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Financial provision of agriculture production
Modern farming in Ukraine is characterized by its structural imbalances and inability to reproduce the resources essential for economic growth.
These are caused by lack of financial support which is specific in agriculture and the specifics is determined with production peculiarities, capital turnover, general and expanded reproduction.
Therefore, agrarian production requires applying specific mechanisms for financial support, which is manifested in five forms: self-financing, loans, budget financing, joint financing and mixed risk financing.
Depreciation and profit are the sources of domestic financing. The amount of such funding is very limited at the present stage of economic relations.
Insurance protection aims at securing organizational units from possible losses due to risk situations arising in the agricultural sector very often. Many farms have no interest in insurance contracts as their insurance coverage means.
The advantage of bank loans and credit unions loans, mortgages, and various types of documents, which attract the necessary funds and other resources is their relative ease and speed of obtaining as well as capital raising performance. The disadvantages include limited credit resources for providing expanded reproduction and development of small and medium businesses in rural areas and their high cost; as well as the complexity of their obtaining. Credit unions have sufficient financial resources of more than 2.5 billion, but these loans are offered at 20-30% loan rate, which is much more expensive than in European countries.
State support covers budget financing programs and activities directed at the development of the industry. Besides, promoting agricultural sustainability, competitiveness on the domestic and foreign markets through preferential tax treatment, partial compensation of interest rates on loans granted by commercial banks writing off bad debts onthe legislative level.
Only 0.8% of the added gross value in the industry accounts for direct subsidies from the budget. In 2014, 17% decrease in funding agricultural is expected compared with 2013, while the cost of production increased by almost 20-30% and the purchase price for basic profitable crops such as maize, wheat, sunflower fell by almost 40% while fertilizer prices have increased by almost 30%, seed - by 10% and crops protection chemicals - by 7.8%.
Agroleasing under which 100% of the funds allocated for purchasing machinery and equipment leasing in the state budget are transferred to agricultural machinery plants which allows to provide jobs, to solve the social problems of industrial groups, to update enterprises’ logistics.
Leasing schemes in Ukraine agricultural sector are not very popular due to the monopoly Naftogaz "Ukragroleasing" on the leasing market. This makes it impossible to develop the private leasing companies, introduces distortions in the leasing scheme and discredits itself.
Agricultural producers were supplied with 2421 units of agricultural machinery and equipment amounted of $ 875.9 million put under financial leasing of the future yield during 2009-2013.
Agricultural receipts under which they can obtain credit to finance their current operations on bail the next harvest under the simplified procedure.
Depreciation regulation which involves applying higher depreciation rates in the early years and their subsequent decline. Accelerated depreciation stimulates intensive restoration of production, reduces inflation risk, contributes to production modernization and innovation process.
Thus under modern unstable political situation of war condition, partial occupation of the territory of Ukraine, solving the problem of financial security of agricultural production is possible under maintaining the fixed agricultural tax and GDP accumulation, accessible system of total payments combined with insurance, lowering interest rates and stimulating long-term loans , creation of alternative financing schemes, new forms of public-private partnerships and increasing public support for agricultural producers.
Key words: agricultural insurance, leasing, agricultural receipts, investment, government support, credit unions.
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