Оксана Радченко et al., State financial regulation of the competitive environment: assessment for the agricultural sector of Ukraine (2022)

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Article by Oksana Radchenko, Oksana Pashchenko, Maryana Matveyeva, Andrii Zelenskyi and Olena Zaika in the Independent Journal of Management & Production, v. 13, n. 3, May 2022, on state financial regulation of competition in Ukraine's agricultural sector. The authors review the condition of agricultural enterprises for 2013-2020, including the share of unprofitable enterprises, and regional results for 2020-2021. They conclude that financial regulation of the sector is carried out without proper scientific justification and responds slowly to economic practice. They discuss competition problems in the COVID-19 crisis and recommend stimulating small business in niche and organic production alongside large-scale industrial production.

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“Оксана Радченко et al., State financial regulation of the competitive environment: assessment for the agricultural sector of Ukraine (2022).” Original at www.ijmp.jor.br. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/et-al-state-financial-regulation-of-the-competitive-environment-assess-252efd813a/, SHA-256 3dc95326f2ebb2efae01639963435471ddf74171e27aba226448d66f0b7b7c44.

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INDEPENDENT JOURNAL OF MANAGEMENT & PRODUCTION (IJM&P)
http://www.ijmp.jor.br v. 13, n. 3, Special Edition ISE, S&P - May 2022
ISSN: 2236-269X
DOI: 10.14807/ijmp.v13i3.1981

STATE FINANCIAL REGULATION OF THE COMPETITIVE ENVIRONMENT:
ASSESSMENT FOR THE AGRICULTURAL SECTOR OF UKRAINE

Oksana Radchenko
National Scientific Center “Institute of Agrarian Economics”, Ukraine
E-mail: oxar4810@gmail.com

Oksana Pashchenko
National University of Life and Environmental Sciences of Ukraine, Ukraine
E-mail: Opashchenko26@gmail.com

Maryana Matveyeva
Stepan Gzhytskyi National University of Veterinary Medicine and Biotechnologies Lviv,
Ukraine
E-mail: mmplviv71@gmail.com

Andrii Zelenskyi
Podillia State University, Ukraine
E-mail: zelenskiy2306@gmail.com

Olena Zaika
State Biotechnological University, Ukraine
E-mail: alyona.zayika1998@gmail.com

Submission: 4/11/2022
Revision: 4/20/2022
Accept: 4/20/2022

ABSTRACT

The article reveals the importance of state financial regulation as one of the most important
tools for economic growth and ensuring the competitiveness of industries and the economy of
Ukraine. The studies of domestic and foreign scientists on the subject of research are analyzed
in detail. The state of enterprises of the agricultural sector of Ukraine for the period 2013-
2020 has been determined. The study was carried out on the factors of providing agricultural
producers with financial resources in terms of the size of the forms of management. The share
of unprofitable enterprises in the industry for the same period is also analyzed. The
achievements of the agricultural sector are described according to the statistical analysis of
the state of socio-economic development of the regions in the period 2020-2021. The
methodology for monitoring and evaluating the effectiveness of the implementation of the state
regional policy in accordance with legislative regulations is described. This made it possible
to establish that at the present stage, the financial regulation of the agricultural sector of
Ukraine is carried out without proper scientific justification and, as a rule, responds slowly to

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INDEPENDENT JOURNAL OF MANAGEMENT & PRODUCTION (IJM&P)
http://www.ijmp.jor.br v. 13, n. 3, Special Edition ISE, S&P - May 2022
ISSN: 2236-269X
DOI: 10.14807/ijmp.v13i3.1981

the requirements of economic practice, especially in the context of deepening the penetration
of global processes into the national economy. Approaches to the assessment of the competitive
environment of the agrarian sector of Ukraine and the direction of its state regulation are
proposed. Theoretical, methodological, and practical aspects of assessing the competitiveness
of the sector are disclosed. The necessity and possibility of forming a competitive environment
by fiscal policy measures, primarily budgetary regulation, is proved. The problems of forming
a competitive environment in the context of the current crisis caused by the COVID-19
pandemic, the place of Ukraine in the world competitiveness ranking are identified, and
methodological approaches to the development strategy are proposed. It is proved that the
competitive strategy is based on the existing resources of the industry (material, financial and
intellectual), the level of development of various forms of management, the structure of
production, marketing, processing, the formation of value chains and a bilateral state-market
regulator. The directions for improving the quality of the competitive environment, arising
from the paradigm of innovative development of the agricultural sector, are summarized and
provide for the stimulation of small business in niche and organic production and large-scale
industrial production in terms of the main indicators of food security, as well as the
development of land, financial, credit and resource markets and the formation of equal access
to them all agricultural producers.

