Economic science/12. Agricultural economics

Prof. Shubravska O.V.

Institute of Economics and Forecasting NAS of Ukraine

Conceptual framework of the modern policy of Ukrainian agro-food development

Despite rather acceptable indicators of economic development of the agricultural industry of Ukraine for the past years there are reasonable doubts concerning maintenance of high average growth rates of production in the long-term period, and its expediency under the present conditions. The current big share of agrofood products in domestic export demonstrates not only decline of other national production, but also can speak of Ukraine’s obtaining the status of the world supplier of agricultural raw materials with all the expected results.

Thus it is necessary to define urgent tasks of modern development of national agrofood production and to estimate challenges which should be overcome to maintain sustainable and well-balanced growth in the industry.

We often defined the long-term goal of development of home agrofood production as ensuring national food security and implementation of export agrofood potential based on sustainability and innovation [1]. However, it is necessary to bear in mind that export should be considered, first of all, as one of key factors of stabilization of the domestic food market. Therefore, the growth of export deliveries of agrofood products in any macroeconomic situation should not be considered as ultimate goal, but should be performed taking into account national interests, both on the world market, and concerning the use of natural resources of agricultural production.

National interests of Ukraine in the sphere of agrofood production and export, obviously, consist in full and sustainable saturation of the domestic food market by qualitative and affordable products, and also in export of its excesses in case economic justifiability. Economic justifiability in this context does not mean obtaining short-term benefit by exporters in terms of the increase of a price world market conjuncture, and has to turn out to be the consequence of target search and long-term consolidation on it in the segments of low price volatility products, specific competitive advantages and so on. First of all, it concerns innovation, organic and highly-processed products. At the same time, the main condition of stable and long maintenance of national food security level and the specified export positions is upholding of ecological restrictions of agricultural production. Without this, in the near future its proper development seems to be impossible because of the degradation of soils and exhaustion of water resources.

Taking into consideration the purpose of agrofood development, we believe that its main tasks under the above mentioned modern conditions are the following: stabilization of the income of agricultural producers, ensuring affordability and safety of agrofood products, providing the proper ecological status of the main resources of agricultural production (land and water). In general, these tasks are not new and have already been put before agrarian sector long ago, however nowadays, taking into account macroeconomic situation in the country and global trends, the challenges rising before the industry while solving these tasks are being aggravated, and process itself seems to have no alternative.

In the context of stabilization of the income of domestic agrarian producers the main challenges are being formed under influence of economic situation in Ukraine and on the world food market in general, as well as in agrofood complex of the country. High involvement of Ukrainian agrofood complex into the global space reduces economic sustainability of agricultural production mainly by means of deterioration of a world price environment in recent years, namely, the general decrease of the food prices that lasts for almost six years already [2]. Thus internal inflationary and devaluation tendencies reduce the income of producers and make it almost unpredictable due to decrease in solvent food demand, diversity in time of implementation of purchase costs of productive resources and receiving income from sales of agricultural products, a considerable share of import in resource provision of agricultural production. Substantially it is possible to reduce the mentioned negative tendencies by modifying the structure of agrofood production (and export) and creating the developed infrastructure of product sales, providing for the need of forecasting of volumes (and channels) of the manufactured products sales and their forehand approval with the production scale and the assortment.

As for structural correction, the primary question is the increase in a share of agrofood products with high added value. Such products, as we know, are less exposed to price fluctuations.

In this regard, as it was often pointed out, one of primary tasks of Ukraine state is to stimulate the consolidation of small agricultural producers to competitive (both by quantity of products made by them, and by their quality) scales and providing certain preferences for them to create the processing enterprises. This will be the guarantee of full implementation of their potential production and long-term income stabilization.

No less important than the establishment of agricultural products processing is to define the place of agrarian producers in creation of added value, production forecasting and sales, inventory management. In order to activate such processes it is necessary to provide a possibility of at least partial funding of the expenditures of small producers and their associations for receiving the necessary consulting services.

Such consultations can be also useful for mastering "smart" agricultural practices, involving domestic landowners to cultivation of "niche" crops, which, in particular, demonstrate the high level of adaptation to the increasing adverse climate changes, have increased export demand and so on.

Such approaches are described in special literature and should be available to a wide range of domestic landowners, as well as agrarian innovation practices in general, the implementation of which is restrained first of all by the lack of national innovation system and the corresponding request from the state that was also repeatedly mentioned.

It is obvious that considerable role in increasing of the added value in agrarian sector and in rise of agricultural producers’ income also should play the logistic infrastructure, with the foreign trade system, including first of all transport and storage. In this context, the primary task for the state is the direct participation in development of the specified systems, making the conditions for involvement of private investors into these spheres, providing benefits for building of the corresponding objects by unions of agricultural producers.

As for ensuring availability and safety of agrofood products, the main problems today are caused by the economic crisis and low purchasing power of the population, as well as by non-formed quality control system for such products at all stages of their production and circulation. And though the first problem in general is out of the agrofood production sphere, the second one is still within the competence of specialized state bodies and direct producers of agricultural and food products. In the estimation of specialists, despite certain shifts, the final decision of the specified problem is still quite far away. Thus, complete recognition of compliance of a domestic product security system to the European standards is expected not earlier than in 5-7 years. Nowadays only 20% of the food industry enterprises have implemented or are in the process of implementation of Hazard Analysis and Critical Control Points (HACCP) system, whereas its complete implementation on the food production enterprises is expected during 2017-2019.

Domestic landowners, especially small and medium ones, are even less prepared for the full-scale operation of such quality control system. And again there is a question of their awareness – in this context, first of all, about the necessity and specific methods of implementation of European "proper" agricultural practices according to the Global GAP standards, and also about the basic principles of HACCP.

The need for social and economic justifiability to maintain the acceptable ecological status of land and water resources of agricultural production was frequently noted. It is only necessary to emphasize that the process of increasing the ecological consciousness of the population, including of agrofood producers, has to be combined with wide usage of the state economic levers for stimulation of implementation of economical, ecologically friendly agrarian technologies, increasing of resource efficiency and wasteless technologies. Taking into consideration rather high cost of shifting all types of agrofood producers to resource-saving model, it is necessary to use instruments of financial encouragement and at the same time to provide tough penalties which will make the development of the enterprises that undermine the foundations of steady economic management impossible. It is especially urgent due to the growing influence of climate changes on agricultural producers worldwide and in Ukraine as well. Under such conditions, the irrational use of natural resources of agrarian production, in particular, non-compliance with optimum structure of agricultural crops planting in a zone section, standards of animals concentration, etc. can create a real threat for domestic food security in the near future.

References:

1. Shubravska O.V. Agroprodovolchyi rozvytok Ukrajiny v konteksti globalnyh vyklykiv / Economika APK. - No. 7. - 2014. - Page 42-48.

2. FAO Food Price Index / [electronic resource]: Access: http://www.fao.org/worldfoodsituation/foodpricesindex/en/.