Economic science/12. Agricultural economics
Prof. Shubravska O.V.
Institute for Economics and Forecasting NAS of Ukraine
Development of Ukrainian livestock farming within the framework of providing
the sustainability of agrarian production
The
ultimate goal of development of agriculture in Ukraine should be to ensure food
security and independence of the state, as well as full-scale implementation of
agro-food export potential in terms of increased resource efficiency of
production and reduce the pressure on natural resources that are used by the
industry. No doubt, all of these will have positive impact on the general state
and prospects for further development of the national economy and social and
environmental spheres in Ukraine, will contribute to the sustainable
development of the state and industry.
The
ecological component of agricultural production is very unfavorable. Thus, the
territory of Ukraine is characterized by extremely high rate of agricultural
development (72%), great exceed of the ecologically justified limits, and
plowed farmland (54%). While in Europe, arable land is 30-32% of the total land
area, particularly in France and Germany the level of tilled land is 33%, in
Spain – - of 30% in the Netherlands – 24%.
Moreover,
agricultural land use in Ukraine is recognized as ecologically unbalanced. It is
considered acceptable when the proportion of natural grassland in the structure
of agricultural lands is from 30 to 50%. In Ukraine it is only about 19%, while
in EU countries this share on average amounts to 39% [1]. Pastures in Ukraine account for 9% of the territory, while in Europe
– are 23%.
The above
mentioned gives grounds to assert that farming requires major changes, which will
be able to stop the depletion of the potential for effective growth and provide
sustainable development of the industry in accordance with the one accepted in
the world, in particular in relation to agriculture and rural area, the concept
of sustainability through innovation.
For that purpose in
Ukraine, in particular, the accelerated development of animal husbandry and
stabilization of its share in the structure of agricultural production needs to
be ensured (this share tends to decline
to 29% in 2014[1] compared
with 1990, when it stood at 49%).
Livestock, especially cattle, require special attention from the state.
The main reasons for this – the need to improve soil structure (due to the
increase in application of organic fertilizers under crops) and the diet of
Ukrainian citizens (in which the share of animal proteins is now 15% below the
1990 level and 36% – of
the U.S. level), reduction of import dependency in the context of meat
production, the extension of the corresponding export potential. Animal waste
is also a reliable source of raw materials for bioenergy production and
increased energy efficiency in the sector and the country.
That is why in
the implementation process of the structural transformation of agrarian sector the
priority of animal husbandry development is need. At the same time, it should
be noted that in modern conditions of a protracted fall in world prices for
dairy products, the uncertainty of its export sales, the decline in consumer
demand in the internal market the increase of domestic production must occur on
the basis of innovation, achieved through the use of high-performance
livestock, its reasonable concentration, the use of high quality foods, complex
processing of the final products and wastes. This will reduce production costs
and increase product quality, in particular because producers use higher
standards while the government toughens sanctions for their non-compliance, the
activation of the independent inquiry process, negative publicity etc. In
addition, the financial mechanisms of state support of livestock development
should be renewed, primarily in view of ensuring the development of family
farming, encouraging family farms formation and growth, compensation of the
equipment costs and buildings for such owners, acquisition of elite breeds of
animals, etc.
State support for
the development of large-scale cattle breeding, it is should be obligatorily
associated with adherence to sustainable (i.e. environmentally sound)
concentration of animals. In the EU approximately 1 head of cattle accounts for
1 ha of arable land. It is noteworthy that in Ukraine, close value of this
indicator was observed in 1990, and now it is less than 0,14.
Simple
calculations show that in compliance with the European regulations and the
increase in milk production to the level of, for example, Canada (as a state
with climatic conditions similar to Ukrainian) domestic milk production may
increase more than fourfold. This requires a clear determination of the sources
of distributing such products. The domestic food market is undersaturated with
meat and dairy products in accordance with rational standards of consumption by
about 30-40% (with adequate food paying capacity of the population), and the
expansion of exports is now constrained by low quality and a considerable cost
of production. Thus, the main directions of stimulation of the livestock development
along with support for family farms should include the formation of a legal
framework to support the improvement of meat and dairy products quality, as
well as to promote its export.
It is worth mentioning
that the government is actively working to bring its domestic legislation in
the sphere of agriculture and food security in compliance with EU requirements.