Keywords: Financial Regulation; Competitive Middle Ground; Agricultural Sector; National
Economic Strategy; Budgetary Agricultural Videos; Ukraine

1. INTRODUCTION

State financial regulation is carried out through the redistribution of financial resources
for needs of national importance, but not fully involved in the market mechanism. Such needs,
as defined by the authors (Mazaraki, 2015), are “structural restructuring of the economy,
environmental protection, defence, law and order, social support for vulnerable segments of
the population, fundamental scientific research, healthcare, etc.” That is, the goal of state
regulation is the restructuring of the economy, and this is the formation of a complex of internal
relations between spheres, industries, sectors, regions, forms of ownership, etc. interconnected
by the division of labour, maintaining proportions between the different components of the
national economy.

Particularly relevant is the financial regulation of the development of industries that
form national security, and this is the agricultural sector in terms of guaranteeing food security.
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http://www.ijmp.jor.br v. 13, n. 3, Special Edition ISE, S&P - May 2022
ISSN: 2236-269X
DOI: 10.14807/ijmp.v13i3.1981

The problems of state financial regulation of the competitive environment in the agricultural
sector are relevant for research, primarily because the resources of the industry belong to the
national wealth and the interests of the market and society, property rights, individual and
collective, the concentration of resources and their efficient use, interaction and contradictions
of traditions and adaptation of foreign experience, etc.

Secondly, the agricultural sector occupies a significant area of the territory of Ukraine,
and it is its condition and models that determine the vector of national development. Thirdly,
significant capitals are concentrated in the agricultural sector - financial, physical, human,
requiring monitoring of their condition and focus on achieving the highest synergistic effect.
The generalization of these areas of financial regulation of the agricultural sector allows us to
recognize that the main task of state regulation is the formation of a competitive environment,
which is the object of this study.

2. LITERATURE REVIEW

The formation of a competitive environment by measures of state financial regulation
is the subject of scientific discussions inherent in Ukraine since independence. In particular,
the Law of Ukraine "On State Support for Agriculture of Ukraine" (Zakon, 2004), paragraphs
2-1.5 states that the effectiveness of state support is ensured by creating favourable conditions
for agricultural activities, improving the quality and competitiveness of agricultural products
in order to minimize natural-climatic and economic risks of agricultural production and food
security of the state.

Researchers (Garan, 2018) found that the general goal of state regulation is to create
effective competitive relations through the implementation of the desired model of behavior by
the participants in these relations using the means of state influence. At the same time, the state
mechanism for regulating economic competition is a set of means of a legal and economic,
organizational nature, within the limits defined by law, of the influence of the state on the
structure of the market and the economic behaviour of its subjects, allowing for the efficient
distribution of resources and, as a result, improving the welfare of the population and
developing the economy country.

Puzhay-Chereda (2016) states that the competitiveness of an industry is defined as a
characteristic that determines the sustainable state of the industry in the domestic and foreign
markets, the ability to create conditions for increasing its competitive potential, due to political,

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DOI: 10.14807/ijmp.v13i3.1981

economic, socio-demographic, environmental factors, technological readiness, and the
presence of a sufficient number of enterprises capable of producing goods and services
corresponding to the demand of the domestic and foreign markets.

