UKRAINIAN AGRICULTURAL SECTOR IN WAR TIME: PROBLEMS AND PROSPECTS

Abstract

The paper investigates the state of Ukraine's agricultural sector before the war and analyses the dynamics of its development. Agribusiness brought in almost 40% of the country's foreign exchange earnings in 2021 and has been characterized by positive dynamics over the past 5 years. Ukraine produces about 100 million tons of grain annually, making it one of the world's largest exporters. The main problems of the pre-war agrarian sector that hindered further development of the sector have been identified. An analysis of the impact of military activities in Ukraine on the functioning of the agricultural sector and its further development has been conducted. On February 24, 2022, with the invasion of Ukraine by Russian troops, a new and much more difficult life began for the whole country and for the agricultural sector. In the first three months of the war in particular, the total damage to the agricultural sector amounted to more than 4.3 billion dollars, while indirect costs in agriculture due to rapid inflation, reduced production, higher input prices and blocked ports reached the mark of 23.3 billion dollars. The occupation of Ukrainian territories and the war resulted in a reduction of 3.5 million hectares of cultivated land, a shortage of workforce, equipment, fuel and funds and the destruction of logistics routes. The outbreak of war sent a shock through the world market for agricultural products. The FAO reported in March that the global food price index reached an all-time high in February. The UN also estimated that the number of food insecure people worldwide may reach a 15-year high because of war and COVID-19 in addition to the impact of climate change. Since the outbreak of war, the agricultural sector has faced many challenges and problems: occupied territories, risks of sowing, logistical problems, targeting of agricultural machinery, shortages of workers, theft of crops, unexploded ordnance and mined fields. It was established that the government implemented a significant number of policies to facilitate the survival of the agricultural sector in war conditions, in particular minimizing bureaucratic procedures for agribusiness, allowing the use of agricultural machinery without registration, simplifying the import of seeds, introducing a zero rate of excise tax and reducing VAT to 7% on fuel, introduced separate state programs to support agricultural producers. The article presents the results of the construction of models describing the processes in the agricultural sector, which can be used for further forecasting of the functioning of the agricultural sector. Further steps required to overcome the most significant problems of the agricultural sector of Ukraine in the war and post-war period are identified.