Gelena Pruntseva

Ph.D in Economics and Management

NSC “Institute of Agrarian Economy”

Principles of ensuring the development of the agricultural
industry in Ukraine

The effective functioning of the agricultural sector in Ukraine implies ensuring sufficient supplies of food products for the country and producing high-quality agricultural products in quantities which can meet the needs of the population and processing industries. A number of specific factors inherent in the activities of agricultural enterprises, namely the seasonal nature of production, significant time intervals between periods of incurring expenditure and getting final results, the continuity of production processes, the dependence of the performance of companies and, correspondingly, sources of funding, on climatic conditions, and using livestock, whose reproduction is primarily dictated by biological laws as means and objects of production ,increase the risks faced by agricultural enterprises, reduce their competitiveness and result in poor profitability. In addition to the above-mentioned factors influencing the performance of agricultural enterprises and hence their investment attractiveness, low returns in the agricultural sector are caused by the fact that the natural and climatic potential is not used to a sufficient degree, the use of agricultural land is not economically efficient; some other adverse factors include poor logistics of agrarian enterprises, lack of capital, a decline in the amount of arable land, high interest rates on bank loans and the unfavourable trend of an increase in both the cost of production and the selling price of the produce due to the fact that the growth rates of prices of fuel and lubricants, mineral and organic fertilizers, agricultural machinery, pesticides, etc, exceed the rates of growth in agricultural produce prices.

In order to minimize the impact of adverse factors on the performance of agrarian enterprises it is necessary to implement scientific research in the following areas:

- analysis of economic relations and the evaluation of the efficiency of markets for agricultural produce in Ukraine;

- the evaluation of methods aimed at sustainable agricultural production and the introduction of scientific principles of utilizing land and raising livestock taking into account regional differences;

- defining the basic principles of providing agricultural producers with necessary financial resources for expanded reproduction and innovative development, financial stability and competitiveness in the domestic and foreign markets;

- improving the mechanisms for the development of material and technical basis of agriculture, pooling the resources of agricultural producers for creating their own sources of investment, as well as raising funds from other sectors of the economy, from foreign financial markets and from the public;

- ensuring the creation of an effective system of formation, processing and transmission (receipt) of accounting and analytical information for the timely adoption of effective solutions at all levels of management of the agrarian sector;

- principles of creating organizational and administrative structures to ensure the development of agricultural production and an effective combination of branch and territorial self-governing system of management responsible for integrated development of agricultural production and rural development;

- ensuring the creation of friendly institutional environment for the development of institutions engaged in generating and implementing innovations, as well as the prerequisites for implementing an innovative model for the development of the industry;

- ensuring the reduction in the dependence of the agrarian sector on traditional energy sources with the corresponding increase in energy efficiency of agricultural enterprises;

- providing growing opportunities for the population to purchase food products in quantities corresponding to physiological norms.

The results obtained from research are to ensure the profitability of agricultural production, the improvement in the productivity of plant-growing and stock-breeding, the creation of the economic environment which could stimulate investors and lenders to support reforms required for transforming rural areas. Research should also be aimed at improving the system of providing information and analytical services for the industry, reforming the system of management, the formation of an effective system of implementing innovations in agricultural production, the development of alternative sources of generating energy for agriculture, achieving a balance between the demand for agricultural products and their supply.

Thus, research carried out in the above-mentioned areas is to increase the investment attractiveness of the agrarian sector, ensure the production of agricultural produce which meets international quality standards and building up the social and economic basis for the development of the agricultural industry.