It is more expedient for small agricultural producers to do business in niche crops production and to apply low-investment technologies. They are competitive at the local level; however they are dependent on state benefits and subventions, as well as on the establishment of state support funds and/or local loan associations.
Such a conclusion was made by the Ukrainian Agrarian Confederation after a research on effective solutions for the Ukrainian agribusiness. Its results were presented at the exhibition “AgroComplex 2017”.
8500 agricultural producers took part in the research. The assessment was made based on their 2015 and 2016 indicators, while all companies were divided into 6 groups depending on the size of cultivated land – up to 100 hectares, 100-200 hectares, 200-1,000 hectares, 1,000-5,000 hectares, 5,000-10,000 hectares, and over 10,000 hectares. The companies have been benchmarked against such criteria as employment generation, tax payments, social contributions, efficient crop yield/livestock productivity etc.
“We gathered input from the State Fiscal Service, the State Service of Ukraine for Geodesy, Cartography & Cadastre, the State Statistics Service of Ukraine, including direct input from agricultural companies,” stated the president of UAC Leonid Kozachenko as he presented results of the research. “This data will be the reference point for the country’s AIC development strategy.”
In conclusion, Mr. Kozachenko highlighted that for medium-size producers it is more reasonable to improve their technologies and to boost their local competitiveness. In this respect they may find partial state benefits and subventions helpful.
Large vertically integrated companies are facing bigger prospects. They find it easier to promote their products on the world market. Moreover, agricultural holdings have impact on the global policy. That is why one should facilitate their development in compliance with the antitrust laws. Large companies must compete.
At the same time, they show the best results in terms of the effective land use, rental payments, social and other contributions.
The article was oroginally written in Ukrainian and translated into English by AgroGeneration