash such potential.
Effective from 1 July 2016, the Law of Ukraine No.864-VIII On Amending Some Ukrainian Laws on Harmonisation of Seeding and Planting Legislation of Ukraine with the European and International Rules and Standards (the Law) is aimed at addressing the above issues and radically reforming the Ukrainian seed industry.
The authors of this article were directly involved in drafting the Law as legal experts during meetings of dedicated parliamentary committees, etc. Since the Law establishes comprehensive reform of domestic seed industry, it is impossible to cover all the novelties of the Law in one article. Therefore, we provide a summary of the most important achievements.
Acquiring the Status of a Seed Producer
For a business entity to engage in the seed industry, it must acquire the status of a seed producer. Prior to the adoption of the Law, a rather complex accreditation procedure had to be undergone that required the filing of many documents. Grounds for refusal of accreditation seemed to be controversial and far from transparent, which as a matter of practice resulted in the abuse of powers by the State Agricultural Inspection of Ukraine (Agricultural Inspection).
The Law abolishes accreditation of seed producers and introduces a simpler system of registration of seed producers with the State Register of Seed Producers and Planting Material (Register of Producers) based on the declarative principle. The Register of Producers represents a list of seed producers authorised to produce seeds and/or planting material to be sold on the market, or those providing seeding and planting services. The Register is public and administered by the State Service of Ukraine on Food Safety and Consumer Protection (Food Safety Service), the successor to the liquidated Agricultural Inspection.
The Food Safety Service is to consider an application for inclusion into the Register within 10 days. The Law also allows submission of a digitally signed application by email. Besides, the Law sets out an exhaustive list of grounds for refusal to include an applicant in the Register of Producers and for striking it off the Register.
If the Food Safety Service sends no reasonable refusal to the applicant, there is a presumption that an entity is included by default on the Register and it may start seed production. We believe that such a procedure for administering the Register of Producers (including electronic form via the Internet) would eliminate current barriers to market access. Meanwhile, if a seed producer is struck off the Register (for example, due to regular breach of seed legislation), it will lose the right to produce, sell or use seeds.
Seeds may be introduced and sold on the market only after their certification, just like prior to the reform. However, unlike earlier practice when certification was carried out only by the agencies within the Agricultural Inspection, the Law introduces the European system of seed certification, which is totally new to Ukraine.
In the EU, a certifying authority can be both a state agency and a private company having relevant technical expertise, being accredited and unbiased. Third countries (including Ukraine) seeking to export seeds and planting material to the EU are obliged to meet the same criteria for seed quality, marking and package as applied in the EU.
The Law creates a competitive environment for seed certification services to be provided by either state agencies or private certifying authorities and certification auditors. Under the Law, every single lot of seeds to be sold on the market should be accompanied with certificates evidencing the varietal and sowing qualities of seeds. The varietal qualities of seeds are determined by a certification auditor (inspecting agronomist) and the sowing qualities by a certifying authority. It is prohibited by the Law to use seeds without the relevant certificates.
Certification auditors/certifying authorities can be either state or private. The Law establishes public registers of certifying authorities and certification auditors (inspecting agronomists). Certifying authorities should be accredited by the National Accreditation Agency of Ukraine (Accreditation Agency) subject to their compliance with strict eligibility criteria. A certificate of a certification auditor shall be cancelled, inter alia, where an auditor is regularly in gross breach of seed legislation. If this is the case, an auditor will be prohibited from conducting seed certification for a 5-year period.
Although certifying authorities and auditors are independent from the Food Safety Service, the latter shall monitor their activities and may (where necessary) send to the Accreditation Agency or the Ministry of Agriculture a grounded application seeking a correction action (cancellation of certificates, termination of accreditation, etc). However, having allowed private companies to carry out seed certification, the Government still monitors and controls the industry and, hence, it may, inter alia, conduct inspections, give directions binding on seed producers, review seeding documents, open any seed package (container) for sample control purposes, impose administrative sanctions against persons in breach, file a claim with a court seeking correction actions in the form of termination or a ban on sale of seeds whatsoever, and have free access to any place where seeds are grown, processed and stored.
Customs clearance of seed is subject to the passing of phytosanitary controls and presentation of a seed quality certificate of the exporting country, or a certificate of the Organisation for Economic Co-operation and Development (ОЕСD) (under the OECD Seed Schemes implemented by Ukraine) and a certificate of the International Seed Testing Association (ISTA). Under the Law, where the ОЕСD and ISTA certificates are issued for seeds exported to Ukraine, no additional testing or certification would be required. Thus, the Law implements the long-awaited mechanism of avoiding double certification3 for seed import to Ukraine, which reduces business costs and expedites certification. Accordingly, seeds will become cheaper for agrarians as now there is one certification procedure instead of two.
Registration of Plant Varieties
Seeds may be imported into Ukraine provided only they are listed among the varieties included in the Register of Plant Varieties of Ukraine (Register of Varieties). Varieties not included in the Register may not be sold in Ukraine.
The Law envisages that, if the applicant so wishes, some stages of examination of an application for registration of a plant variety (e.g. formal examination, examination of a variety as to its marketability) may be carried out by all expert institutions accredited by the Accreditation Agency. So, similar to seed certification, separate stages of examination of an application for a plant variety registration may be carried out by private entities that comply with strict criteria set out by the Law (e.g. availability of competent staff, resources and technical facilities, etc) and which are duly accredited. However, a decision on the state registration of a variety and granting a patent shall be taken by a competent state authority, which shall also perform supervisory functions (for instance, private expert institutions must report on their activities, undergo annual audit, etc).
The Law further provides that a plant breeder may transfer to its employer the right to file an application for a plant variety if such option is provided by a relevant employment contract or a contract for creation of a variety. Third parties, who believe that their rights to a variety might be infringed, are entitled to object registration of rights to such variety.
The Law also simplifies the requirements for documents to be filed to register a variety (for instance, no employment contract with a plant breeder would now be required); sets out that a formal examination of an application is to be carried out during a maximum of 3 months instead of the earlier stipulated 6 months; reduces the term of issuance of title documents for a variety; clarifies in detail the procedure for examining a variety name and challenging a decision taken by the competent state authority in question.
To sum up the above, it can be concluded that the Law ensures the harmonisation of national legislation with relevant international and European requirements, fosters integration of Ukraine into the European seed marketing network, brings Ukrainian laws into line with EU seed rules, extends participation of Ukraine in the Seed Schemes of the OECD and facilitates mutual recognition of certification by competent international organisations. As a result, the above could guarantee a better varietal purity and quality of seeds produced in Ukraine and, ultimately, lead to an increase in crop yield.
A predictable and transparent regulatory framework with a system of variety registration and seed certification recognised as equivalent to the EU will contribute to attracting long-term foreign investments into the Ukrainian seed industry and enable Ukrainian seed exporters to get simpler access to European as well as global markets.
1 World Bank Report “ENABLING THE BUSINESS OF AGRICULTURE 2015”
2 For instance, in Spain similar costs are 6 times lower than in Ukraine
3 Before the said reform even when ОЕСD and ISTA certificates were issued, an additional “internal” certificate of the Agricultural Inspection was required