Integration of small agricultural producers to the agro-food chains of value added: methodological approaches and empirical research

O. Borodina

Economy and Forecasting, 2014, issue 2, 73-84

Abstract: The author proves that the growth in Ukraine's agrarian sector is followed by a market concentration with a small number of powerful agro-industrial corporations controlling a considerable part of this country's agro-food system. At the same time, the small producers and processors have a weak market power and are crowded out from the profitable markets. The article shows that the conceptual approaches to the solution of this problem are based on the search for ways to their integration, on a parity basis, into the chains of value added existing in the corporate sector. The author justifies that agro-industrial chains - are not only interrelated links of the production process, but, first of all, mutually beneficial ties between groups of producers, sellers, processors and service companies, who unite in order to increase productivity and create value added based on the understanding of mutual profit and fair distribution of the obtained results. Those objectives could be attained through better economic coordination and institutional innovations. Research on the agro-food chain makes it possible to assess the relations between all actors and promotes the understanding of all possible economic and social profits and losses for all its participants. The article describes various case studies on the development of mutually beneficial relations in the production of pork and fruit and berries, which testify that the establishment of ties between small commodity producers and the enterprises of the agro-food industry based on common agro-food chains guarantees for the latter a sustainable development of their business, and for the rural households - technological modernization and access to profitable markets. Among the small commodity producers, the first to integrate in the chains of value added are those commercial farms, which are innovatively oriented and capable of overcoming mistrust and risks.

Date: 2014
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