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Large Farm Debt in Ukraine


  • David Sedik


The present study analyzes the nature of Ukrainian farm debt by investigating whether the debt servicing problem of Ukrainian farms is more of a debt problem or a net income problem. Net income generation appears to be the more important underlying problem behind the debt problem. Second, the study recounts the main reasons for apparent farm losses in Ukraine. This analysis suggests that low profits are a result of public policies that reduce incentives for profit making, farm production of livestock products at a loss and lack of restructuring. The study concludes that the debt servicing problem of Ukrainian farms leaves them unable to utilize market instruments to secure seasonal financing and is the primary justification for the presence of the Ukrainian government in financing seasonal input supplies. Such financing creates a substantial burden on the state budget, and ultimately on taxpayers. It also leads to sizeable State claims on commodity markets that are similar to a continuation of the state order system for grain that was discontinued after 1997.

Suggested Citation

  • David Sedik, 2003. "Large Farm Debt in Ukraine," Working Papers 03-02, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  • Handle: RePEc:fao:wpaper:0302

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    References listed on IDEAS

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    More about this item


    Agricultural economics; Debt; Decision making; Economic indicators; Economics; Farm income; Farm management; Farm results; Financing; Large farms; Losses; Profitability; Public debt; Repayment; Ukraine;

    JEL classification:

    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products


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