The industry competitiveness factors (Kuzmin & Gorbal, 2004) include macro factors:
government support for industries; science and innovation; legal regulation; openness of
society and markets; harmonization of the system of standardization and certification with the
international one; quality of information support; level of integration; the level of tax and
interest rates; availability of accessible resources; management personnel system; favourable
climatic conditions and geographical position of the country; and micro factors: a significant
need for the product of the industry; the level of concentration, specialization and cooperation
of the industry; the level of unification and standardization of the products of the industry;
quality management base; competitive suppliers; access to quality resources; significant level
of innovation; certification of products and systems; exclusivity of goods in the industry; high
efficiency of the organization; a significant share of exports; a significant share of competitive
enterprises and products of the industry.

Gudzinsky et al. (2010) carried out a study of the features of managing the formation
of the competitive potential of enterprises; Dernova et al. (2020) defined the global dimension
of Ukraine's competitiveness; Melnik and Ptashnik (2018) described the competitive potential
as the basis for the formation of the competitiveness of agricultural enterprises; Nakisko and
Danylenko (2018) analysed the influence of market forces on the formation of a competitive
food chain environment; Tkachuk (2012) described the formation of the competitiveness of
small agribusiness enterprises: current state and development prospects; Tsarenko (2009)
identified the methodological aspects of the formation of the competitive advantages of the
industry; Holovchuk and Pchelianska (2020) highlighted the features of the formation of a
strategy for increasing the competitiveness of an enterprise based on the paradigm of innovative
development.

Vdovenko et al. (2018) note that the competitiveness of the agro-industrial complex
should be determined considering the specifics and social significance of the agricultural sector
as its competitiveness to function and develop in a market environment, effectively ensuring
reproduction processes.

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DOI: 10.14807/ijmp.v13i3.1981

Radchenko et al. (2020) assessed the institutional environment and identified the need
for financing small agribusiness to facilitate access to financial resources in accordance with
the need for them of commodity producers.

Shestakovskaya and others (2018) identified the features of ensuring an appropriate
level of competitiveness of the agricultural business to form a leadership position in the
markets, which will be facilitated by meeting the needs of consumers and the country's food
security. The authors clarify that the decline in the country's leading position in terms of the
competitiveness of agricultural production is associated with an unstable socio-economic and
political situation.

Pylypenko et al. (2019) conducted an empirical analysis of the factors of
competitiveness of the agricultural sector in the region, analyzed two opposite concepts of
sources of sustainable competitive advantages, resource-oriented and based on the influence of
the external environment on the competitive position.

Humbatova et al. (2018), Ivanova et al. (2018) considered import substitution as a factor
in promoting the competitiveness of regional agricultural systems.

Gusakov & Shpak (2018) traced the factors of improving the efficiency,
competitiveness, and stability of the development of the agricultural sector in the Republic of
Belarus.

Andrei and Ungureanu (2014) examined the evolution of the economic structure in
achieving the competitiveness of the agrarian economy in the Romanian economy, noting that
in an increasingly integrated and globalized market, there is risk diversification and regulation.

Followers Miniussi et al. (2015) revealed the impact of innovation on the
competitiveness of the organic agricultural state and food industry in Brazil, evaluating the link
between strategic innovation and competitiveness in this area.

Abraham et al. (2015) identified factors that contribute to the competitiveness of Czech
small and medium-sized enterprises.

According to the list of research areas, we can conclude that the subject of state
regulation of the industry is almost constantly influenced by the environment and requires
scientific support for transformation, adjustment, and changes, which are the topic of our study.

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DOI: 10.14807/ijmp.v13i3.1981

The purpose of the article was to form a methodological approach to assessing the
state financial regulation of the competitive environment for the agricultural sector of Ukraine.

3. METHODOLOGY

The conditions for the formation of a competitive environment are assessed by available
open sources of data: forms and activities of agricultural enterprises, the volume of their
financial performance, the impact of other related economic entities on the effectiveness of
state regulatory policy. The monographic method is used to review scientific publications of
researchers and the regulatory framework for the outlines of the competitive environment and
government regulation, empirical, systematic and comparative analysis and synthesis,
graphical method to reflect the dynamics of research indicators, abstract and logical for
generalizations and conclusions.

