122 
УДК 338.4311  ©   
SOKOLSKA T.V., Ph.D. in Economics 
Bila Tserkva National Agrarian University 
AGRICULTURE OF UKRAINE: STATE AND DEVELOPMENT PROSPECTS 
У статті представлено стан та проблеми розвитку агропродовольчого виробництва в Україні. Досліджено основні 
чинники,  що  блокують  економічний  розвиток  агросфери,  зокрема:  диспропорції  між  окремими  галузями  АПК, 
недостатня  забезпеченість  фінансовими  ресурсами,  низький  рівень  технічного  та  технологічного  оснащення,  значний 
обсяг імпорту продовольства, скорочення частки державної підтримки тощо. 
Обґрунтовані  основні  напрями  державного  регулювання  аграрного  виробництва  в  частині  фінансової  підтримки 
виробників  через  механізм  здешевлення  кредитів,  виплати  дотацій,  що  сприятиме  підвищенню  окупності  витрат  та 
прибутковості. Особливий акцент зроблено на розвиток аграрної освіти і науки.  
Ключові  слова:  сільське  господарство,  перспективи  розвитку,  економічний  ріст,  диспаритет,  державне 
регулювання, аграрна освіта та наука. 
 
Problem  definition  and its relation  to important scientific or practical  issues.  Agriculture  may 
stop being a source of growth of the national economy. Apart from the obvious scales of the industry and 
its ability to ensure the economic growth demonstrates the potential of market and non-market sub-sectors 
of agriculture which stimulates high growth in other sectors of the economics through the multiple effect. 
According  to  the  World  Bank  estimations  based  on  a  comparison  of  the  world  countries  rates,  GDP 
growth due to the growth of agriculture, is at least twice as efficient in poverty reducing as GDP growth 
obtained in other industries.  
Analysis  of  recent  researches  and  publications.  The  problem  of  the  Ukrainian  agricultural 
development  efficiency  has  been  discussed  in  the  papers  of  famous  national  economists  like 
O.Shubrasv`ka, B.Pasxaver, V. Andrijchuk, O.Shpy`chak, P. Sabluk, L. Moldavan etc. But nowadays, the 
problem of forming an efficient mechanism which will create opportunities for economic development of 
agrarian sphere is still unsolved. 
Aim of the our research is identify of main development prospects of domestic agriculture sector for 
create opportunities of economic growth in national economy. 
The main results of reseach. Agriculture is the foundation of the economy of any country. Even the 
most progressive industrial countries invest big money into domestic agriculture development. It provides 
vital human products like food and raw materials for the consumer goods production 
In  Ukraine  agricultural  sector  has  always  occupied  a  leading  position  in  solving  its  economic  and 
social  problems.  It  is  agriculture  growth  that  we  hope  to  provide  poverty  overcoming  and  to  take  our 
country among industrialized countries.  
The agricultural sector concentrates  natural resource  potential,  varied favorable  climatic conditions 
which  creates  opportunities  for  the  production  of  high-quality  agricultural  products,  food  security, 
positioning the country in the global food market. In the 2013 year 17,53 % of the employed population 
are engaged in agriculture; 9,1% of gross domestic product is produced in it. 
In addition, its development is important in the view of the preparation of Ukraine's accession to the 
EU since agricultural products and food industry make a significant part of Ukrainian exports. Nowadays 
food  products  exports  has  replaced  the  decrease  in  exports  of  Ukraine  traditional  industries  like  metal 
manufacture and chemical industry. 
Land is one of the key factors in the development of agricultural. Ukraine is the world second country 
in terms of arable land share in the total area of the country. Arable land makes 56% of total area of the 
country. The bigger is the share only in Denmark – 58.9 % of the area is cultivated [ 1 ]. By the beginning 
of 2014 the total agricultural land area was 41525,8 thousands hectares (70,8% of the total in Ukraine) of 
which 32525,5 thousands hectares was made up by arable land [2]. 
The industry has been in a very difficult financial and economic conditions recently, and it has faced 
a number of significant challenges like: 
- extremely limited opportunities in drawing investments and loans; 
- ineffective system of registration of leasing rights of agricultural land; 
- excessive regulation in economic activity, which creates opportunities for corruption; 
                                                             
