sumy national agrarian university

Sumy National Agrarian University

invite to a

lecture and discussion

at Marxerg. 2, 1030 Wien

June 20, 2007, 17:00-18:00


Rural Development in Ukraine: Tendencies, Issues, and

Perspectives

bySerhiy Moroz

Candidate of Economic SciencesAssistant Professor


24,823,022,419,6

25,4

20,3 19,7 19,2

4,25,03,68,1

24,0

5,2 4,5 5,4

11,29,4

21,817,0

13,3 11,8 10,6 12,6

19,0

14,916,3 16,3

12,2

14,6

10,89,5

0

10

20

30

40

50

1991 1995 2000 2001 2002 2003 2004 20050

5

10

15

20

Share of agriculture in total employment (the left scale)Share of investment in agriculture in total investment (the left scale)Share of the agro-food export in total exports (the left scale)Share of agriculture in GDP (the right scale)

The Role of the Agricultural Sector in the Economy of Ukraine (%)

Dynamics of the Rural Population in Ukraine

1505215272154761567516760 16529 15972 15883

2861928845 28864 28739 28651 28612 28957 28585

32,632,3

32,7 32,532,8

32,132,2 32,2

0

10000

20000

30000

40000

1991 1995 2000 2001 2002 2003 2004 200524

27

30

33%

The rural population, thousands (the left scale)The number of rural settlements (the left scale)Rural population, % of total (the right scale)



The Birth, Death, and Growth Rates ofthe Population in Ukraine

(per 1000 inhabitants)

1990 1995 2000 2001 2002 2003 2004 20052005 (+,-) to 1990

Number of newborns:

- Urban areas 12,7 8,8 7,2 7,2 7,7 8,3 8,9 8,9 -3,8

- Rural areas 12,7 11,1 9,2 8,7 9,0 9,1 9,3 9,4 -3,3

Number of deceased:

- Urban areas 10,2 13,6 13,8 13,8 14,0 14,3 14,4 14,8 +4,6

- Rural areas 16,1 19,1 18,8 18,6 19,1 19,6 19,6 20,5 +4,4

The overall population growth:

- Urban areas 2,5 -4,8 -6,6 -6,6 -6,3 -6,0 -5,5 -5,9 -8,4

- Rural areas -3,4 -8,0 -9,6 -9,9 -10,1 -10,5 -10,3 -11,1 -7,7

Demographic Information about the Rural ResidentPopulation (thousands)

1991 1995 1999 2002 2005

2005 as %

of 1991

Rural population 16895,0 16537,4 15950,2 15742,6 15127,1 89,5

Rural population by age:

- under working age 3751,6 3625,9 3328,0 3076,2 2753,7 73,4

- at working age* 8305,0 8091,0 7997,7 8210,3 8222,9 99,0

- over working age 4838,4 4820,5 4624,5 4456,1 4150,5 85,8

Rural population structure (%):

- under working age 22,2 21,9 20,9 19,5 18,2 -4,0

- at working age* 49,2 48,9 50,1 52,2 54,4 +5,2

- over working age 28,6 29,1 29,0 28,3 27,4 -1,2

* men: 16-59; women: 16-54.



Quantitative Changes in Employment of Rural Residents(at the beginning of the year)

49,5

86,9

69,482,0

65,7

133,4

66,674,0 70,4

136,3

66,977,2

3,82,6

1,2

11,9

0

30

60

90

120

150

1996 to 1991 2001 to 1996 2005 to 2001 2005 to 1991

%

0

2

4

6

8

10

12

14times

The total rural population employed in rural and urban areas (the left scale)Rural residents employed in urban areas (the left scale)Rural residents employed outside their rural settlements (the left scale)Rural residents employed only in household plots, times (the right scale)


The Structure of Rural Population Employed in the Place of Residence,

by Type of Economic Activity, 2005 (%)