According to Resolution № 856 (2015), the rating is based on the calculation of relative
deviations of indicators of each region from the maximum and minimum values of such
indicators of other regions according to the formula:

(1),

where Rj - the sum of the ratings of a particular region for each of the indicators that
characterize a particular area of activity;

xij is the value of the i-th indicator of the j-th region;

xmaxi - the maximum value of the i-th indicator;

xmini is the minimum value of the i-th indicator.

The first part of the formula is used to estimate indicators whose increase has a positive
value (for example, the volume of industrial production per capita), the second part - to assess
indicators whose increase has a negative value (e.g., the amount of arrears of wages) .

Determining the arithmetic mean of the sum of ratings of a particular region for all
indicators of annual evaluation, which characterize a particular area of activity, is carried out
by the formula:

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DOI: 10.14807/ijmp.v13i3.1981

(2),

where Rcpj - the arithmetic mean of the sum of the ratings of a particular region for all
indicators of a particular area;

n - the number of indicators for which the calculation was carried out in a particular
direction.

According to the results of calculations, the integrated rating is determined as the
arithmetic mean of the sum of ratings of a particular region in all areas by the formula:

(3),

where Ij is the arithmetic mean of the sum of ratings of a particular region in all areas;

m - the number of areas in which the calculation was performed.

The method of standardization is also used - the calculation of conditional
(standardized) indicators that replace intensive ones, when the comparison of the latter is
complicated by the incompatibility of the groups compared to the ideas of Melnik, Ptashnik
(2018).

This method analyzes the phenomena based on constructing several analytical and
calculation tables and definitions with their help and shows what would be the total coefficients
in the compared populations if they were homogeneous with each other.

At the same time, enter data and calculate:

Xi - the actual value of the i-th factorial indicator (the value of the factorial indicator for one
area);

Xs is the arithmetic mean of the factorial index for all studied objects (all regions);

(Chi-Xs) - the difference between the actual value of the indicator and the average value; (Chi-
Xs) 2 - standard deviation; Chi / S is a standardized indicator.

The standard deviation is determined by the formula:

S = √1/n-1(∑ (Хі – Хс)2 (4),

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DOI: 10.14807/ijmp.v13i3.1981

where S is the standardized deviation of the indicator; n is the number of objects studied.
Determination of the standardized value of the i-th factorial index X^ and is carried out by the
formula:

X^ i = Xi / S (5).

The standardized Chi / S indicator is also a score of the i-th factor in each individual
study object (area).

4. RESULTS AND DISCUSSIONS

4.1. Result: The activities of the agricultural sector require state regulation

The formation of a competitive environment is a global problem. The World
Competitiveness Rankings-2021 presents data from 64 countries of the world.

The MIM Business School (2021) contributed to Ukraine being included in this ranking
in 2007 (the ranking has been published since 1989), where information is divided into four
categories: economic performance, infrastructure, government performance and business
performance and a wide range of statistics are considered, such as unemployment, GDP and
government spending, social cohesion, globalization, and corruption.

In the competitiveness ranking, Ukraine was the 54th in 2021, while for comparison, in
2017 it was in the 60th position. The rating notes that among the challenges currently facing
Ukraine are control over the coronavirus epidemic, freezing the armed conflict in eastern
Ukraine, promoting economic recovery, and introducing public-private partnerships
(especially for infrastructure projects), launching a full-scale energy and land market, as well
as activating the domestic stock market and pension system.

The 2021 ranking was led by European countries: Switzerland was in the first place,
Sweden - the second place, the third place belonged to Denmark, and the fourth - to the
Netherlands. Innovation, digitalization, supportive policies, and social cohesion have become
determinants of competitiveness.

The activity of the agricultural sector is a complex technological process, because
agriculture occupies 70% of the territory, more than 40% of exports, 17% of GDP, forms 11%
of budget revenues, and is one of the key sectors of the economy.

The agricultural sector plays a significant role in the implementation of the financial
policy of the state because it acts as a budget-forming industry, covers more than a third of

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exports, demonstrates consistently high profitability rates over the years and the predominant
share of profitable enterprises in financial results.

