Economic science/12. Agricultural economics
Shubravska O.V.
Institute for Economics and Forecasting
NAS of Ukraine
Modern Challenges of Ukrainian Agro-food Development
Agriculture is traditionally an important component of
national economic complex [1]. Trends and prospects of the branch are
determined by the general state of the national economy. And it largely depends
on the main indicators of agricultural activities.
The main challenges and threats in the process of
development and growth of agro-food production are influenced by factors as
planetary scale, as the general economic situation in Ukraine and on the world
food market and in the agro-food complex of the country [2]. In a global context presently the strongest challenges
are connected with the change of climate, intensifying of ecological and
demographic problems, deficit of water, meal, depletion of natural resources
etc. For the Ukrainian agro-food production the number of
these challenges also acquires considerable weight: foremost, the role of
climatic factor becomes more perceptible in providing of stability of
deliveries and consumption of agricultural products. In
turn, this further heightens the problems of land degradation and increased
water scarcity for the agricultural economy.
One of important challenges, also for agro-food
development, is the increasing of global competition (economic transnationalization). Transnationalization
affects on agriculture development not only straightly (through activity of
dynamic participants of grain and oil markets, for example such, as TNC “Louis
Dreyfus Company”, “Bunge”, “Cargill”, ADM, “Serna” and other) but also
indirectly. Namely: through the formation of regional specialization of raw
materials for domestic processers, as well as import demand from domestic
producers in the market of material and technical means. Thus, the share of
German BASF in 2015 on such market was estimated at 15-20%, while the Swiss Syngenta AG plans to increase its share to 27% by 2018.
In the whole world, the interest of large
international capital in the sphere of agricultural and food production has
been increasing for a long time and, taking into account the global food supply
trends, will only grow in the future. Taking into account that representatives
of selected countries (to which Ukraine does not belong) participate in such
global competition, the scenario of consolidation of raw specialization of
export and import dependence in deliveries of a number of important material
and technical resources of the industry is fully realized in the domestic
agrarian sphere. The most obvious long-term consequences of this are the final
degradation of land resources, a significant deterioration in the ecology of
rural areas, a decrease in the price competitiveness of domestic agro-food
products, a reduction in the corresponding industries, etc., which together can
negatively affect the national food security and independence.
Taking into account the general weakness of the
Ukrainian economy and, accordingly, the position of our country in defending
its own interests in attracting foreign investment, the real positive effect of
the transnationalization of the agricultural sector
seems incommensurable with the scale of the accompanying negative effects.
All this is also true for the sphere of land
relations. There are now also formed significant challenges due to the existing
in Ukraine uncertainty with the institutional mechanism of the land market and
a fairly serious possibility of establishing high money control, incl. foreign,
over land resources after the abolition of the current moratorium on their
sale. Throughout the civilized world, it has long been accepted to assess the
likely risks associated with foreign investment in the most important sectors
of national economies and strategic assets, with a view to implementing
appropriate proactive measures. It is obvious
that some agrarian enterprises, as well as land resources of agricultural
production, are among the objects whose sale (explicit or indirect) to
non-residents threatens to create barriers to domestic supplies of goods that
are strategically important for the domestic economy and restrict access to
resources. Therefore, on the whole, without denying the expediency of
attracting foreign investments, we believe it is extremely important to
determine at the national level with a list of their potential threats, the
corresponding preventive actions, as well as a list of spheres and industries
of priority attraction of such capital.
The threats connected with the high level of
involvement of the Ukrainian agrarian sector in the global space are extremely
actual in modern conditions also due to the worsening in recent years of the
world price conjuncture, namely: a prolonged general fall in food prices and
their volatility [3].
The main threats of the national and branch level are
formed under the influence of: a) inflation and national currency devaluation
(this reduces the producers incomes and makes them unpredictable due to a
decrease in effective food demand, time differences between the obtaining of
production resources and receiving revenues from the sale of agricultural
products, a high share of imports in the resource supply of agricultural
production; b) relatively low efficiency, low yield and productivity of domestic
agricultural production; c) predominantly the raw orientation of agro-food
exports; d) the rapid reduction of the natural resource potential of the
agrarian development, which is also intensified in certain regions of the
country by unfavorable climate changes.
References:
1. Paskhaver B.I., Moldavan L.V., Shubravska O.V. Osnovni problemy rozvytku silskogospodarskogo vyrobnyctva [Main Problems of Agricultural Development]
/ Economika APK. – ¹ 9. – 2012. – P. 3-10.
2. Shubravska O.V. Agroprodovolchyi sektor v umovah kryzy: osnovni
tendencii ta vyklyki rozvytku [The
Agro-food Sector under the Crisis: Main Tendencies and Development Challenges]
/ Economy and Forcasting. –¹3 –2009. – P. 99-110.
3. FAO Food
Price Index [Åëåêòðîííèé ðåñóðñ].
– Available at:
http://www.fao.org/worldfoodsituation/foodpricesindex/en/.