50,6%

15,2%

6,3% 2,6% 4,9%

2,1%

2,9%3,7%

5,0%6,7%

Agriculture ForestryIndustry Wholesale and retail sales, repair servicesTransport and communication State governmentEducation Healthcare and social assistanceCollective, public, and private services Others


The Level of Unemployment in Ukraineon the Methodology of the International Labor

Organization (the age group 15-70, %)

14,3 13,712,6

11,69,9

8,77,8

6,3 6,8 7,1 6,69,1 8,4

5,7

0

4

8

12

16

20

1999 2000 2001 2002 2003 2004 2005

The rural population The urban population


49,4

27,9

33,5 33,0 34,824,8

35,5

138,5129,1125,3

120,0

105,8

126,8136,3

59,558,853,364,9

52,963,4 63,3

0

30

60

90

120

150

1995 2000 2001 2002 2003 2004 2005

%

Agricultural enterprises Household plots All farm types

Dynamics of Gross Agricultural Output, by Farm Type (in 2000 comparable prices, 1990 = 100%)


The Structure of Gross Agricultural Output, by Farm Type

72,5

27,5

55,1

44,9

38,0

62,0

41,3

58,7

40,2

59,8

34,0

66,0

39,8

60,2

40,7

59,3

0%

20%

40%

60%

80%

100%

1990 1995 2000 2001 2002 2003 2004 2005

Agricultural enterprises Household plots


The Share of Households with Average per Capita Monthly Expenses below the Living Wage* (%)

82,6 79,187,0

80,689,2

80,4 84,971,9 75,0

61,065,2

50,4

0

20

40

60

80

100

2000 2001 2002 2003 2004 2005

Rural areas Urban areas

* the 4th quarter of 2000 – 270.1 UAH; 2001 – 311.3 UAH; 2002, 2003, and the 1st quarter of 2004 – 342.0 UAH; the 2nd quarter – the 4th quarter of 2004 – 362.23 UAH; 2005 – 423.0 UAH.


Housing Amenities in Urban and Rural Areas in Ukraine (%)

71,5 75,6 76,1 76,2 76,3 76,6

69,7 74,3 74,7 74,8 75,0 75,4

0

20

40

60

80

100

1995 2001 2002 2003 2004 2005

Urban households

Sewer systems Running water

15,217,9 18,2 18,7 19,1 20,0

9,5 13,2 13,7 14,2 14,7 15,7

0

7

14

21

28

35

1995 2001 2002 2003 2004 2005

Rural households

Sewer systems Running water

80,2 81,8 81,9 81,8 82,0 81,8

69,5 73,4 73,6 73,8 73,9 74,2

0

20

40

60

80

100

1995 2001 2002 2003 2004 2005

Central heating Natural gas

79,4 83,2 83,4 83,5 83,8 84,1

11,219,8 20,5 21,4 22,2 24,4

0

20

40

60

80

100

1995 2001 2002 2003 2004 2005

Central heating Natural gas


The Share of Rural Settlementswith Social Infrastructure Objects (%)

1990 1995 2000 20052005 (+,-) to 1990

Pre-school organizations 44,1 37,8 31,1 29,4 -14,7

Schools 52,4 52,8 52,4 49,2 -3,2

Club-houses 70,8 68,5 61,8 58,8 -12,0

Libraries 64,8 62,4 54,8 52,9 -11,9

Hospitals 5,7 4,9 3,1 2,7 -3,0

Outpatient health facilities 6,5 6,2 8,4 10,7 +4,2

Retail shops 209,7 167,1 104,0 66,5 -143,2

Canteens 63,4 37,8 35,6 28,4 -35,0

Consumer service establishments 5,2 0,7 0,3 1,1 -4,1


23,3

21,6

26,9

23,0

42,1

28,5

21,8

0 10 20 30 40 50

Pre-school organizations

Schools

Club-houses

Libraries

Hospitals

Outpatient health facilities

Consumer service establishments

The Share of Social Infrastructure FacilitiesNeeded Capital Repairs, 2005 (%)


