Экономические
науки/12. Экономика сельского хозяйства
К.ф.н. Савицкая Л.В.,
Грицюк И.
Харьковский национальный экономический
университет
PROBLEMS
OF INVESTMENTS IN AGROINDUSTRIAL COMPLEX IN UKRAINE
Agriculture is
the basic sector of the economy in Ukraine, that’s why to ensure its effective
functioning requires substantial investment resources. However, internal and
foreign investors investment activity is largely constrained by unfavorable
investment environment in Ukraine, and a number of external and internal
factors. Therefore the problem of improving investment process efficiency is
one of the most important at this stage of state economy development.
Ukraine investment
climate condition and agriculture development were discovered by our scientists
O. Stag, M. Demyanenko, M. Harasymchuk, G. Mazur, N.Petrunya, I. Shalygin, O.
Evtushevskaya and others. They studied overcoming
of crisis in agricultural sector, the development of competitive production
through material recovery and resource potential. But the problem of investment
and sustainable development of this complex remain unresolved.
The aim of our research
is to study the major problems that hinder investment in agro industrial
complex and their overcoming.
Agriculture of the country has the necessary prerequisites for foreign investments involvement.
Among them: fertile black soils, developed transport infrastructure, favorable
geographical location, availability of labor, unsaturation food and resource
markets. However, there are several factors that impede the flow of foreign
investment in the agricultural sector of Ukraine [3].
Agricultural production
has always been fairly risky activity, because it depends on climatic
conditions. Agricultural lands are not the subject to privatization and sale,
that’s why it is not possible to determine the real market price of land. Due
to absence of mortgage and seasonality banks cannot provide long-term loans.
Moreover the economic situation in Ukraine is unstable. The basic directions
and strategies of economic development have not been solved yet. Weak
regulatory framework, lack of established buy-sell land system, mortgage credit
lending, corruption, shadow economy, high taxes discourages foreign investors
[2].
Regarding
the political situation in the country experts say that the continuous struggle
for power, instability creates dangerous conditions to attract investment.
It
is very often occurs that foreign investors do not have an access to
information on natural climatic conditions in specific territory or region.
There are no any maps translated into foreign languages. There are only some
agricultural inquiry centers and then they were established through
international organizations.
Anyways,
the situation is not hopeless. There are a number of foreign firms investors engaged
in agricultural business in Ukraine. They are "Ilta Holding SA"
(Switzerland), "Cargill", "Case" (USA)"," Yanke
"(Germany). But these investments
are still not sufficient.
In
the first 9 months in 2010 the agricultural sector of Ukraine received 5844.5
bl. UAN. For the same period in 2011 – 10.8382 bl. UAN [4]. During this period,
investments came from 124 countries [Graf. 1]. The top 10 investor countries,
which form over 82% of total direct investments, are Cyprus (22.5% of total
investments), Germany (16.5%), the Netherlands (9.6%), Russia (7.0%), Austria
(6.3%), United Kingdom (5.4%), France (4.1%), Sweden (4.1%), British Virgin
Islands (3.4%) and USA (2.9%).
The
most successful regions in attracting foreign investment in agriculture are
Donetsk (12.4%), Kiev (11%), Dnipropetrovs’k (9%) and Odessa (6.2%) regions.
Unfortunately Kharkov region does not belong to their number [5].
Graf.1
Countries investors in Ukrainian
agricultural sector
In
order to improve the investment climate in Ukraine it is necessary to stabilize
the macroeconomic situation, form regulatory framework, encourage long-term
bank lending, found leasing company.
Leasing operations development in the agricultural sector will promote new competitive position of
agricultural enterprises. Leasing can become alternative of lending getting
resources and avoid significant losses. The largest equipment supplier in
Ukraine is NAC "Ukragroleasing". This company offers reliable and
inexpensive equipment. Using leasing allows direct resources to expand
production and introduce advanced technologies. Moreover, the advantage of
leasing in agriculture is that it itself is an effective investment mechanism
renewal of fixed assets. It doesn’t exclude, but includes other forms of state
regulation, such as tax and credit incentives. As for the lessees they could:
buy quality new fixed assets without the distraction of business significant
money; pay a down payment (usually 20 to 30% of the value of the leased) and
immediately begin using purchased equipment, generate cash flow with his
participation, make payments with flexible payment schedule that will be
convenient for them to use tax breaks, don’t waste time for insurance,
registration and other legal actions. So leasing is a new
perspective which helps to increase investments in the economy.
To
ensure stable economic situation in agriculture sector, a series of reforms in
agriculture should be conducted, involving entities of property rights to land,
property and results of work, create
conditions for providing loans to producers based on seasonal production,
income support for agricultural producers to ensure reproduction of
agricultural production based on the introduction of mortgage prices, income
policy through government grants and subsidies, promote network of agricultural
inquiry services and monitor agricultural market system.
Free
economic zones and joint ventures would enable to attract foreign capital more
intensively. Foreign currency earnings from agricultural activities would
significantly strengthen regional economy. Free economic zones should be
created especially for those areas where favorable meteorological, financial
credit, climatic, customs conditions are existed.
It
is necessary to raise the qualification level of the agricultural sector,
including managers training for agricultural production who could organize the
work to obtain maximum revenue at minimum cost.
Foreign
investors complain to the complexity of judicial protection of their rights. It
often occurs that decisions are delayed or not confirmed at all. We have to
promote legislative reforms, concerning agriculture.
It
is possible to provide competitive agricultural sector, if we are going to stimulate
the development of export-import potential field. It is appropriate to have foreign
investment in those areas, because they are the source of competitive exports
for agricultural products.
The
most profitable and priority areas for foreign investment in the agricultural
sector are: renewal and modernization based on new technology companies,
including those involved in harvesting and storing grain, the introduction of
high crop production, creation and raw materials for the production of
equipment for the oil and fat, meat, milk, flour and baking industry,
establishing effective production of chemical plant protection of agricultural
plants and animals, agricultural infrastructure [1].
Thus,
in our
opinion, investment climate in Ukraine is
not favorable; the risks for investors are high. But only deliberate state policy
in improving the efficiency of agricultural production, compliance with economic
laws, improved legislation in agricultural policy, credit transactions regulation,
funds rational distribution and their effective usage, debt repayment can
improve the situation in the agricultural sector.
REFERENCES
1. Nazarova L.V. Development
of investment processes in agriculture in Ukraine: status, problems and
prospects // Scientific Journal: Finance, banks, investment. – 2011. – № 1. – P.
71-75. 2. Semikina K.V. Problems of investment
in agribusiness of Ukraine // Scientific Journal: Finance, banks, investment. –
2011. – № 1. – P. 85-89. 3. Sugay
T.Y. Investment climate in agriculture in Ukraine // Actual problems of economy.
– 2010. – № 10. – P.18-24. 4. The State
Statistics Committee of Ukraine [electronic resource] – Access mode: http://www.ukrstat.gov.ua
5. Ministry of agrarian policy and food of Ukraine [electronic
resource] –
Access mode: http://www.minagro.gov.ua