Ukraine: The Agriculture Sector In Transition (world Bank Country Study)

This study is based on the findings of a World Bank mission that visited Ukraine in October 1993, and reflects developments since then. This report describes the current status of the food and agriculture system and the ongoing process of transformation in the Ukraine and it also provides an agenda and recommendations for continuing sectoral reform. The food and agricultural sector has greater economic potential in Ukraine than in any other region of the Former Soviet Union (FSU). Performance of the sector, however, has been far below potential. Ukranian agriculture still exhibits the major hallmarks of the Soviet system. Most of the production is organized in large-scale state farms and collectives. The decline in production is a reflection of the deterioration of the overall economic situation of the FSU: high inflation, worsening terms of trade for agriculture, reduced availability of vital inputs, overall decline of real wages and domestic demand, and the collapse of intra-regional trade. The Government has moved cautiously in reforming and restructuring the food and agricultural sector. To continue the effort and develop a reform strategy, the report makes the following recommendations: 1) the continuation of market and price liberalization and subsidy reduction; 2) restructuring and privatizing the agricultural distribution and processing system; 3) reform of the agricutural credit system; 4) land reform and farm restructuring; 5) investing in, and improving, farm productivity and efficiency; 6) restoring international trade; and 7) defining new roles and structure for the government. Annotation The dissolution of the Soviet Union and the breakdown of all previously established production and trading practices has forced Ukraine to confront the demands imposed by a market-based economy. The food and agriculture sector is still in the early stages of the transition toward private ownership and market- based decisionmaking. The adjustment is difficult because of the country's long history of distorted prices, government intervention, and monopolistic marketing and because of the built-in inefficiencies of the collective and state farm systems. This report describes the current status of the food and agriculture system and the continuing process of transformation. It also provides an agenda and recommendations for maintaining the reform process. The main chapters highlight the development of a market framework and competitive strategies, land reform and privatization, and ways of improving farm production and efficiency. Also available in Ukrainian: (ISBN 0-8213-3475-1) Stock No. 13475