According to the statistical analysis of the state of socio-economic development of the
regions and the city of Kyiv (2021), according to the results of January-September 2021, a
positive trend was recorded in Ukraine as a whole in relation to the volume of gross agricultural
output - an increase of 1.9% (in the corresponding period of 2020 year) year - a decrease of
13.1%).

The volume of agricultural production per person of the rural population in January-
September 2021 increased by 3.1% compared to the corresponding last year period and
amounted to UAH 34,875.

Agricultural production in the reporting period was significantly affected by the
quantitative dependence of the crop on weather and climate conditions, as well as restrictions
caused by the COVID-19 pandemic.

4.2. Result: Basic indicators for assessing the competitive environment of Agrosector

In terms of the volume of financial resources in 2013-2020 (Table 1), the share of
agricultural producers’ accounts for 9.4% of the financial resources of the economy, and in
2013 - 5.48%, and in 2020 - 8.96%, that is, the niche of participation of the agricultural sector
in general economic finance is steadily expanding

Figure 1: Volumes of financial resources of agricultural enterprises by size of activity in
2013-2020, UAH million
Source: built by the authors according to the State Statistics Committee of Ukraine, 2021. URL :
http://www.ukrstat.gov.ua/

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DOI: 10.14807/ijmp.v13i3.1981

The highest figure was in 2016, when the share of the agricultural sector in the balance
of enterprises in economic sectors reached 15.39%. If in 2013 large enterprise accounted for
1605 million UAH, in 2020 - 5140 million UAH, i.e. an increase of 3.2 times. For medium-
sized enterprises, this ratio was UAH 15 million and UAH 87 million, an increase of 5.8 times,
for small ones - UAH 1.5 million, and UAH 6.6 million, respectively, or an increase of 4.4
times. The average resources of one micro-enterprise were 0.36% of the resources of large
enterprises in 2013 and 0.56% in 2020. The average resources of one micro-enterprise were
0.36% of the resources of large enterprises in 2013 and 0.56% in 2020.

Competitiveness at the industry level is proposed by researchers (Kuzmin & Gorbal,
2004) to assess using the following indicators: labor productivity; pay; capital intensity and
science intensity; technical level of production; export orientation or import dependence of the
industry; compliance of the level of development of the industry with the general level of
economic development, etc.

The main indicators of the competitiveness of the industry are indicators that
characterize the state of the components of its competitive position. In particular, it includes
the provision of enterprises with resources (labor, raw materials), investment attractiveness
(ability to raise capital in domestic and global markets), well-chosen development strategy
(management system and competition policy), demand for manufactured goods and services
(ability to meet consumers’ expectations).

Accordingly, the determinants of the competitiveness of the industry will be the factors
that affect the value of these indicators. The level of competitiveness is reflected in the size of
the main types of agro-industrial products per capita, their positive dynamics and the creation
of conditions for sustainable development of the national economic system in the long run.

Table 1: Specific weight of agricultural enterprises that have received losses in the total
number of enterprises, in terms by region in 2014-2020
2014 2015 2016 2017 2018 2019 2020
Ukraine 15,8 11,5 12,2 13,8 13,7 16,9 17,3
Vinnytsia 14,4 13,1 9,5 10,0 10,2 12,3 15,5
Volyn 19,9 15,4 16,8 13,9 13,4 15,9 15,5
Dnipropetrovsk 14,1 9,2 12,3 14,1 15,4 16,8 15,8
Donetsk 17,6 11,3 9,5 12,3 13,6 15,7 10,1
Zhytomyr 28,4 25,6 23,8 23,2 21,8 26,3 22,5
Zakarpattia 9,9 7,1 8,2 8,7 9,2 10,9 14,9
Zaporizhzhia 15,9 9,5 10,0 9,8 16,1 15,7 11,7
Ivano-Frankivsk 15,6 12,5 17,1 11,4 10,4 16,9 17,1
Kyiv 18,1 15,4 14,9 18,8 16,3 19,3 20,9
Kirovohrad 9,0 5,6 7,3 12,5 9,8 11,8 17,4