©  Sokolska T.V., 2014. Економіка та управління АПК, № 2’2014 
 
 
 
  123 
- the lack of legislation aimed to the facilities economic activity in agriculture; 
 - disparity in prices for inputs in agriculture: fertilizers, pesticides, fuel and agricultural products. 
However, even under a deep crisis, the industry keeps growing (Figure 1). 
Analysis  of  dynamics  of  agriculture  production  is  shows  that  in  2013  year  the  indices  of  gross 
agriculture production increased in comparison with the 2012. 
Specifically,  in  2013  the  gross  production  volume  in  agricultural  sector  amounted  to  UAH  253.7 
billion, which exceeded the record of 2011 by $20 billion when the amount of agriculture products made 
233.7 billion. USD. (in prices of 2010) [2]. 
However, this growth in agriculture can not be considered sustainable because it is provided due to 
large agricultural market enterprises - holdings - and favorable conditions in world commodity markets, 
while  the  most  advantageous  in  terms  of  the  strategic  objectives  of  investment  in  modern  technology, 
innovation, and science are not implemented. 
A large-scale concentration of land use has been taking place since 2004. It is evident in leased land 
area increase, as well as in new holdings rapid creation, vertically and horizontally integrated structures, 
which  include  not  only  agricultural  formation,  but  also  processing  enterprises,  elevators,  transport  and 
trade organizations, research institutions and others. 
 
100,1
117,1
98,2 98,5
119,9
95,5
113,3
97,5
128,6
95,3 95,9
130,4
91,9
117,9
105,1
98,7
104,2 103,4
101,3
103,9
104
0
50
100
150
200
250
300
350
400
2005 2008 2009 2010 2011 2012 2013
Indices of gross agricultural production,% Indices of gross crop production,%
Indices of gross animal production,%
 
Figure 1. Agricultural production Dynamics (comp. with the previous year) 
 
They  concentrate  hundreds  of  thousands  of  hectares  of  land  and  monopolize  the  benefits  of 
international  trade  in  agricultural  products  and  food.  Most  of  them  use  IPO  to  raise  funds  for  further 
development  and  expansion,  alongside  with  the  possibility  to  register  the  parent  company  offshore  to 
optimize their financial flows. 
Nowadays  there  are  75  holdings  in  Ukraine,  their  land  banks  size  has  reached  about  6  million 
hectares, or 16% of the total area of agricultural lands owned and used by agricultural  enterprises and 
individuals.  A  typical  feature  of  economic  holdings  is  unsustainable  land  use,  crop  rotation  failure, 
excessive  use  of  pesticides,  herbicides  and  crop  protection  products.  Increasing  exports  of  grains  and 
oilseeds reinforces the image of Ukraine as a supplier of raw materials. 
As to the environmental situation, it is characterized with catastrophic state of the soil (almost a third 
of  all  arable  land  is  eroded),  depletion  of  land  resources  by  the  tenants.  Breaking  crop  rotation  and 
rational  crops  structure  demands  they  have  been  growing  the  most  profitable  crops  –  wheat,  barley, 
sunflower and canola, corn for years. 
Financial position of the agricultural sector deteriorates with the increase in incomes of agricultural 
holdings, grain traders, processors, and other agribusiness representatives, their development potential is 
exhausted, the level becomes threatening rural communities development level is getting worse, only 20% 
of population are employed in agriculture. 26 villages disappear annually from the map of Ukraine [3]. 
Unemployment level has been rising. 
The agricultural holdings reduce labor costs through the wide decrease in the number of employees 
(they  provide  employment  only  to  one  fifth  of  theworking-age  rural  population).  The  industry  is Економіка та управління АПК, № 2’2014 
 
 
 
  124 
characterized with the lowest wages among other labout activities (except for fishing and hunting) which 
is lower than the average national salary.  
 