In particular, the Law of Ukraine "On amendments to some legislative acts
of Ukraine regarding food products" was developed and in 2014 adopted by
the Verkhovna Rada. Most provisions of this law came into force on 20 September
2015.Thus, Ukraine is implementing the European security model and the quality
of food products "from field to fork" procedures and HACCP. The lack
of this approach was one of the main claims of the EU to the domestic products
on their way to the European market. It is positive that the act significantly
reduced the number of administrative procedures, the extent of state control,
cancelled non-existent in the EU permitting procedures, but set detailed
requirements for the implementation of state control of food products
(including imported) in the domestic market in accordance with European
practice.
In addition,
according to information of the Ministry of economic development and trade of Ukraine,
as of mid-September 2015, Ukraine has taken 70% of EU technical regulations
that will also contribute to the development of domestic exports and strengthen
control over safety of food consumed be the citizens.
To promote the
expansion of domestic exports (including meat and dairy products) is a goal of
the Export credit Agency, the creation of which was announced by the same
Ministry, and work should start in 2016.
All in all,
according to various estimates, to bring the agricultural sector up to EU
standards, Ukraine needs to attract investments in the amount of from 50 to 80
billion dollars. In particular, according to the Ministry of agrarian policy
data, about $ 25 billion is needed for the development of infrastructure, deep
processing, breeding and biotechnology, restoration of irrigation in the
southern regions.
Livestock
development will necessitate adjusting the structure of agricultural land and
crops, in which the share of natural pastures and forage crops is now very low.
In this regard, it is necessary to evaluate possible consequences for domestic
food market and export from such structural shifts.
At our rough
estimate, adherence to environmental standards and standards of EU countries
will encourage Ukraine to at least 5-7 fold increase in livestock population
and implement an adequate change in the structure of agricultural land,
including arable land, in favor of increasing the area under fodder crops and
pastures. In its turn, this will require at least in the medium term the
application of the compensatory arrangements for farmers with the aim of
preserving the average level of their income.
The above
mentioned adjustment of the structure of agricultural land in the short term
will obviously reduce the amount of export earnings (primarily from grain and
sunflower seeds), which can be compensated for by the expansion of export of
meat and dairy products in the future. In the domestic market, you can expect
some aggravation of the situation only in the segment of vegetables. It is
possible to mitigate the risk of a decrease in production volumes in connection
with changes in the structure of agricultural land by increasing crop yields due
to innovative technologies of their cultivation, including the use of better
seed material (which is capable, according to estimates by the Ministry, to
provide at least 15-20% growth of the gross production), irrigation systems etc.
In this context,
it should also be noted that the adjustment is required not only for the
structure of arable land (in the direction of increasing the share of fodder
crops in the overall). The percentage of crops of Ukrainian selection is in
need of increase (as most adapted to the domestic climatic conditions) just as crops
show a high degree of adaptation to the more tangible occurrences of climate
change. Among the latest crop, agronomists named primarily sorghum and millet
(which are particularly relevant for conditions of the Southern Steppe).
However, their broad application is constrained by low development of
commercial infrastructure and the reluctance of grain traders to export these grain
crops [2]. The above mentioned can
also be applied to rain-fed crops of legumes, in particular chickpeas, which are
capable of maintaining natural fertility of the soil, but are not currently
widespread because of the difficulty of forming commercial lots of this crop
seeds, primarily for its export sales.
Special attention
should be given to the need for renewal of the production of durum wheat, which
domestic selection has a long history and is now also represented by a
considerable number of highly productive varieties in Ukraine. This culture
has almost unlimited export potential, and in addition, is a raw material for
the production of high quality flour, popular in both domestic and foreign
markets.
References:
1. Rozvytok agrarnogo vyrobnyctva jak peredumova zabezpechennia
prodovolchoi bezpeky [Agricultural development as the precondition for food
security supporting]. Retrieved from http://www.niss.gov.ua/content/articles/files/0623_dop-b3314.pdf [in Ukrainian].
2. Ivashchenko, O. (2015) Pro klimat i makarony [About climate and
spaghetti]. Newspaper “Dzerkalo tyznia”, 36-37, 12 [in Ukrainian].