In the conditions of state support shortage to agriculture and loss of opportunity for farmers to sell products at currently high world market prices because of export quotas an efficient budgetary funds usage is becoming more and more important. Within this context concentration of resources on solving key issues of agricultural sector of economy is a crucial factor for its sustainability in the next years.

Among major actual challenges for agribusiness one of the most important is a technical renewal of the sector. Decreasing of tractor and combine numbers since the end of 2000 to the beginning of this year is 47 and 44 percent, respectively. According to Alex Lissitsa, UCAB’s President, issue complication became even higher in 2009 when Ukrainian agricultural machinery market went down three times from $1.8 billion because agricultural producers faced lack of funds due to the financial crisis and its impact to the sector. Financing of agriculture was very limited and expensive, so mostly short-term loans were given to increase the available capital. Thus the opportunity to invest in new, highly productive machinery was very limited.

Under total cost saving conditions most farmers tried to repair old machinery and manage without buying new machines what led to many breakdowns and crop losses. “Among sold combines in 2009 more than 60% were used, when before crisis its market share amounted less than 40%. Today this results in a huge demand for a highly productive machinery, however this requires the ability of budgetary support,” UCAB’s expert Roman Slaston said.

This year rate of technical renewal in agriculture is still very low. State should take active role in this issue to change present negative tendency. “If government won’t stimulate technical modernization of the sector in the next year, losses with old low productive combines and tractors can reach 7.5 billion UAH,” A. Lissitsa warned.

Implementation of such positive, sustainable sector stimulation can and shall be achieved via the project “Grain of Ukraine” which will increase efficiency in agriculture and become crucial step of Ukrainian agribusiness on the way of improving international competitiveness. The Ukrainian agricultural sector has an unexplored potential to significantly support a further growth and strengthening of the country’s Gross Domestic Product (GDP).

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«Ukrainian Agribusiness Club»

Khrystyna Protsiv