The Main Directions of the Agricultural Reform Program in Ukraine

The Agricultural Reform Program in Ukraine

Ensuring the real rights of landowners for land usage

The creation of a legal framework for private

ownership of agricultural land and assets

The improvement of efficiency in the agricultural sector based on the transformation of collective and state farms to market-oriented

private agricultural enterprises


Structure of Agricultural Land, by Farm Type

1990 1995 2000 20052005 as

% of 1990

mln. ha

%mln. ha

%mln. ha

%mln. ha

%

Agricultural land, total 42,0 100,0 41,9 100,0 41,9 100,0 41,8 100,0 99,5

- agricultural enterprises 38,7 92,1 35,2 84,0 29,9 71,4 22,1 52,9 57,1

- individuals 2,7 6,4 5,6 13,4 8,5 20,3 14,9 35,65,5

times

including household plots 2,5 6,0 3,9 9,3 4,3 10,3 4,7 11,2 188,0


Selected Economic Indicators of Agricultural Enterprises

1995 2001 2002 2003 2004 20052005 (+,-) to 1995

Profit (million UAH) 748,1 834,1 -330,8 -4,6 2689,3 3584,8 +2836,7

The profitability rate (%):

- of all economic activities 10,6 5,0 -1,9 -0,03 12,6 14,6 +4,0

- of crop production 55,5 35,8 22,3 41,7 20,3 7,9 -47,6

- of animal husbandry -16,5 -6,6 -19,8 -18,8 -11,3 5,0 +21,5

The share of unprofitable agricultural enterprises (%) 30,2 43,9 53,8 50,5 33,8 36,2 +6,0

Losses into an average statistical unprofitable agricultural enterprise (thousand UAH) 77,3 228,7 303,4 382,1 308,6 356,8 +279,5


2002 2003 2004 20052005 as %

of 2002

Support measures from the "amber box" 352,0 167,4 1070,4 1527,8 4,3 times

including:

- reduction of costs of commercial credit 119,6 13,4 141,5 350,0 292,6

- financial support of small private farms 4,5 39,3 5,1 27,3 6,1 times

- financial support of crop and livestock production 73,9 2,0 421,0 689,5 9,3 times

- support of horticulture, wine grape and hops production 118,1 5,0 109,1 175,0 148,2

- partial compensation of costs of agricultural machinery and fertilizers 35,9 37,8 393,7 270,0 7,5 times

- other expenditures 0,0 69,9 0,0 16,0 -

Source: Institute for Economic Research and Policy Consulting of Ukraine.

Continued on the next page

Budget Expenditures to Agriculture (million UAH)


Budget Expenditures to Agriculture (continued)

2002 2003 2004 20052005 as %

of 2002

Support measures from the "green box" 1050,1 2655,1 1905,8 2426,2 231,0

including:

- research and education 146,6 295,1 61,8 113,0 77,1

- pest and disease control 37,2 140,4 86,3 131,4 3,5 times

- crop selection and livestock breeding 25,6 238,2 152,7 224,0 8,8 times

- inspection services related to food quality and safety 265,1 359,4 446,9 532,9 201,0

