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The inclusion of small agriproducers in the state support system

S. Kyryziuk

Economy and Forecasting, 2017, issue 3, 97-110

Abstract: The Common Agricultural Policy of European Union (CAP EU) is the most modern model of agrarian policy, that provides equal competitive capacities for the development of each agriproducer and rural areas. Taking into account the European vector of Ukraine' development, this investigation aims to analyze the European support system in terms of the promotion of small argiproducers, which can help to offer some recommendations for the improvement of Ukrainian agrarian policy. Analysis of CAP EU indicates that measures of rural development pillar are more favorable for small farm development than market support programs. But the inclusion of small farms and, in particular, semi-subsistence farms into the rural development programs is lower than that of the larger commercial enterprises. And access limitation to the support program for small farms depends both on the direct factors (minimal access levels) and on the indirect ones (entrepreneur and personal skills, education level, information availability etc.). Practical experience of CEE countries confirms that participation of small farms in the non-oriented rural development programs is very low (less than 0.5 percent of total). In this case it is more efficient to use the target programs, like the Measure 141 "Semi-subsistence farm support", implemented specially for the CEE countries. Each CEE country adapted the European regulation with regard to their agriculture structure. This helped to identify a well-defined target group of the most viable beneficiary farms. The most successful case study among the investigated CEE countries is the Polish one due to the favorable institutional environment (including fiscal policy for small agriproducers) and the active work of the local advisory services. Specialists mention the insufficiency of a solely financial support for modernization of small farms. The development of these agriproducers requires a parallel solution of one more problem, namely the expansion of their outlets. We estimated the number of potential applicants in the case of implementing a similar program in Ukraine using different scenarios of access criteria. In determining the amount of support, one should consider not only the need to expand financing of current production costs, but primarily the need to raise capital investment in the farms' fixed assets. Since it has been established that the possibilities of increasing agrarian output and the level of commercialization of semi-subsistence farms in Ukraine are related to the development of livestock production, much attention should be paid to the expansion of the trade channels and, above all, their inclusion into the agri-food chains (short and long ones). In this case, it is necessary to use all the opportunities arising in the context of strengthening connection and communication between towns and villages, as well as increasing the mobility and accessibility of remote areas.

Date: 2017
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Handle: RePEc:eip:journl:y:2017:i:3:p:97-110