Economics and Business Management

Grain market in Ukraine: Financial and economic aspects

S. Rogach , R. Stupen , Tetiana Mirzoieva, Olena Lemishko, Nataliia Shevchenko
Download article
Abstract

The study focused on analysing the financial and economic performance indicators of agricultural enterprises in Kharkiv Region, with an emphasis on calculating production costs per unit and identifying the specific features of the grain sector. The methodology included data analysis from three enterprises with different organisational and legal forms: the private enterprise “Agro”, the farming enterprise “Zerniatko”, and the limited liability company “Barvinok”. For each of these, unit production costs were calculated for three main crops: wheat, maize, and barley. The findings revealed that the private enterprise “Agro” incurred losses in wheat cultivation due to high production costs exceeding the market price, highlighting the need to optimise agro-technological practices. Meanwhile, the farming enterprise “Zerniatko” demonstrated stable financial results thanks to a diversified income structure that mitigated market fluctuation risks. The limited liability company “Barvinok” achieved the highest profit per unit of output by specialising in barley cultivation and benefiting from favourable soil conditions. However, its narrow specialisation increased risks amid changing market conditions. For maize, the most profitable enterprise achieved a profitability rate of 1,000 UAH per tonne, while for barley it was 850 UAH per tonne. An analysis of income structures showed that diversified enterprises were more resilient to market volatility, whereas a high concentration on a single crop, as in the case of the barley-focused enterprise, posed additional risks. The analysis found that the level of financial efficiency depended on specialisation, land bank size, and the level of technological development. Enterprises with a more balanced production structure were better able to adapt to market changes, while focusing on a single crop could both increase profitability and introduce additional risks. The data obtained allowed for an assessment of the economic efficiency of each enterprise. The study's findings support effective management decisions aimed at minimising risks in Ukraine's grain sector

Keywords

land use; grain crops; agricultural market; financing; financial results; agribusiness; risks