- training and qualification improvements 385,4 458,8 603,1 881,5 228,7

- land reform 0,2 3,6 1,8 5,0 25,0 times

- rural infrastructure 7,9 25,4 15,6 17,0 215,2

- environmental protection 8,9 0,7 24,4 26,5 297,8

- other expenditures 173,2 1133,5 513,2 494,9 285,7

Total budget expenditures 1402,1 2822,5 2976,2 3954,0 282,0


The Main Directions of Complex Development of Rural Territories

The directions of complex

developmentof rural territories

The directions of complex

developmentof rural territories

The creation by the State of the system to regulate demographic

processes in rural regions

The creation by the State of the system to regulate demographic

processes in rural regions

The reduction of the gap in living

conditions between urban and rural areas

The reduction of the gap in living

conditions between urban and rural areas

Ensuring of reliable maintenance of social

infrastructure

Ensuring of reliable maintenance of social

infrastructure

The promotion of rural employment growth on the basis of

development of state support for the stimulation of entrepreneurship

The promotion of rural employment growth on the basis of

development of state support for the stimulation of entrepreneurship

The creation of conditions for the preservation and development of

small, remote, and depression rural settlements

The creation of conditions for the preservation and development of

small, remote, and depression rural settlements

Assistanceto income growth of the rural population

Assistanceto income growth of the rural population


• Acceleration of agrarian reform

General Measures for Stabilizationof the Agricultural Sector (the 1st point of view)

• Resumption of activities of agricultural cooperative institutions

• Implementation of the state system for the estimation and the control of the quality of agricultural products

• Solution to the problem of the lack of qualified specialists for agriculture

• Development of market infrastructure

• Elaboration and approval of a complex program for support and development of rural areas

• Improvement of agricultural competitiveness and adaptation of its state support mechanisms under WTO rules

• Improvement of agricultural taxation

• Strengthening agricultural budget support

• Providing of equivalence in economic relations between agriculture and other branches of the Ukrainian economy


Comparative Evaluation of Approaches for Development of Rural Areas in Ukraine

THE CURRENT APPROACH THE NEW APPROACH

Rural regions can resolve their social and economic problems on the basis of the development of agricultural production

Rural territories are multi-functional systems which consist of social, demographic, economic, ecological, and other components. The development of rural territories should be based on state target programs

Direct budget transfers and subsidies mainly for support of certain agricultural products

Use of limited budget resources for solutions of actual problems of rural territories

The primary goal: Increase of the volume and the efficiency of agricultural production

The primary goal: Development of rural territories and sustainable agriculture through the improvement of competitiveness and diversification of the rural economy


Directions of rural development policy

Development of sustainable agriculture in order to protect the natural environment and

to preserve the rural landscapes

Development of sustainable agriculture in order to protect the natural environment and

to preserve the rural landscapes

Introduction of measures to improve

the quality of rural lifeand to increaserural incomes

Introduction of measures to improve

the quality of rural lifeand to increaserural incomes

Main Directions of Rural Development Policy in Ukraine (the 2nd point of view)

Increase of agricultural productivityand competitiveness through

the establishment of a favorable investment environment and improvement

of the quality of human capital

Increase of agricultural productivityand competitiveness through

the establishment of a favorable investment environment and improvement

of the quality of human capital

Implementation of programs for

the development of less favored areas

Implementation of programs for

the development of less favored areas


• Poverty reduction in rural areas

• Diversification of the agricultural production

• Cooperation and economic integration of rural households

• Improvement of social and physical infrastructure

• Development of non-farm employment opportunities in rural regions

• Increase ecological sustainability of production activities in rural territories

• Preparation of rural areas for integration of Ukraine into the global economy

• Preservation and protection of rural landscapes

Primary Goals of the Rural Development Strategy


Humancapital

Formation ofa national extension

service

Implementationof a program

similar to LEADER+

Introduction ofmeasures to improvethe education level

in rural areas

Directions for Development of Rural Human Capital


• Development of a proper legal framework to establish predictable and transparent rules in the agricultural market

Proposed Components of the Agricultural Strategy in Ukraine

• Introduction of economic mechanisms to complete farm restructuring, to improve the competitiveness of agricultural products, and to attract investments

• Formation of the agricultural credit system

• Implementation of other essential components to accelerate economic reforms in agriculture

• Promotion of cooperation between agricultural producers


Thank you for your attention

Contact:

Serhiy Moroz160, Kirov St.Sumy, 40021 Ukraine

[email protected]

sumy national agrarian university

Documents

rural population structure

rural areas12

rural areas16

rural population16895

working age4838

working age28

working age22

working age3751