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“A quarter of our agriculture exports go to the European Union”

Borys PASKHAVER on threats of Ukraine’s de-industrialization
22 October, 2015 - 11:51
Photo by Serhii HUDAK

For how longer will stay the myth that agriculture is the principal and the most promising industry in Ukraine? This question of The Day is answered by Borys Paskhaver, chief researcher of the Institute of Economics and Forecasting of NASU, Academician of the National Academy of Agrarian Sciences of Ukraine, professor, laureate of NASU Tugan-Baranovsky prize.

“In the current five-year period agriculture is the only basic national industry which has accrued a high positive rates of growth in production. Gross agricultural output over this period has gone up by more than a quarter; the average annual growth rate has exceeded 5 percent. All major products has seen a major increase in production: vegetables and potatoes by more than 20           percent, fruits – by a third, grain – by 40 percent, sunflower seeds – by 60 percent. Livestock industry experiences slower recovery rates, but it has not been without significant successes of its own: the production of meat has increased by 20 percent, of eggs – by a quarter.”

“The leadership in the agricultural production has been reclaimed by the agricultural enterprise sector, whose output has grown by more than 40 percent. Private households have increased their total production by 11 percent. This growth indicates technological and organizational progress, but the main driving force behind it has been the favorable market conditions and a significant increase in effective demand for agricultural food products. The prior five-year period has seen export of these products amount to 8.2 billion dollars per year on average; but throughout 2011-14 the annual export has reached 16.1 billion dollars, 4.3 billion of which came from the EU. The internal market has also grown: the average expenses of a Ukrainian household (factoring the price rates) on food purchase has increased by over 20 percent per person over that period. It is true that this year the volume of agricultural production is expected to decrease compared to 2014. However, 2014 was a record year, and even accounting this reduction the current year can still be considered a quite successful one.”

What are the prospects for the Ukrainian agricultural sector in light of the exceptional grain harvest worldwide, which had exceeded the forecasts? The increased supply and competition makes it difficult to expect high prices for our exports.

“Agriculture in Ukraine has demonstrated the ability for dynamic growth in production volumes. The most important thing today is the capacity of the market, the effective demand. After all, in terms of food consumption Ukraine lags far behind developed countries. Consequently, the domestic food market should expand, and this problem can be solved only by income growth within the population. Concerning the external market, the fluctuations are inevitable, and the extent of these fluctuations is difficult to predict. But the unresolved worldwide problems of food supply and the strengthening of the EU integration suggest that food export will be a strategic perspective direction of the farmer’s economic activity. And the inevitable price fluctuations are to be studied; we have to learn to predict them and take them into account accordingly when making plans for the cultivation of certain crops.”

By Vitalii KNIAZHANSKY, The Day