Diversification as a strategy for ensuring security of business subjects in the agricultural sector

Abstract

Agricultural business is one of the riskiest types of economic activity. In addition to the set of traditional risks, there are threats in agriculture caused by the specifics of agrarian entrepreneurship, which require the search for appropriate strategies and tools for neutralization. Diversification of economic activities of agricultural producers appears as one of these tools. The article examines vital risks that threaten the safe development of agrarian business entities. The main trends in the activity of Ukrainian agricultural enterprises during the last ten years and directly impacted the diversification processes of their economic activity were determined. Price (market) risks were identified as the determining risks of activating diversification processes. Existing processes and trends significantly influenced the formation of the philosophy and main principles of agrarian business, of which the commercial interests of the owners of agricultural structures became the priority. The article assesses the dynamics of the diversification level of agricultural enterprises' economic activity. It was revealed that over the past twenty years, the balance of the development of industries and their share in the structure of agricultural production has been disturbed. The specific weight of agribusiness structures' agricultural services and other non-agricultural activities remained practically unchanged. An analysis of the diversification structure of the plant and animal husbandry industries was carried out. The results showed the presence of problematic structural shifts, which are a consequence of the unjustified deepening of specialization of agricultural enterprises. It was revealed that the curtailment of diversification processes led to the disruption of the intra-industry structure and the emergence of threats to the disappearance of specific sub-sectors of domestic agriculture. Despite this, the agricultural sector of the Ukrainian economy has demonstrated a relatively high level of sustainability and efficiency. It was determined that diversification is an element of strategic agricultural management, which has a significant potential for reducing the level of riskiness of agrarian business and forming prerequisites for achieving the goals of sustainable development of agriculture and rural areas. Keywords: agricultural enterprises, business, diversification, risks, security, agricultural management.