The decline of Ukrainian agriculture

Abstract

Despite its undoubted potential, agricultural production in Ukraine has almost halved since the break‐up of the Soviet Union. The sector has been characterized by decapitalization, a fall in real profitability and growth in rural poverty. Ukrainian policy makers have faced a number of dilemmas regarding agricultural reform and how they have dealt with these challenges explains much of the performance of the sector. Three broad challenges are discussed in the article (improving farm efficiency, reorganizing the social functions of agricultural enterprises and implementing an appropriate model for governing state ‐ agricultural relationships). It is argued that Ukraine has struggled to develop a consistent framework for governing the relationships between agricultural actors and the state. Agrarian nationalists and reform communists have united to resist attempts at radical decollectivization in parliament. Given this block, farm directors have been able to control the means of production as under the old system but with greater freedom to strike their own deals and enterprise development. With a production system caught between two models of agricultural‐state relationships they have been able to retain the assets of the command economy but use them for market means. This system has acted to minimize foreign involvement and competition for physical assets.