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Ukraine is using its land inefficiently

Author : Pavlo Vernivsky

To earn $ 1 billion in agriculture, Ukraine uses 1.4 million hectares of land. In the same area, the Dutch citizens earn 76 billion
09:33, 13 November 2019

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Let’s look more precise. The Netherlands. The area of ​​agricultural land is 1.8 million hectares. The number of farms is 54 thousand. This is approximately an average of 33 hectares per farm. Export volume is 98 billion dollars or 54 thousand dollars per hectare!

Ukraine. The area of ​​agricultural land is 42 million hectares. The number of farms is about 35 thousand. Approximately 1 200 hectares per farm. Agricultural exports amount to 29 billion, or 690 dollars per hectare of land.

As you can see, smallholder farming dominates in Holland and large-scale farming in Ukraine. At the same time, their small-scale farming is 76 times more effective than ours. Why?

They grow products with higher added value and process them, which also creates added value. According to the WTO, the top 5 largest export positions of the Netherlands are flowers - 4 billion dollars, other plants - 4 billion, cheese - 3.5 billion, other food products - 3 billion, malt extract - 3 billion.

At the same time, our farmers mainly export low-margin grain and corn.

Related: Land market issue withdrawn from parliament's agenda


There is an economical explanation for all this - the law of diminishing returns in agriculture. This is the opposite of scale effect, and it means that as production increases, land use efficiency will decrease. In the book of Professor of Cambridge Joe Studwell, all this is described in more detail.

Everything is explained very simply. The grain market is larger and it’s easier to sell grain. If there are no sales, then the grain can be stored for a long time. In general, income/risks are lower in grain production. After all, flowers are more demanding for growing, for storage, they are more difficult to sell! Therefore, one cannot expect that all large farms will rush to grow vegetables and fruits. For the same reason, no one processes the products.

A small farmer, using his small plot of land, cannot afford to sow it with the low-margin grain. Of course, he will look for ways to maximize profits. So thee small farmers are more willing to grow vegetables, flowers, and other high-margin products.

Therefore, while Ukraine is not reorienting to small-scale farming, we will definitely not have any cosmic figures for increasing exports. By the way, even comparing with examples of other countries where agricultural holdings are also present, there is a land market there: in the USA there are 362 dollars per hectare, in Australia - 99 dollars per hectare, in Argentina - 222 dollars, in Brazil - 286 dollars.

We can say that in our current situation we are working very efficiently and, rather, at the limit of our capabilities. Therefore, I do not believe that agriculture is able to lift the country to its feet. And the land market will not change the situation if it is not aimed at creating small farmers.

Related: Rally against land market opening held near Verkhovna Rada

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