Canadian Agency for International Development Канадстьке агентство з міжнародного розвитку International Finance Corporation Міжнародна

Canadian Agency for International Development

Канадстьке агентство з міжнародного розвитку International Finance CorporationМіжнародна Фінансова Корпорація

S id aSwedish International Development Cooperation Agency

Шведське агентство з питань міжнародної співпраці та розвитку

Agribusiness Development Project in Ukraine

Проект розвитку агробізнесу в Україні

Farm and Agribusiness Farm and Agribusiness Development in Ukraine: Development in Ukraine:

Some Findings of Some Findings of Sociological StudiesSociological Studies

IAMO: June 14, 2005IAMO: June 14, 2005







SOME BASIC FACTSSOME BASIC FACTS Ukraine has well-developed farm and processing sectors. Primary production accounts for 13.4 % GDP. There are considerable potentials for further agribusiness development. Beneficial geographic location for exports. Laid institutional and legal groundwork for market relations in agribusiness







Main Agricultural Reform Main Agricultural Reform OutcomesOutcomesReformed the sector of collective agricultural enterprises and created new more effective types of farms. Conducted land reform and introduced the right to private land ownership. Created main agricultural commodity markets, where the price is defined on the basis of supply and demand. Changed some principles of state regulatory policies: a shift from exclusively administrative regulations toward economic ones.







Problems and ChallengesProblems and ChallengesUndeveloped land market: land sale moratorium extended till January 1, 2008. Limited opportunities for commercial crediting, especially long-term loans. Fragmented agricultural market infrastructure: warehouse receipts, forwards&futures, and ag insurance. Lack and untimely supply of data to agricultural policy making and commodity market development.







IFC Survey & Monitoring ActivitiesIFC Survey & Monitoring ActivitiesA series of four socio-economic surveys “Farming and Agribusiness Development in Ukraine”

Conducted in 2002-2005 and studied a broad range of issues: farm operations, marketing, finance and ag insurance, land relations, and rural development.

Surveyed 400 farmers (private family farmers and heads/deputy heads of reformed ag enterprises) in 5 Ukrainian regions (oblasts)

Face-face interviews with a combination of open and closed questions

Survey national error 4.9%







Main Types of Farms/Ag ProducersMain Types of Farms/Ag ProducersAgricultural Enterprises

Created in the late 90-th on the basis of CAE, presently 19,000 enterprises

Average size 1,680 ha, employ 77 workers

Legal & organization status: joint-stock companies, privately rented enterprises, production coops, private enterprises.

Private family farms

Created in the late 80-th, currently 46,000 farms

Average size 45 ha (vary from 2 ha to 4,000 ha), employ 5 workers

Legal status: a private family-run ag business/enterprise







83%

75%

98% 97%

87%

62%66%

84%

76%

88%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

East North West Center South

Private family farms Agricultural enterprises

SHARE OF TILLED/ARABLE LANDS AT SHARE OF TILLED/ARABLE LANDS AT UKRAINIAN FARMSUKRAINIAN FARMS







FARMING IS THE SINGLE SOURCE OF FARMING IS THE SINGLE SOURCE OF INCOMEINCOME

90% 88%

78%

89%

46%

63%

55%

72%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004

Private farms Agricultural enterprises







AVAILABILITY OF ON-FARM STAFF AVAILABILITY OF ON-FARM STAFF SPECIALISTS AND DEMAND ON SPECIALISTS AND DEMAND ON

AGRICULTURAL EXTENSION AGRICULTURAL EXTENSION

Family farms demonstrate an improving availability of staff specialists . Overall demand on agricultural extension in Ukraine is low or/and undeveloped. Agronomists and accountants have the biggest PAYBLE demand. Other specialists have much lower/no demand.







AVERAGE YIELDS OF THE MAIN CROPSAVERAGE YIELDS OF THE MAIN CROPS ,, centners /hectarescentners /hectares

2001 2003 2004

Private farms

Agricultural Private farms Agricultural Private farms Agricultural

Enterprises Enterprises Enterprises

Winter wheat 24,4 28,8 4,2 6,9 29,7 31,5

Spring barley 18,7 22,3 12,3 14,6 21,3 33,6

Spring wheat 20,7 30 21,4 17,9 33,8 36,7

Leguminous 15,3 19 14,1 15,2 14,5 24

Grain corn 35,5 57,4 21,6 40,6 36,1 50,6

Canola 8,7 13,5 3,8 5,1 18,8 15,4

Sunflower 8,1 10,5 10,3 13,3 9,9 12,2

Sugar beets 182,3 224,3 175,7 194,7 239,8 249,5

Potato 116,7 111,5 110,8 107,7 116,9 127,5

Tomato 162,5 143,4 192,8 231,6 127,3 152,8

Cucumbers 114,7 73,9 315,6 330 139,1 174,7

Cabbage 191,7 169,1 186,1 110,1 186,1 110,1







MOST PROFITABLE CROPSMOST PROFITABLE CROPS

During the 2001-2004 period, winter wheat, spring barley, and sunflower have remained the most profitable crops.

In 2004, 39% of private family farmers and 67% of agricultural enterprises called wheat the most profitable crop (in 2003: 12% and 29% respectively).

In 2004: 7% of family farms and 4% of agricultural enterprises did not have profitable crops at all (2003: 23% and 11% respectively).







