Research on foreign economic activity of agrarian enterprises of Ukraine

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RESEARCH ON FOREIGN ECONOMIC ACTIVITY OF AGRARIAN ENTERPRISES OF UKRAINE

аgrarian industry ukraine competitiveness

Formulation of the problem. The development of foreign economic activity is one of the main (priority) areas of increasing the level of competitiveness of Ukrainian enterprises in the agrarian sector. Entering markets with a high level of competition and widespread use of modern technologies creates opportunities for gaining new experience and knowledge, which can be key factors in the success of enterprises in the future. Agribusiness sector is one of the Ukraine's economic powerhouses: the industry had sustainably grown before the start of the full-scale war, showing 5 - 6% annual growth, with a share of agricultural production in GDP amounting to 10%, and taken together with processing of agricultural products, to 16%. Agriculture was one of the leaders of world production in terms of some types of food, ensuring trade equivalent to 6 percent of global calorie consumption.

Ukraine was a leader in international trade in sunflower oil (world leader), rapeseed and barley (third and fourth respectively in the rating), and other products. Ukraine annually earned USD 22 billion from the trade in agricultural products and food products whose share was 41% of total exports.

The development of industrial agricultural production in Ukraine made it possible to offset the impact of disparities in the levels of state support and lending costs with the countries of North America and the EU, and to compete successfully in international markets; Introduction of the maximum amount of agricultural land into agricultural circulation resulted in the end of extensive growth (by increasing the land bank) and has led to a gradual transition to intensive growth by improving production technologies, production of higher value-added goods, renewal of equipment and storage facilities, development of processing sector.

Analysis of recent research and publications. The analysis of the latest research and publications in the field of foreign economic activity agrarian enterprises allows us to highlight the works of I.Burakovskyi, N.M. Galazyuk, Yu. O. Lupenko, M.Y. Malik, O.G. Shpykulyak, V.A. Mamchur, V. Nelep, T. O. Ostashko, A.Rzepka, B.Slusarczyk and other scientists.

The purpose of the article is to study development of as one of the main (priority) areas of increasing the level of competitiveness of Ukrainian enterprises in the agrarian sector in current conditions.

Presenting main material. Adoption of the land reform package not only launched the land market, but also significantly improved land relations, reduced corruption and raiding; and the agricultural sector became more attractive for investment due to the reform. Moreover, the land reform has become a basis for long-term development, and for example, for laying out orchards and vineyards.

The launched land reclamation reform has opened opportunities for agricultural producers to invest independently in expanding the area of irrigated land and reducing water supply losses, which leads to an increase in gross agricultural production.

The new Law of Ukraine “On Cooperation” has created an opportunity to develop cooperatives that unite hundreds and thousands of small and medium-sized agricultural farms, rising their competitiveness to the level of large agricultural holdings. Obviously, Ukraine is one of the world's top agricultural producers and exporters and plays a critical role in supplying oilseeds and grains to the global market. More than 55 percent of Ukraine's land area is arable land. Agriculture provides employment for 14 percent of Ukraine's population. Agricultural products are Ukraine's most important exports. In 2021 they totaled $27.8 billion, accounting for 41 percent of the country's $68 billion in overall exports.

According to the information available to Post at the time of the report writing, the corn harvest has not yet been concluded. As of early December 2022, around 40 percent of corn areas were unharvested. The delay of corn harvest for MY2022/23 could be attributed to a combination of factors:

S financial strain for some farmers due to the direct and indirect losses caused by the armed conflict with Russia;

S a reportedly high moisture in corn ears due to the weather conditions;

S low farm-gate prices make corn drying economically unviable;

S blackouts caused by Russian missile strikes on Ukrainian energy infrastructure disrupt the functioning of grain silos, especially the ones that rely on electricity for drying up their grains.

Despite of mentioned above factors Ukrainian agrarian sector is still alive and continuous to save leader's positions in the World trade. Comparative research of 2021-2022 Marketing year and 2022-2023 Marketing year is performed on the tables 1-2.

Table 1

Ukraine Agricultural Production and Exports (2021/2022 Marketing Year)

Source: USDA WASDE and PSD Database, updated March 9, 2022.

Ukraine corn production for marketing year 2022/23 is estimated at 27.0 million metric tons, down 14 percent from last month and 36 percent from last year. Yield is estimated at 6.75 tons per hectare, down 4 percent from last month and 12 percent from last year. Harvested area is estimated at 4.0 million hectares, down 11 percent from last month and 27 percent from last year.

Table 2

Ukraine Agricultural Production and Exports (2022/23 Marketing Year)

Fig. 1. e corn production

Fig.2. Ukraine corn harvest: area harvested

Sourse: Ukraine Ministry of Agriculture

Fig. 3. Ukraine corn: estimated area, yield and production

Sourse: USDA

Production is down month-to-month based on harvest data from the Ukrainian Ministry of Agriculture. As of December 1st, Ministry of Agriculture reported that harvest is at 60 percent complete. Unfavorable weather and the ongoing conflict are the two main reasons for the slow harvest speed. Abnormally wet October and November prevented farmers from entering the fields on time and delayed the harvest of all summer crops, including corn. Additional limitations imposed by the conflict such as insufficient manpower, high fuel cost, transportation problems, access to storage facilities, among other problems, further slowed the com harvest.

