The agricultural machinery market in Ukraine developed rapidly until 2022, despite the peak of the coronavirus pandemic. There was an increase in sales for various groups of equipment. The full-scale invasion of Russia caused the fall of our country's economy and adjusted the development of the agricultural sector.
The study of this sector of the economy in the wartime period was conducted by experts of the Ukrainian Agribusiness Club (O. Nesterov, 2022), scientists of the Kyiv School of Economics (KSE Agrocenter, 2022), the Ministry of Foreign Affairs of Ukraine (O. Trofimtseva, 2022), the National Institute for Strategic Studies (V. Rusan, 2022). Mukha V. (2022) studied regional trends in the agricultural machinery market in Ukraine.
Foreign authors also started to make important studies. In particular, the impact of the Ukrainian agricultural sector on world agricultural markets and food security was covered in the works of Câmpeanu V., Banse M., Glauben T., Celi G., Guarascio D., Reljic J., Simonazzi A., & Zezza F., Fiott D. It was analyzed a number of factors that significantly slow down the market development. Ukraine is import-dependent on such items as tractors, combines, self-propelled sprayers. Domestic production does not cover the needs of farmers both in quantitative and qualitative terms. There are problems with the supply of components to factories for the assembly of equipment from many Western manufacturers. In addition, the cost of logistics has risen due to the closure of seaports and the increase in the cost of containers [4].
Analysis of sales for the last five months shows a significant "subsidence" for all types of equipment. Sales in some groups fell to zero. Only some types of machines, such as small tractors and tillage equipment had better results. Experts provide the most optimistic forecasts for foreign manufacturers in the tractor segment, as farmers use this equipment for many operations all year round and trust foreign brands [1].
Due to the situation, the tendency to rent harvesting equipment or order harvesting services is spreading among farm households. Combine harvesters are seasonal and expensive. In addition, there is a problem with the supply of equipment and components, even if they are paid in advance. Therefore, this segment is expected to see an even greater decline in sales.
The purchasing power of agricultural enterprises is one of the main factors affecting the agricultural machinery market. A significant number of companies note and predict a decline. The situation was complicated by the adoption of land reform before the war. Many farmers accumulated their funds for the possible purchase of land and postponed the purchase of equipment. Under current conditions, their solvency remains low, which implies a decrease in demand for machinery.
It should be taken into account that many farmers have stopped their activities or left their homes. The prospect of their business recovery is uncertain, which may lead to withdrawal from the agricultural sector or change of specialization. This is especially true for small enterprises that produced seasonal products.
Another factor of negative impact on the development of the industry is the reduction of cultivated agricultural land. According to research, the total losses from the Russian military attack reached $ 4.3 billion, the largest losses - due to the destruction or damage of land [5].
The eastern and southern territories of Ukraine were occupied, which were mainly actively buying agricultural machinery. Business activity in these regions has significantly decreased. However, local dealers are adapting to changes in the market and offer a subscription option. In particular, many customers ask to keep tractors in warehouses, leave a subscription and plan to pick them up after some time.
The price situation for grains and oilseeds also causes the industry to fall. There is uncertainty about the forecasts, given that these crops are export-oriented and provide foreign currency to the country and farmers.
Financing opportunities and state support should be priorities for agricultural development. The simplification of the registration procedure during martial law makes it easier to do business both for farmers and equipment manufacturers.
This issue has become particularly important during the sowing season, as there is an urgent need to provide agricultural producers with technical means. Therefore, against the background of this problem, the Ministry of Agrarian Policy and the Government amended the Procedure for registration and deregistration of tractors, self-propelled chassis, self-propelled agricultural, road construction and land reclamation machines, agricultural machinery and other mechanisms [3].
The assistance from the Ukrainian government is not limited just to one change.
A number of support programs have been created in the tax and financial spheres: VAT reduction, optional tax payments for individual entrepreneurs of the first and second groups, providing access to cheap loans and opening new grant programs. The state abolished business inspections, introduced a declarative system of business operation, simplified customs procedures. The above measures of business support are reflected in demand and contribute to the development of the industry [2]. Nevertheless, now we are still on the way to victory and the process of restoring the entire agricultural sector and the country as a whole is ahead of us. Therefore, there is a significant need for support from foreign funds, organizations and states.
Thus, the war in Ukraine has made its own adjustments in the production and sale of agricultural machinery, in particular, in the production chain, logistics within both the country and internationally, employment and solvency of the population. These factors were almost impossible to take into account for business and machinery manufacturers when planning their work for the year. However, according to reality, the agricultural sector is the sphere that should work even in such conditions, because the activity of related industries and enterprises depends on it, especially producers of basic resources: machinery, seeds, PPE, fertilizers.
List of used sources:
1. Mukha V. Regional trends in the market of agricultural machinery in Ukraine [Electronic resource] / V. Mukha - Access to the resource: http://www.ndipvt.com.ua/zbirnyk_2022_v1_4.html.
2. Negrey M.V. Analysis of the functioning of the agrarian sector of Ukraine in the conditions of war [Electronic resource] / M.V. Negrey, O.V. Trofimtseva - Access to the resource: https://periodicals.karazin.ua/economy/article/view/20374/19146.
3. Resolution of the Cabinet of Ministers of Ukraine of April 12, 2022 [Electronic resource] – Access to the resource: https://www.kmu.gov.ua/npas/pro-vnesennya-zmin-do-poryadku-vidomchoyi-reyestraciyi-ta-znyattya-z-obliku-traktoriv-samohidnih-shasi-samohidnih-silskogospodarskih-dorozhno-budivelnih-i-meliorativnih-mashin-434.
4. Rusan M.V. Peculiarities of the functioning of the agrarian sector of the economy of Ukraine in the conditions of war [Electronic resource] / M.V. Rusan - Access to the resource: https://niss.gov.ua/en/node/4589.
5. Market of agricultural machinery in Ukraine during the war: state and forecasts from UCAB analyst [Electronic resource] - Access to the resource: https://agroelita.info/rynok-s-h-tekhniky-v-ukraini-pid-chas-viyny-stan-ta-prohnozy-vid-analityka-ukab/.
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