MOST PROFITABLE CROPS:REGIONAL MOST PROFITABLE CROPS:REGIONAL VARIATIONSVARIATIONS

59%

59%

47%

68%

35%

26%

1%

4%

3%

6%

12%

83%

33%

31%

56%

31%

31%

30%

20%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

East

North

West

Center

South

Wheat Sunflower Barley Sugarbeets Rye No profitable crops







CRITERIA IN CHOOSING PRODUCTION CRITERIA IN CHOOSING PRODUCTION TECHNOLOGIESTECHNOLOGIES

37%

62%

26%

11% 9% 9%

79%

29%22%

37%

14%7%9%9%

28%39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1 2 3 4 5 6 7 8


1- Minimum production costs

2- High Yields3- High quality4- Ecological safety of technology

5 High quality of inputs

6- Produce satisfying customer needs

7- Minimum application of crop protection

chemicals8- High profitability







PRODUCERS’ READINESS TO PRODUCERS’ READINESS TO GROW ORGANIC FOODGROW ORGANIC FOOD

64%

75%

20%

12%9%

6%11%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%


No, we are not ready Ready, provided selling prices are higherReady provided there are reliable marketing channelsReady provided there are new crop varieties







CHANGES IN SCOPES OF MAIN MINERAL CHANGES IN SCOPES OF MAIN MINERAL FERTILIZERS USEDFERTILIZERS USED

41%38% 39%

31%

41%

50%

55%52%

59%

54%

9%7%

9%10%

5%

0%

10%

20%

30%

40%

50%

60%

70%

Nitrogen Potash Phosphate Manure Mineral premixes

Increase Did not change Decreased







AVERAGE VOLUMES OF ACTIVE COMPONENT AVERAGE VOLUMES OF ACTIVE COMPONENT APPLIED PER 1 HA OF SEEDED AREA, KGAPPLIED PER 1 HA OF SEEDED AREA, KG

103.3

61.4 61.7

105.6

68.5 65.3

0

20

40

60

80

100

120

Nitrogen Potash Phosphate








AVERAGE AGE OF AG MACHINERYAVERAGE AGE OF AG MACHINERY

14.9

13.4

13.2

13.7

12.5

12.1

15.3

13.7

14.713.5

13.1

12.4

14.3

14

13

12.6

12.4

12.7

13.2

12.2

0 2 4 6 8 10 12 14 16

Tractor

Combine

Automobile

Seeder

Plow

Tractor

Combine

Automobile

Seeder

Plow


2001

2004







MAIN PRODUCTION PROBLEMS RANKINGMAIN PRODUCTION PROBLEMS RANKING

2001 2004Private family farms

1. Ineffective usage of agricultural machinery and equipment.

2. Problems with usage of new crop varieties.

3. Soil erosion.

• 19%-had no problems

1. Ineffective usage/lack of agricultural machinery and equipment.

2. Ineffective usage/lack of fertilizers crop protection chemicals.



Agricultural Enterprises

1. Ineffective usage of agricultural machinery and equipment.




1. Ineffective usage/lack of agricultural machinery and equipment.










GRAIN AND OIL-BEARING CROPSGRAIN AND OIL-BEARING CROPS MAIN MAIN MARKETING CHANNELSMARKETING CHANNELS

23%

12%

19%

15%17%

33%31%

21%

2%

7%

1%

4%

7% 8%

0%

5%

10%

15%

20%

25%

30%

35%

Private farms Agricultural Enterprises

Retail markets Wholesale markets Processors Wholesale traders Government Exchanges and trade housesOther







CRITERIA FOR CHOOSING DISTRIBUTION CRITERIA FOR CHOOSING DISTRIBUTION CHANNELSCHANNELS

79%

67%60%

52%

19%

10%

22%

12%16% 14%

11% 9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Grain and oil-bearing crops Vegetables

Good price Stable sales

Possibility of prepayment Buyer’s reputation

Transportation/storage by buyers Moderate requirements to produce quality







PROPORTION OF PRODUCE SOLD IN THE PROPORTION OF PRODUCE SOLD IN THE COURSE OF MARKETING YEARCOURSE OF MARKETING YEAR

44%

59%

36%

28%

14%10%

6%3%

0%

10%

20%

30%

40%

50%

60%

70%

Grain and oil crops VegetablesJuly-September October-December

January-March following year April-June following year







AGRICULTURAL MARKETING PROBLEMSAGRICULTURAL MARKETING PROBLEMS

Private family farmers

Agricultural enterprises

Low purchasing pricesLow purchasing prices 90%90% 78%78%

Commodity storage problemsCommodity storage problems 54%54% 30%30%

Limited number of Limited number of purchasers/buyers purchasers/buyers

39%39% 37%37%

Commodity transportation Commodity transportation problemsproblems

35%35% 23%23%

Lack of information about Lack of information about distribution channels and markets distribution channels and markets

26%26% 29%29%







ADANCING AGRIBUSINESS: IFC AGENDAADANCING AGRIBUSINESS: IFC AGENDA

Improve the enabling (policy & institutional) environment Develop and adopt legal underpinningsDevelop a state agribusiness development strategy.Developed regional programs

Improve access to credit and farm insurance products Make farming more attractive for crediting Improve micro- crediting and credit union operation Promote agricultural insurance as a risk-minimization tool

Ensure transfer of new production and marketing technologies and know-how

New crop production technologies (drip irrigation, zero tillage, etc) Marketing cooperation

Conduct education and awareness campaign







WE MAKE EVEN SMALL WE MAKE EVEN SMALL CHANGES TANGIBLECHANGES TANGIBLE

Documents

Canadian Agency for International Development Канадстьке агентство з міжнародного розвитку International Finance Corporation Міжнародна