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Luhansk 9,9 8,4 6,7 8,5 8,3 13,0 8,8
Lviv 17,6 15,6 19,3 17,9 15,0 19,5 18,1
Mykolayiv 13,6 7,6 8,6 11,9 11,6 11,1 16,4
Odesa 10,6 8,3 7,3 7,1 8,5 18,1 35,4
Poltava 16,1 9,4 10,3 15,7 11,7 17,0 11,3
Rivne 24,9 21,9 22,7 20,1 19,4 23,7 20,6
Sumy 17,6 11,6 12,4 15,7 14,3 18,1 13,3
Ternopil 18,8 14,5 17,0 11,4 13,7 16,9 13,5
Kharkiv 16,8 12,5 15,4 21,3 18,4 23,7 16,3
Kherson 21,8 12,1 13,5 13,1 14,6 16,5 15,0
Khmelnytskyi 13,9 12,3 11,4 10,1 9,7 12,5 11,0
Cherkasy 13,1 9,5 9,6 16,4 12,8 15,7 17,4
Chernivtsi 18,4 16,3 21,7 13,7 17,6 22,7 17,0
Chernihiv 20,6 16,8 17,6 19,0 19,8 23,0 17,9
City of Kyiv 45,5 38,4 49,1 46,9 46,5 45,5 48,8
Source: built by the authors according to the State Statistics Committee of Ukraine, 2021. URL :
http://www.ukrstat.gov.ua/

4.3. Result: The state of financial resources of agricultural enterprises

Adding the values of the standardized indicator Hi / S for each factor by the method of
standardization of indicators determines the integrated score, given in Table. 2.

Table 2: Initial data and summary points for assessing the competitive potential of
agricultural enterprises of Ukraine in 2020
Regions Initial data, x Summary points Sum of
product profitability products for product Profita- products for points
per 1 ha 1 person per 1 ha bility 1 person
Vinnytsia 28,1 16,40 1085 4,38 1,90 4,23 10,51
Volyn 28,1 22,80 1053 4,37 2,64 4,11 11,12
Dnipropetrovsk 18,3 18,00 831 2,84 2,08 3,25 8,17
Donetsk 15,6 24,90 769 2,42 2,88 3,00 8,30
Zhytomyr 17,7 15,80 1026 2,75 1,83 4,00 8,58
Zakarpattia 18,7 10,70 455 2,91 1,24 1,78 5,92
Zaporizhzhya 11,9 27,70 683 1,85 3,21 2,67 7,72
Ivano-Frankivsk 29,4 12,30 993 4,58 1,42 3,88 9,88
Kyiv 24,7 12,30 681 3,84 1,42 2,66 7,92
Kirovohrad 12,7 15,00 575 1,97 1,74 2,24 5,95
Luhansk 11,6 30,30 774 1,81 3,51 3,02 8,33
Lviv 27,1 13,70 1221 4,22 1,59 4,77 10,57
Mykolayiv 11,0 14,90 594 1,71 1,72 2,32 5,75
Odesa 6,1 -6,70 394 0,95 -0,78 1,54 1,71
Poltava 19,8 22,90 766 3,08 2,65 2,99 8,72
Rivne 23,7 16,90 1179 3,69 1,96 4,60 10,25
Sumy 22,6 36,40 1344 3,52 4,21 5,25 12,98
Ternopil 26,4 22,50 1214 4,11 2,60 4,74 11,46
Kharkiv 18,5 29,70 1025 2,88 3,44 4,00 10,32
Kherson 15,0 20,50 756 2,33 2,37 2,95 7,66
Khmelnytskyi 25,6 22,30 1124 3,98 2,58 4,39 10,94
Cherkasy 25,7 16,50 755 4,01 1,91 2,95 8,86
Chernivtsi 22,9 18,90 736 3,56 2,19 2,87 8,62
Chernihiv 20,6 29,00 1052 3,21 3,36 4,11 10,67
Хс 20 19,32 879
Source: built by the authors according to the State Statistics Committee of Ukraine, 2021

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Researchers (Melnik, Ptashnik (2018) found that the scale of the rating assessment of
competitiveness was deciphered as follows: from 3 to 7 points -nig competitiveness; from 7 to
10 points - medium; with 10 points - height.

