State Support for the Agricultural Sector in the Context of Inclusive Rural Development

Abstract

The agrarian sector as a system-forming sphere of the rural economy becomes decisive for rural development based on inclusiveness. The influence of the state on the development of the sector by means of financial support should not only contribute to strengthening the production capacity and competitive advantages of commodity producers, but also have a positive impact on the development of rural areas and increase the opportunities for attracting the population to public life. These tasks are being updated in the context of a long-term budget deficit, in particular, aggravated by the conduct of military operations and the need to direct public funds in areas with the greatest multiplicative effect. The purpose of the study is to investigate the impact of state financial support for the agricultural sector on rural development from the standpoint of compliance with the principles of sustainability and ensuring the inclusivity of socio-economic development. To achieve this goal, the study used: general logical methods of analysis and synthesis in the development of laws regulating the system of state support in Ukraine; statistical and economic methods for grouping recipients of state support by different statuses, programmes, areas; methods of mathematical analysis to assess the dynamics of indicators and identify patterns of distribution of support funds, calculating the dependence of budgets of territorial communities on agricultural production. Tabular and graphical methods were used to visualise the results of the study. The abstract and logical method was used to generalise conclusions and formulate proposals. Based on the study results, including the analysis of the agricultural companies that received the most financial support from the state in three years, the public irrationality of the existing distribution of state support is substantiated, which leads to an increase in the gap between the production capacities of farmers, strengthening the uneven development of the agricultural sector and rural areas as a whole. The implemented improvement of legislative norms is not reflected in the practical plane, so the trend of asymmetric distribution of funds in favour of large businesses remains. The study argues for the need to introduce a number of changes in the system of distribution and use of state financial support for the agricultural sector, concerning regulatory support and control over its implementation, strengthening requirements for recipients of funds in terms of economic and social responsibility to promote rural development based on the principles of inclusivity. One of the conditions for all programmes funded by the state should be the prioritisation of achieving a social effect and maintaining sustainable development. Taking into account the proposed changes would help to preserve the multi-complexity of agriculture and the sustainability of food systems, expand the circle of recipients of support and strengthen the financial stability of small producers, increase revenues to local budgets, and increase the efficiency of using public finances in terms of their public function, achievement of a synergistic effect from the use of budget funds in the economic, social, and environmental spheres, establishment of sustainable foundations of rural development on an inclusive basis.