Economic aspects of integration ties in dairy cattle breeding development in Ukraine

Abstract

The article deals with economic aspects of integration ties in dairy cattle breeding development of Ukraine. Mutually benefcial integration of agricultural organizations with other market players signifcantly improves their economic stability. In addition to system-wide factors that determine agro-industrial integration, dairy subcomplex has a number of specifc features that determine occurrence and development of integration processes in the feld of production, processing and sales of milk. It is proved that a cooperative form of ownership may compete with joint stock in a global scale in dairy subcomplex mainly due to the fact that vertical cooperation has prevailed historically in countries specializing in milk production, which allows farmers to manage income from the dairy products sale. High dairy business concentration provides cooperatives with the opportunity to use the latest processing technologies, to pursue flexible commodity policies, to get access to interregional and international markets, to combine dairy business with logistics and other important services, to reduce the negative influence of seasonal fluctuations in milk production. The characteristic feature of the relationship between domestic milk producers and processing enterprises is its non-cooperative integration, which is based on contractual arrangements. To summarize the contracting type of dairy factories integration with agricultural producers, it should be noted that in this rather simple form of economic relations involves opportunities for further development. It is established that the low activity of establishing and dairy cooperatives running is inefcient due to low activity rural residents who farm cows. In our opinion, there are no prerequisites for agricultural cooperatives establishment in most regions since most of the population have only one cow and is focused on its self-provision. We believe that dairy-grocery cluster based on the principles of mutually benefcial long-term partnership between the subjects is the driving force in ensuring economic growth in the examined industry. It creates conditions for employment growth in the region, proposals for high-quality dairy raw materials and safe milk products. In general, this will contribute to the sustainable development of dairy cattle breeding enterprises in the region and other participants of the cluster association. Key words: dairy cattle breeding, cooperation, integration, cluster, agricultural enterprise, personal peasant farm.