Table 1. – Average monthly nominal wage by type of economic activity (hryvnya) 
Indicators  2010  2011  2012  2013 
Total  2239  2633  3026  3265 
Agriculture, forestry and fishing  1472  1853  2086  2340 
including agriculture  1430  1791  2026  2270 
Industry  2570  3107  3478  3763 
of which food, beverages and tobacco goods  
produc-tion 
2138  2545  2891  3110 
Constructions  1758  2270  2516  2702 
Wholesale and retail trade; repair of motor  
vehicles and motorcycles 
1877  2342  2704  3010 
Transportation and storage, postal and courier  
activities 
2658  3071  3412  3589 
Accommodation and food ser-vice activities  1455  1777  2055  2249 
       Source: Developed by Statistical Yearbooks of Agriculture in Ukraine [3]. 
The real and hidden unemployment raises the population migration and the subsequent deformation 
of its sex and age structure. The birth rate in the rural population per 1000 people dropped from 12,7 in 
1990 to 11,4 persons in 2012 while the mortality rate increased from 12,1 to 14,5 thus making the natural 
increase  negative  (3,1  persons  per  1000)  [4].  As  a result,  villages  are  becoming  depopulated,  some  of 
them  even  disappear. There are 8 thousand  villages in  Ukraine  which have  lost the  opportunity of the 
population self-reproduction. 
The social infrastructure in rural areas has been getting deteriorated significantly. During 2000-2013 
the number of preschool institutions decreased by 46%, district hospitals - by 41.5%, shops - by 53.4%, 
restaurant industry objects - by 25.2%. 
Only 22% of villages have electricity and only 2.6% of the are equipped with drainage system. Nowadays 
1087 villages are not covered with regular bus service, 109 of them have na paved entrances. Modern private 
sector is represented mainly with small private farms (over 9 million of rural and urban households with land-use, 
including 4.5 million of private households) owning 55% of the industry gross production. 
Low  efficiency  of  agricultural  production  is  typical  of  most  farms  as  the  yield  of  grain  and 
leguminous crops in Ukraine was 39,9 center / ha, average milk yield per cow in Ukraine was 4446 kg 
while in the abovementioned the figures were 8202, 9593, 7083, 6242 kg, respectively [2]. 
As to the financial results of the agricultural enterprises before taxation, they were 29602,8 mln hrn in 
2013 which was 72281,9 mln hrn less than in 2012.  
 
Table 2. – Financial results before taxation by type of economic activity (millions hryvnya) 
Indicators  2010  2011  2012  2013 
Financial results before tax-ation   58334,0  122210,0  101884,7  29602,8 
Agriculture, forestry and fishing   17291,8  25565,9  26992,7  16005,4 
including agriculture, hunting and respective services   17305,2  25345,4  26843,1  15859,1 
Industry   31221,1  58662,3  21353,4  13204,5 
Construction   –4418,2  –3845,8  –71,1  –5547,2 
Wholesale and retail trade; repair of motor vehicles 
and motorcycles  
14883,5  21591,5  9608,0  –8572,5 
Transporting and storage, postal and courier activities   5058,9  8741,4  7524,9  2470,1 
        Source: Developed by Statistical Yearbooks of Agriculture in Ukraine [3]. 
 