Suggested citation
Rogach , S., Stupen , R., Mirzoieva, T., Lemishko, O., & Shevchenko, N. (2024). Grain market in Ukraine: Financial and economic aspects. Economics and Business Management, 15(4), 65-81. https://doi.org/10.31548/economics/4.2024.65
References
  1. Abuselidze, G. (2021). Use of hedging instruments on example of grain market. In 20th international scientific conference engineering for rural development engineering for rural development (pp. 26-28). Jelgava: Latvia University of Life Sciences and Technologies. doi: 10.22616/ERDev.2021.20.TF359.
  2. Albeshchenko, O. (2022). The European experience of the sustainable development of the agricultural sector in rural areas. Economy and Society, 37. doi: 10.32782/2524-0072/2022-37-1.
  3. APK-Inform. (n.d.). Agricultural market – prices, reviews. Retrieved from https://www.apk-inform.com/uk/markets.
  4. Ceglar, A., Toreti, A., Zampieri, M., & Royo, C. (2021). Global loss of climatically suitable areas for durum wheat growth in the future. Environmental Research Letters, 16(10), article number 104049. doi: 10.1088/1748-9326/ac2d68.
  5. Chai, Y., Senay, S., Horvath, D., & Pardey, P. (2022). Multi-peril pathogen risks to global wheat production: A probabilistic loss and investment assessment. Frontiers in Plant Science, 13. doi: 10.3389/fpls.2022.1034600.
  6. Davydenko, N., Wasilewska, N., Titenko, Z., & Wasilewski, M. (2024). Modelling of innovation and investment development of agricultural enterprises in the context of ensuring their financial security. Economics and Environment, 89(2). doi: 10.34659/eis.2024.89.2.775.
  7. Dykha, M.V., Kuzina, V., & Serdyukov, K. (2023). Grain pricing in Ukraine: A case study of malted barley. Innovative Marketing, 17(4), 26-36. doi: 10.21511/im.17(4).2021.03.
  8. Iqbal, M.J., Shams, N., & Fatima, K. (2022). Nutritional quality of wheat. In Wheat – recent advances. Rijeka: Intech Open. doi: 10.5772/intechopen.104659.
  9. Kalinowska, B., & Bórawski, P. (2024). Factors influencing grain prices in Poland. Annals PAAAE, XXVI(4), 112-130. doi: 10.5604/01.3001.0054.8800.
  10. Kohlhase, S., & Wielhouwer, J.L. (2023). Tax and tariff planning through transfer prices: The role of the head office and business unit. Journal of Accounting and Economics, 75(2-3), article number 101568. doi: 10.1016/j.jacceco.2022.101568.
  11. Krylov, Ya.O. (2018). Major development trends in the grain market and mechanisms of its regulation in Ukraine. Ukrainian Journal of Applied Economics and Technology, 3(3), 43-53.
  12. Kucher, A., Kucher, L., Sysoieva, І., & Pohrishchuk, B. (2021). Economics of soil erosion: Case study of Ukraine. Agricultural and Resource Economics: International Scientific E-Journal, 7(4), 27-41. doi: 10.51599/are.2021.07.04.02.
  13. Kuchimov, S.K. (2021). Economic issues of ensuring economic efficiency in agricultural production and the use of innovative agricultural technologies. SAARJ Journal on Banking & Insurance Research, 10(2), 16-22. doi: 10.5958/2319-1422.2021.00011.4.
  14. Kyryliuk, I., & Trokhymenko, A. (2021). Features of pricing for agricultural products. Economy and Society, 26. doi: 10.32782/2524-0072/2021-26-34.
  15. Law of Ukraine No. 1469-VIII “On Ratification of the Paris Agreement”. (2016, July). Retrieved from https://zakon.rada.gov.ua/laws/show/1469-19#Text.
  16. Lawson, J., Alam, M.R., & Etienne, X. (2021). Speculation and food-grain prices. Applied Economics, 53(20), 2305-2321. doi: 10.1080/00036846.2020.1859451.   
  17. Li, S., Thompson, M., Moussavi, S., & Dvorak, B. (2021). Life cycle and economic assessment of corn production practices in the western US Corn Belt. Sustainable Production and Consumption, 27, 1762-1774. doi: 10.1016/j.spc.2021.04.021.
  18. Ljungqvist, F.C., Thejll, P., Christiansen, B., Seim, A., Hartl, C., & Esper, J. (2022). The significance of climate variability on early modern European grain prices. Cliometrica, 16, 29-77. doi: 10.1007/s11698-021-00224-7. 
  19. Makarenko, I., Plastun, A., Mazancova, J., Juhaszova, Z., & Brin, P. (2022). Transparency of agriculture companies: Rationale of responsible investment for better decision making under sustainability. Agricultural and Resource Economics: International Scientific E-Journal, 8(2), 50-66. doi: 10.51599/are.2022.08.02.03.
  20. Martins, A.M. (2024). Short-term market impact of Black Sea Grain Initiative on four grain markets. Journal of Futures Markets, 44(4), 619-630. doi: 10.1002/fut.22481.
  21. Ministry of Agrarian Policy and Food of Ukraine. (n.d.). Exports of grains, legumes and flour from Ukraine. Retrieved from  https://minagro.gov.ua/napryamki/eksport-do-krain-ies/eksport-z-ukrayini-zernovih-zernobobovih-ta-boroshna.
  22. Miroshnyk, R., & Bahlai, I. (2022). Problems of grain market in Ukraine and ways of solving them. Economy and Society, 39. doi: 10.32782/2524-0072/2022-39-24.
  23. Moshenskyi, S., Grytshen, D., & Petruk, O. (2024). Agricultural and resourse economy of Ukraine and problems for economic growth. Scientific Horizons, 27(1), 152-161. doi: 10.48077/scihor1.2024.152.
  24. Open data of the land cadastre of Ukraine. (n.d.). Retrieved from  https://kadastr.live/#4.71/48.9/32.83.
  25. Opendatabot. (n.d.). Retrieved from https://opendatabot.ua/analytics.
  26. Petrenko, O. (2019). Financial and economic analysis of the grain market as a precondition for Ukraine’s food security. Modern Economics, 13, 32-38. doi: 10.31521/modecon.V13(2019)-32.
  27. Resolution of the Cabinet of Ministers of Ukraine No. 1020 “On Verification and Approval of Exports of Certain Agricultural Products to the Republic of Bulgaria, Romania, the Slovak Republic, Hungary and the Republic of Poland”. (2023, September). Retrieved from https://zakon.rada.gov.ua/go/1020-2023-%D0%BF.
  28. Ribeiro, G.B. de D., De Loreto, M.d.D.S., Miranda, E.L., Bastos, R.C., Aleman, C.C., da Cunha, F.F., & Rodrigues, P.D. (2024). The use of financial tools in small-scale irrigated crops to assess socioeconomic sustainability: A case study in Tocantins-Araguaia Basin, Brazil. Sustainability, 16(5), article number 1835. doi: 10.3390/su16051835.
  29. Sánchez, A.C., Kamau, H.N., Grazioli, F., & Jones, S.K. (2022). Financial profitability of diversified farming systems: A global meta-analysis. Ecological Economics, 201, article number 107595. doi: 10.1016/j.ecolecon.2022.107595.
  30. Smith, O.M., et al. (2019). Organic farming provides reliable environmental benefits but increases variability in crop yields: A global meta-analysis. Frontiers in Sustainable Food Systems, 3, article number 82. doi: 10.3389/fsufs.2019.00082.
  31. State statistics service of Ukraine (n.d.). Retrieved from https://www.ukrstat.gov.ua/.
  32. State statistics service of Ukraine. (2022). Methodological provisions of the state statistical observation “Availability and receipt of grain crops, legumes and oilseeds at enterprises engaged in their storage and processing”. Kyiv: State statistics service of Ukraine.
  33. von Cramon-Taubadel, S. (2022). Russia’s invasion of Ukraine – implications for grain markets and food security. German Journal of Agricultural Economics. doi: 10.22004/ag.econ.343340.
  34. Xu, X., & Zhang, Y. (2021). Network analysis of corn cash price comovements. Machine Learning with Applications, 6(15), article number 100140. doi: 10.1016/j.mlwa.2021.100140.
  35. Yanagi, M. (2024). Climate change impacts on wheat production: Reviewing challenges and adaptation strategies. Advances in Resources Research, 4(1), 89-107. doi: 10.50908/arr.4.1_89.