According to the results, the leaders of competitiveness between the districts of
Ukraine, according to production indicators of 1 hectares, Ivano-Frankivsk, Vinnytsia, Volyn
region, from the point of view of performance per person - Sumy, Ternopil, Lviv region;
profitability - Sumy, Kharkiv, Chernihiv and for the total rating account - Sumy, Ternopil,
Volyn. Low glasses in Odessa, Mykolaiv, Kirovohrad regions.

Sumy 12,98

Ternopilskaya 11,46

Volynsky 11,12

Khmelnitsky 10,94

Chernigovsky 10,67

Lviv 10,57

Vinnitsa 10,51

Kharkiv 10,32

Rivne 10,25

Ivano - Frankivsk 9,88

Cherkasy 8,86

Poltava 8,72

Chernivtsi 8,62

Zhytomyrskaya 8,58

Luganskaya 8,33

Donetsk 8,30

Dnipropetrovsk 8,17

Kievskaya 7,92

Zaporozhye. 7,72

Kherson 7,66

Kirovogradskaya 5,95

Transcarpathian 5,92

Nikolaevskaya 5,75

Odessa 1,71

0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00

Figure 2: Baln rating of the competitiveness of the regions of the agrarian sector of Ukraine
in 2020
Source: built by the authors according to the State Statistics Committee of Ukraine, 2021

Through financial policy, the state can influence the pace of development of agro-
industrial production, its structure, in particular the share of individual business entities in the
overall structure. This is done to effectively manage the industry and ensure food security. It
can be assumed that the confident role of agricultural finance in the economic market largely
depends on the policy of state protectionism.
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DOI: 10.14807/ijmp.v13i3.1981

The modern policy of state financial support for the agrarian sector of Ukraine has
features of protectionism, which manifests itself as measures of state regulation for the sake of
competition, promotion of investment, saving material costs, protecting jobs to maintain
sustainable development conditions.

The foundations of state policy in the budgetary, credit, price, regulatory, and other
areas of public administration are defined in Art. 1 of the Law of Ukraine on state support of
agriculture (2004), as a measure to stimulate the production of agricultural products and the
development of the agricultural market, as well as to ensure the food security of the population.

One of the key financial regulators of the competitive environment of the agricultural
sector of the economy is the fiscal mechanism through fiscal methods. The main instruments
of financial regulation are: regulatory legal acts, taxes, tariffs, duties, budget programs,
macroeconomic plans and targeted comprehensive programs, government orders, centrally set
prices, standards, licenses, quotas, limits, etc.

That is, fiscal methods, being an inseparable part of state regulation, are a combination
of various tools and forms of fiscal economic impact on the development of agriculture to
create stability and competitiveness for all categories of farms, create opportunities for
saturating the market with quality food, developing rural areas, and achieving food security of
the country.

The dynamics of the functional expenditures of the State budget for the agricultural
sector of Ukraine in 2013-2020 is shown in Table 3.

Table 3: Dynamics of state budget expenditures on agriculture sector of Ukraine in 2013-
2020, UAH million
Indicators 2013 2014 2015 2016 2017 2018 2019 2020
State budget expenditures on
7705 5135 4143 4075 10532 13054 13020 13496
agriculture
Share in budget expenditures,
5,16 1,19 0,71 0,59 1,25 1,32 1,21 1,04
%
Share in expenditures on the
15,18 14,92 11,15 12,97 22,39 20,52 18,00 7,98
economy, %
Source: built by the authors according to the State Treasury of Ukraine URL: https://www.treasury.gov.ua/ua

4.4. Practical aspects of applying the model of financial regulation

Thus, the competitive strategy is based on available resources of the industry (material,
financial and intellectual), the level of development of various forms of management, structure
of production, sales, processing, value chains and bilateral regulators: government and market.

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For the agricultural sector, the availability of an effective competitive environment is a stimulus
for efficiency, and it has the following characteristics: factors of influence, competitive
environment, factors of advantage, levels of regulation (Figure 3).