Among the main factors that block economic development of agrarian sector are: disparities between 
different  areas  of  agriculture,  insufficient  provision  with  financial  resources,  a  large  volume  of  food 
imports, reducing the share of government support, poor technical and technological outfit etc. 
The  discrepancy  in  prices  for  raw  industrial  resources  and  the  goods  sold  resulted  in  an  capital 
outflow from the agricultural sector, it inhibits the development of relations between agriculture and other 
sectors. For example, prices for basic grains have grown by 12 times, on diesel fuel – by 86 times, and 
electricity prices have increased by 152 times over the past 15 years. Under constantly rising prices for 
energy,  fuel  and  lubricants,  fertilizers  and  farm  machinery,  under  low  purchase  prices  for  agriculture 
products, many companies pull out their previous activities. 
Poor  equipment  and  technology  and  technology  level  which  decelerates  efficient  functioning  of  the 
agrarian sector is a direct factor blocking economic growth under the current development of agriculture. Економіка та управління АПК, № 2’2014 
 
 
 
  125 
The  amount  of  all  tractors  decreased  by  54.21%  during  2000-2013,  grain  harvesters  number  -  by 
53.8%, milking machines – by 66.56% (tab. 3).  
 
Table 3. – Agricultural machinery in agricultural enterprises  
Indicators  2000  2005  2010  2011  2012  2013 
Tractors, thsd. pcs  318,9  216,9  151,3  147,1  150,1  146,0 
per 1000 ha of arable land, pcs   11  11  8  8  8  11 
Grain harvester combines, thsd. pcs   65,2  47,2  32,8  32,1  32,0  30,0 
per 1000 ha of grain sown area (without maize), pcs   6  5  4  4  4  4 
Maize harvester combines, thsd. pcs   7,9  4,8  2,5  2,3  2,1  2,0 
per 1000 ha of maize sown area, pcs     8  5  1  1  1  1 
Potato harvester combines, thsd. pcs   3,6  1,9  1,7  1,7  1,6  1,5 
per 1000 ha of potatoes sown area, pcs   133  117  59  49  40  16 
Beet diggers, thsd. pcs     13,0  8,5  4,2  3,8  3,6  3,0 
per 1000 ha of sugar beet (factory) sown area, pcs   16  17  9  8  9  13 
Flax harvester com-bines, thsd. pcs   1,7  1,0  0,5  0,4  0,3  0,3 
per 1000 ha of flax sown area, pcs   72  41  8  7  6  1 
Milking, equipment, thsd. pcs   33,5  16,8  10,9  10,8  11,2  11,2 
       Source: Developed by Statistical Yearbooks of Agriculture in Ukraine [3]. 
The main causes of the agriculture enterprises poor logistics are:  
- lack of equity funding sources for technical re-equipment.  
- increase in prices for new farm machinery. The average tractor price in 2013 increased by 59.34% 
compared to 2010, grain harvesters price - by 40.27%, corn harvesters price - by 94.14%, feed harvesters 
- by 32.03%, beet harvesters - bt 180.23%. 
-  reduce  in  the  state  support  for  machinery  park  modernization  by  means  of  financial  leasing  program. 
According to the Ministry of Agrarian Policy and Food of Ukraine, AIC needs 40 thousand tractors [5]. 
Organic  fertilizers  volumes  are  reduced  due  to  the  financial  economic  crisis  in  Ukraine.  Also, 
agricultural products procurement and marketing infrastructure is poor, which causes significant losses in 
storage and transportation. Most elevators, built during the Soviet era, have outdated equipment and do 
not meet modern requirements for grain storage. 
All  the  abovementioned  factors  indicate  a  lack  of  targeted  policy  measures  aimed  at  ensuring  the 
sustainability  of  the  national  food  market  and  using  potential  benefits  from  Ukraine's  presence  in  the 
world food markets. 
Another major problem for farmers in the Ukraine is the high loan interest rates. 
According to the NBU, in 2013 interest rates on agriculture loans amounted to 22-24% per annum. 
Ukraine has no agriculture insurance protection system against weather risks. In agriculture insurance 
risks are covered for less than 5% of the total acreage area, while for most leading countries this figure 
rises to 70-80%. 
Thus,  due  to  considerable  number  of  unprofitable  enterprises  and  comparatively  low  standards  for 
agriculture production profit, the productive capital slow turnover, due to significant difference between 
the production time and work periodas well as poor protection of investors rights there is a low level of 
investment of the agricultural sector in Ukraine. 
To solve the problem we need: to increase and ensure the appropriate use of funds for state support of 
agricultural sector; to take steps to mitigate inter-sectoral imbalances in economic relations and to create 
conditions for their alignment to ensure profit margins in agriculture at the level which is not lower than 
the average national economics.  
To improve the financial condition of agricultural enterprises we need to improve credit policy, 
the  essence  of  which  is  to  reduce  interest  rates  and  to  stimulate  long-term  loans.  Implementing 
Institute of land sale and mortgage in Ukraine will open new opportunities for agricultural producers 
as well. It will allow implementing new financial schemes by purchasing agricultural machinery, in 
particular, to get a loan for purchasing necessary equipment by private owners is possible with a loan 
against privatized land. 
State regulation of the sustainable development of agrarian sphere is reasonable to carry on under the 
following approaches:  
-  strict  management  of  critical  aspects  of  agricultural  activities  (using  pesticides,  herbicides, 
fertilizers, environmental impact of large livestock farms, compliance with crop rotation etc.); 
 -  to  introduce  legislative  techniques  of  financial  and  economic  incentives  for  economic  agents, 
subject to crop rotation, under implementation of measures preventing soil degradation and to legitimize 
responsibility for the requirements non-compliance. Економіка та управління АПК, № 2’2014 
 