At this stage of the season, it is expected that some of this year's crop will be left in the fields during the winter and may be harvested in the spring. This may help with drying the crop out, but it will most likely cause yield losses. It is necessary for the crop to be dry for it to be stored. USDA crop production estimates for Ukraine include estimated output from Crimea.

Estimated outputs decreased in MY2022/23 corn production volume down to 23.1 million metric tons (MMT), compared to around 25.8 MMT previously quoted in UP2022-0082, based on yield estimates available as the result of the 60 percent of corn areas already harvested.

Based on the analysis of scientific literature and statistical materials, , it can be stated that as of December 2022, the dynamics of the development of foreign economic activity of enterprises of the agrarian sector of Ukraine is at the stage of reducing trade operations with a reorientation to domestic markets.

At the time of this research, harvesting has been completed for wheat, barley, and rye. FAS Kyiv estimates the following production numbers for MY2022/23: barley - 5.9 MMT, corn - 21.2 MMT, wheat - 19.6 MMT, and rye - 336,000 MT.

Large corn areas will not be harvested during the normal time frame (before December 2022), and MY2022/23 harvesting progress is significantly delayed compared to the previous MY. As of November 7, only 27 percent of the estimated corn crop area has been harvested, compared to 61 percent harvested for the same date the previous year.

Obviously, that around 10 percent of planted corn areas may not be harvested as farmers are facing both shortages of funds for fuel and available storage. An additional factor impacting a farmer's decision to harvest is a ratio between the farmgate price, which is tied to functional logistics for grains, and the price of natural gas routinely used to dry up grains. Under some circumstances, it makes no economic sense for a farmer to harvest grains when a farm-gate price goes below a certain threshold. Based on NDVI patterns, the MY2022/23 corn yield is estimated higher than for MY2020/21, but below the record-breaking MY2021/22. A combination of reduced consumption and exports has led to the build-up of large ending stocks for both FY 2021/22 and FY 2022/23

At the time of writing, wheat, barley and rye harvests have been completed. FAS of Kyiv estimates the following production indicators for 2022/23 MR: barley - 5.9 million tons, corn - 21.2 million tons, wheat - 19.6. Large areas of corn will not be harvested within the usual timeframe (until December 2022) and the FY 2022/23 harvest is significantly delayed compared to the previous FY. As of November 7, only 27 percent of the estimated corn acreage had been harvested, compared to 61 percent harvested by the same date last year.

Conclusions. The emergence and intensity of the manifestation of internal factors directly depends on the activity of agricultural enterprises in a competitive environment, the state of their resource base, the nature of the organization of the strategic management system, the general management system, etc. The emergence and intensity of the manifestation of external factors does not depend on the activity of agricultural enterprises and is determined by the state of the external environment. The factors of the external environment are extremely heterogeneous in their sources of origin, as they are a manifestation of systems of different levels.

Analysis of the data shows that Ukraine and its agrarian complex do not sufficiently participate in international trade and do not use the advantages that such participation could give to increase the efficiency of production. Foreign economic activity in the agrarian sector, which has just begun to gain momentum, has no opportunity for expansion, but maintains sufficient sustainable development.

The main factors that to some extent restrain the growth of Ukrainian exports of agricultural products include:

S military aggression on behalf of Russia;

S access to world markets is significantly complicated for Ukrainian enterprises due to the disruption of established logistics routes;

S severance of traditional production and cooperative ties with enterprises of the CIS countries and Eastern Europe;

S critically insufficient investment in promising export-oriented projects at the expense of domestic resources and limited opportunities to use foreign investments and loans for this purpose.

References:

1. I. Burakovskyi. Sectoral impact of Ukraine's membership in the WTO. Kyiv: Institute of Strategic Studies and Political Consultations, 2015. URL: http://www.ier.com.ua/files// publications/ Books/WTO_industry.pdf.

2. Galazyuk N.M. Strategic planning of foreign economic activity as the basis of enterprise management at the current stage of development / Galazyuk N.M. // Economic Sciences. Central: Accounting and Finance. - 2013. - No. 10. - P. 56-62. Access mode: http://nbuv.gov.ua/UJRN/ecnof_2013_10(2) 9

3. Lupenko Yu. O. Current state and prospects of international integration of the agricultural sector of Ukraine: tasks of agro-economic science. Economy of agro-industrial complex. 2015. No. 6. P. 6-10.

4. Malik M.Y., Shpykulyak O.G., Mamchur V.A. Institutional formalization of the development of family farms in Ukraine. Economy of agro-industrial complex. 2018. No. 10. P. 72

5. Nelep V. Evaluation of the export possibilities of the agro-food complex of Ukraine. Economy of agro-industrial complex. 2011. No. 5. P. 54-62.

6. Ostashko T. O. Export of agro-food products to the EU: prospects and tasks. Economics and forecasting. 2016. No. 1. P. 83-94.

7. Rzepka A., Slusarczyk B., Correlation and dependence between: BusinessGlobalisation-Information Society and Global Society, International Journal of Management Invention, Volume 5 Issue 1, January 2016, ISSN 2319-8028s. 39-45.

8. Official website of the Ministry of Agrarian Policy and Food of Ukraine [Electronic resource]. - URL: http://www.minagro.gov.ua/

9. Official website of the US Department of Agriculture [Electronic resource]. - URL: https://www.fas.usda.gov/

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