Formation of a competitive environment in the agricultural sector of Ukraine

Influencing factors Competitive Factors providing Levels of
environment benefits regulation
Production
Market Macro level
Manufacturers Demand
Climate Consumers Food security
Resource
Manufacturers Technical Meso level
Material-
technical base of logistics Technological
Innovative
Micro level
Financial Processors Costs
flows Intermediaries Income
Trade Price
Figure 3: Formation of a competitive environment in the agricultural sector of Ukraine
Source: built by the authors according to the Puzhay-Chereda (2016); Dernova, Borovik and Kravchenko
(2020); Nakisko and Danylenko (2018); Radchenko and Leontovych (2021); Melnychuk (2021).

The main directions of state financial regulation of the agricultural sector are currently
defined in the National Economic Strategy until 2030 (Strategy, 2021), which provides for a
separate Strategic Course of State Regulation in the Development of the Agro-Industrial Sector
for the following purposes: ensuring an stimulating agricultural policy; provision of quality
infrastructure; creation of conditions for providing available material and technical resources;
balancing the production of high- and low-margin products to increase the profitability of the
sector; promoting the development and full provision of the market for the functioning of the
processing industry; optimization of the sales system for products in the domestic and foreign
markets The course defined in the Strategy for Ukraine is a kind of symbiosis of domestic
traditions in the management of the agricultural sector and the tools of the EU countries on
state protectionism of food security.

The regulatory documents, on the basis of which the Strategy-2030 was formed, noted
that the main directions for the development of the agricultural sector in Ukraine should be
considered: civilized formation of the land market; providing state subsidies to agricultural
producers and attracting investments in the agricultural sector of the economy; carrying out all

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technological processes of production in accordance with European requirements; entry of
domestic enterprises to international markets for agricultural products; solution of social
problems in the countryside.

At the same time, it is obvious that state regulation is an intervention that affects the
market situation, that is, here there is a need to achieve a balance of state regulatory and market
measures to create a competitive environment for high efficiency.

In such conditions, Ukraine should pursue an effective agricultural policy to support the
agricultural sector in the market through regulatory support, creating conditions for the
formation of a competitive environment, increasing the level of competitiveness of individual
forms of management by increasing the level of scientific and technical support, orientation,
and innovative development model.

5. CONCLUSIONS AND RECOMMENDATIONS

The eruptive studies allow us to induce appreciation. Based on the foregoing, the
regulation of the competitive environment for the agricultural sector of Ukraine is a set of
measures taken by the state to equalize the economic conditions of management in the market.

Regulation concerns almost all aspects of activity - regulatory, organizational, financial,
and regulatory. These measures affect the micro level, leveling the production, financial,
infrastructural, organizational, personnel potential of the industry, as well as the macro level,
leading to an optimal structure in financial, credit, tax, and budgetary policies. Thus, state
regulation measures strengthen or weaken the action of market levers to satisfy the ability of
the industry to function effectively in the external and internal markets.

To increase efficiency, the state financial regulation of the competitive environment of
the agricultural sector should be transformed in the key areas defined in the Strategy-2030,
which provide for the formation of:

• equal conditions for access of agricultural producers to state support programs through
the functioning of the State Agrarian Register; introduction of tools and a mechanism
for the development of farms, optimization of the activities of the Ukrainian State Fund
for the Support of Farms; strengthening financial support for agricultural cooperatives;

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• in crop production: reimbursement of expenses associated with the cultivation of high-
margin crops; supporting the production of high value-added crops; niche crops;
irrigation support; stimulation of breeding and popularization of new varieties of plants;

• in animal husbandry: increase in the number of cattle and pigs; increase in livestock
and poultry in the organized sector; support for the acquisition of breeding (genetic)
resources; stimulating an increase in the productivity of cows; attracting investments
for the construction and reconstruction of livestock farms and complexes; stimulation
of production and processing of livestock products by the organized sector; improving
the quality of animal products; development of beekeeping; aquaculture; organic
production; ensuring the participation of public organizations of agricultural producers
and territorial communities on the development of budgetary state and regional
programs of agricultural development. This will create a proper legal framework,
predictability of the rules of the game and guarantee the implementation of food
security with the involvement of all forms of commodity producers and the formation
of a competitive environment for agricultural production and processing.

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