Investment plans of Ukrainian agrarians - summing up the passing year*

Source

APK-Inform

4971

 During recent 12 months the agricultural sector of Ukraine has faced a lot of significant events – from the quotas imposition to cancellation of the export duties for grains. After that the changes touched the investment plans of agricultural producers. How precisely the state policy of the country impacted the investment plans of Ukrainian agrarians, the article will reveal.

 

Thus, the new 2011 the agricultural produces of Ukraine met not in great mood. The reason was imposition of the grain export quotas. As a reminder, on November 12, the Ministry of Economics of Ukraine realized the meeting of the commission on the considering the applications for issue of the licenses for the export of certain range of agricultural commodities and quotas distribution. According to the results of the commission meeting there was realized the proportional distribution of the quotas in accordance with received applications and in accordance with the stated order. The export quotas imposition caused the plant growing commodities demand essential decrease on the domestic market, which in its turn cause the worsening of the financial parameters of the agrarian enterprises. Thus, in December, 2010, when the farmers were asked to estimate the economical condition of their enterprise, nearly 10.42% of the respondents estimated the situation as unfavorable and 0.25% and very unfavorable. However, in six months, in June, 2011 there was improving of the economical situation in the farmers enterprises. Thus, nearly 28.32% stated their enterprises economical condition is good and only 6.52% as unfavorable. Meanwhile no one estimated the condition as “very unfavorable” in the stated period. But still export quotas imposition caused the certain problems and by the end of 2011 the mood of the farmers worsened, and the estimation of the economical condition was lower.

 

Estimation of the financial condition of own enterprise by agrarians

 

Dec-10

Jun-11

Dec-11

Very unsatisfactory

0,25%

 

0,25%

Unsatisfactory

10,42%

6,52%

6,75%

Satisfactory

64,27%

65,16%

66,25%

Good

25,06%

28,32%

26,75%

Very good

 

 

 

Source: polling of АPК-Inform of 400 farming enterprises (small, medium, large-scale) in 24 oblasts of Ukraine

 

Despite rather difficult economical situation in agriculture, the number of agrarians, providing the investments into the heavy machinery in 2011, like tractors, combines, compared to the previous season faced an increase. Thus, the share of the respondents, purchasing tractors during the current year increased by 32.79% by year and totaled 15.25% of all the polled enterprises. At the same times the investments into the new machinery were provided by 86.89% of the enterprises, which means that 13.11% invested into the used tractors. As about grain harvesting combines, the investment faced an increase by 47.37% compared to the last year level and totaled 9.5% of all the polled enterprises. In total in 2011 the enterprises purchased nearly 90 tractors and 42 grain harvesting combines. At the same time the essential part of them, nearly 59% of the purchased heavy machinery have been invested into the machinery of the domestic production or the CIS production.

At the same time it is necessary to note that the percent of the Ukrainian agrarians, planning to invest into the heavy machinery the next year, faced an increase compared to the results of the polling as of December, 2010. According to the stated diagram, the percent of the respondents, planning to purchase tractors and combines in 2012 increased by 1.5 times compared to the data of 2010, and totaled 12.75%.

 

The most positive mood of agricultural producers, connected to the investments during the next year, influenced the cancellation of limitations for the export of agricultural crops, so the experts forecast the increase of the  current assets in the enterprises. Thus, according to the essential part of agrarians, the machinery investments will be provided at the expense of own assets. At the same time only 2.5% noted about the particular financing at the expense of the credit assets. As about the choice of the producer of the heavy machinery, the opinions were divided by the following: 70.37% of the planned combines are produced in the western countries, meanwhile 29.63% of the machinery are produced in the domestic country or in the CIS countries. The opinions on the choosing of the producer of tractors were divided by half. It is worth to note that no one respondent stated about the plans to purchased used machinery of the domestic production, and nearly 18.04% are going to purchase used machinery of the western countries production.

 

 

 The positive moment for the agrarians, investing into the machinery of the domestic production is the fact that the Draft of the State Budget for 2012 provides the particular compensation of the cost of heavy agricultural machinery of the domestic production. However the agricultural producers do not account on the receiving of any support from the state for renewing of the technical population of machines, but the particular compensation of the cost of heavy machinery. Thus, only 3 respondents of 400 answered “yes” on the question whether they plan to give the application for providing of any kind of the state support for purchasing/ leasing of tractor or grain harvesting combine during the nearest 12 months.

According to the essential part of agrarians, the reason they base when accept the decision to invest into the heavy machinery is replacing of worn-out equipment, but not to increase machinery park. It is necessary to note that in accordance with the statements of the Minister of Agrarian Policy and Food Nikolai Prysiazhnyuk, nearly 80% of technical machinery of agriculture of Ukraine is in the condition of physical worn-out.

Despite the technical necessity in the renewing of agricultural equipment, the most farmers are not sure if they certainly will invest into the renewing of population of machines. According to the major reason of unwillingness to invest into the machinery is enterprises revenue decrease due to the low demand prices for agricultural commodities. Thus, revenue decline they forecast due to the winter crops sowing areas decrease and their unsatisfactory condition due to the unfavorable weather conditions for the sowing campaign realization. According to the forecast of the Ministry of Agrarian Policy and Food, winter sowing areas of crop-2012 will total 8.1 mln ha as opposed to 8.3 mln ha, sowed in autumn, 2010. At the same time the range of agricultural producers stated that they delay the decision on the investment into the machinery the next year due to vagueness of the land market situation. Thus, 14.75% of the polled respondents stated that in the case of moratorium cancellation on the agricultural land selling the essential part of the current assets will be invested into the land purchasing. As a reminder, the Verkhovna Rada did not support the Draft Law # 9014 dd. July 18, 2011 where it was offered to prolong moratorium on the selling of agricultural lands to January 1, 2013.

Due to rather unstable agricultural policy in the country, which far not in the best way affects the economical condition of the agrarians, very few of the polled respondents stated their interests are presented in the policy in the necessary way. Thus, 32% of the respondents stated that their interests are not presented in the policy at all, and only 1 respondent was able to confidently state that his opinion on the agricultural interest is presented in the policy in the necessary way.

 As about the issue who precisely presents the opinion of our agricultural producers in the policy, the more trust of agrarians was to the regional administrations – their share total nearly 45.25% of the positive answer. At the same time nearly 27% stated their opinion in the policy is presented by the Ministry of Agriculture and Food and only 2, 5% of the polled answered in favor of the association (only the farmers association).

Next year APK-Inform Agency plans to continue the subject of correction of the investment plans of the domestic agricultural producers, based on the possible changes of the state policy in agriculture.

 

Darya Biryulina,

expert of the agrarian department of

APK-Inform Agency


 * The stated material is based on the results of the polling “Investment barometer”, realized by experts of APK-Inform twice a year

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