Food Subsidy: Methodical Approaches for the Implementation in Ukraine

Despite the decreasing of the poverty level in Ukraine according to statistics, some categories of population (pensioners, families with children) are quite vulnerable due to low food consumption. Even in the developed countries, there is a long-standing practice of supporting the vulnerable population through the provision of food subsidies. Reasoning from this fact, initiatives to introduce the food subsidies in Ukraine may be appropriate. The article compares the methodical approaches that can be used to determine the size of food subsidies in Ukraine. The two methodical approaches were compared by the author: the first is used in the framework of the SNAP program in the USA, the second used to determine the amount of the subsidy for utility bills in Ukraine. There were identified the fundamental differences between them: first, the difference between the percentage of family income that can be directed towards food purposes; second, the differences in the list of categories of income that are taken into account in determining total income; third, the fundamental difference of the US methodology, which uses the concept of net income; fourth, the use of a regressive scale of subsidy provision in the USA. It was found that the amount of food subsidy, calculated according to both methodical approaches, did not differ significantly (about 5 %). At the same time, the SNAP methods is somewhat simpler in terms of calculation and more adapted for the purpose of food subsidies, but the adapted domestic methods may be more acceptable for the authorities in view of its practical use in Ukraine. Considering the US experience, author proposes to limit the food subsidies to unprocessed products only; particularly during the first stage, they may be raw vegetables and fruits. In addition, the feasibility of supporting the demand for products produced by domestic farmers was substantiated. Given the predominance of small agricultural producers in the fruit and vegetable sector, this can be an effective incentive for the development of small family farms. It was estimated the amount of budget funds required for the introduction of food subsidies to provide vegetables and fruits for poor families in Ukraine.