What policy should Minagro implement so that the Ukrainian agricultural sector does not lose markets

The priority direction of the Ministry of Agrarian Policy should be the development of solutions that will eliminate logistical difficulties for Ukrainian farmers. In particular, the Ministry of Agrarian Policy must defend the interests of agricultural producers before the owners of infrastructures, who strive for maximum monetization of the supply channels of Ukrainian agricultural products to buyers.

The need to change the focus of the Ministry of Agrarian Policy’s activities is conditioned by export orientation and the important role of the agricultural industry as a source of foreign exchange earnings for Ukraine. It is also affected by the conflict of interests between the agricultural and logistics industries.

It is a common opinion that business processes in the agricultural sector are simple: sow, grow, sell. But growing and selling what is grown is already a complex process, which involves the resources of both agricultural producers and owners of the logistics infrastructure. Agricultural products must be delivered to the markets in such a way that agricultural production does not lose its economic meaning and provides producers with resources for development, technology, and efficiency improvement.

Therefore, the prospects of agricultural production must be considered only in combination with logistics. And the Ministry of Agricultural Policy should think about how to keep the balance of interests between farmers and the owners of all infrastructures, who want to earn as much as possible from the delivery of agricultural products to the markets.

For example, these two years there is no balance of interests: the owners of infrastructure resources are taking full advantage of the helplessness of farmers who need to sell their crops to get working capital. And there are no signs that the agrarians are actively protected by their ministry, when the agricultural sector is being hit from all sides: sometimes from Ukrzaliznytsia, sometimes from transshipment terminals and ports, which drove up prices, sometimes from Polish provocateurs who blocked the roads.

It is agriculture that is currently pulling out the rise in exports to the pre-war level, which was recently reported by the Ministry of Economy. The biggest component of this rise was corn. In addition, on the way to the markets, this culture generated income for the owners of all the infrastructures through which the cargo traffic passed. But today, farmers began to abandon corn, because it is the most expensive to grow and transport, and without objective (unbiased) and solidarity logistics, its production loses its economic meaning.

This means prospects for a decrease in the GDP of the agricultural industry and all related industries. And the worst thing is that our markets go to competitors, who will receive additional income, and with this money will begin to improve their production technology and logistics.

Regaining lost markets is always very difficult, long and expensive. Therefore, the Ministry of Agrarian Policy should not remove itself from the logistical problems of agricultural producers or pretend that they are beyond its competence. If Minagro’s policy is not to protect its production, its markets, then with what resources will the entire country’s economy be fed tomorrow?

In Ukraine, there is an opinion that preferential credit programs or subsidies are the only available tools of the state to support farmers. In fact, the agricultural sector needs other forms of support from the state, namely, help with long-term planning of sowing and logistics campaigns.

The United States has the USDA (United States Department of Agriculture), and this government structure monitors agricultural production around the globe and informs its farmers: which crops will be in short supply and which markets will be free for them. Therefore, American farmers are sure that they will not experience economic shocks and price drops, and the volumes of products produced by them will be provided with infrastructure for access to markets.

It would be good if our Ministry of Agriculture also monitored the situation on the markets and anticipated shocks before they happen, and helped with production planning. And the most important thing is that the Ministry of Agrarian Policy does not avoid the function of helping farmers with the planning of moving their products to the markets.