 
 
  126 
For example, government support may be granted only to producers who observe crop rotation, take 
measures to prevent land degradation, and use well-handled fertilizers and pesticides. 
Farmers can expect to receive budget support for any government program if they follow rules and 
requirements of sustainable agriculture farming. 
However, at the current stage of development of our state budget in the absence thereof budget funds 
we need to improve significantly the environmental responsibility of all business entities, nature users and 
nature contaminants on the legislative level. Violation of the requirements of resource and environmental 
security should be punished  with administrative, economic and criminal  liability for the  environmental 
damage caused. 
It should be noted that at present the main directions of state regulation of agricultural production in 
Ukraine  are:  financial  support  to  producers  through  the  cost  reduction  mechanism;  milk  and  meat 
subsidies  payments;  surcharges  for  increased  weight  condition  young  cattle,  conditioned  pigs  and 
broilers, thereby increasing profitability and recovery cost.  
State  support  of  agricultural  education  and  science  is  rather  important  for  the  economic  growth  of 
agricultural production because through generation of educated professionals for sustainable development 
we can get weighty guarantees of balancing economic growth and sustainable use of the environment for 
present and future generations. 
Ukraine  must  seek  to  expand  exchange  programs  that  allow  young  Ukrainian  students  to  undergo 
practical training in agriculture and to attend technical colleges and universities abroad. 
Thus, the current state of agricultural production in Ukraine needs to complete the agrarian reform urgently. 
Ukrainian agrarian producers set great expectations that the new government that will act prudently 
and transparently. Ukraine has every chance to be transformed from a raw appendage into a major player 
in the global food market. Agricultural production is our perspective which can proved by the work of 
Bila Tserkva National Agrarian University with its modern teaching and research center where innovative 
technologies  in  animal  husbandry  and  crops  production  are  implemented  and  the  students  have  the 
opportunity to study here. 
Conclusions of this research and prospectives for further research in this direction. To achieve 
economic  growth  Ukraine  should  overcome  a  number  of  problems  precluding  agriculture  growth, 
particularly  declarative  nature  and  ineffectiveness  of  state  programs  of  agriculture  development,  poor 
market  infrastructure,  informational  vacuum  of  rural  population,  lack  of  finance,  agriculture  machines 
park  deficiency  (about  10  thousand  units),  prices  instability,  technologies  obsoleteness,  instable  and 
ineffective legislation etc.