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Postscriptum: Toward possible consequences of market economy transformation in Ukrainian agriculture

Chapter Three. A Model of Alternative Organizational Structure for Ukrainian Agriculture

This study focused mainly on positive aspects of market economy transformation in Ukrainian agriculture. Let's turn our attention now to possible negative results of the market reform. It will make a more objective picture for the future, and will help to prevent development of undesirable consequences.

The first real problem is possible overproduction already in the near future. Now it is not understood and taken into serious consideration even by scientists and agricultural experts because of food crisis and stagnation of agricultural production. However, the empty shelves of state shops are not a good reason for ignoring threat of overproduction. According to official Ukrainian statistics the country produces more of some agricultural products (both absolutely and per capita) than some developed agrarian countries. Let's remember that official statistics do not always have exact information about potential of agricultural production. For example, the shown share of individual subsidiary economic in general agricultural output is about 40%, but in reality sometimes rural families for different reasons (mainly because of dread of taxes) decrease the real volume of production. Of course, internal consumption of rural families is also out of a report. The same can be said for people who have microfarms in suburbs, for example, who feed pigs. Very often these people are the main suppliers of food for cities' private market places.

State statistics also do not, of course, account for illegal export of Ukrainian agricultural products which in fact is recognized even by the government. And to what extent are the losses of products during harvesting, transportation, storage, processing taken into consideration? It is universally recognized that is usually not less than 30% of the harvest. The market restructuring can eliminate these shortcomings or, at least, substantially reduce them. And finally, restructuring will provide an increase of agricultural productivity due to new incentives even without additional investments. In the future, when investments become possible, productivity will also rise. The reserve for growth is tremendous. The limited access to international market, the absence of adequate experience, and unreliable internal market because of low purchasing capacity of population can seriously affect the agrarian revival in Ukraine.

The difficulties of food trade are caused not only by food deficit. Private food marketplaces, which operate in all cities and majority of towns, do not support the suggestion of shortage of food resources in Ukraine. The problem is that prices are too high even for people with average level of incomes. This leads to unbalanced food consumption of Ukrainian population. The set of products available is very narrow, and is not able to provide optimal nutrition for many families. But even for these products there is no guarantee as for required quality of food. The primitive level in organization of state trade and the absence of elementary services (for example, parkaging) redouble the unstability of food market too.

A next problem which is also connected with increasing production is a threat of unemployment. The number of people who left agriculture or is going to leave, on one hand, and the endless need of collective farms in additional labor force, on another hand, are often used as arguments for existing high demand for labor in agriculture. But really it is only an illusion because it is well known that about 20% of Ukrainian people, able to work, are engaged in agriculture. Unemployment already exists in the latent form: low labor intensity; time wasted because of unsatisfactory production organization and inefficient coordination; significant share of manual and low-mechanized labor; irrational labor organization; the fulfilment of job by larger number of people than it should be; high degree of interrelation within production process in collective farms, etc. The market orientation can fundamentally change labor motivation and organization of production. This can result in development of latent unemployment into its open form. The leaders of new private enterprises will also have other considerations and rights for employment of people (now chairmen of collective farms must give a job for every desired to every desiring member). This is fraught with release of millions people from agrarian sphere. Unemployment and some other consequences of market transformation can lead to stratification of rural population into rich and poor people. Like in the times of Stolypin's reform, it would possibly be an aggravation of social relations between "winners" and "lossers" in market reform.

The problem of employment can be minimized if the state acting through municipalities, control the situation at the labor market. A state program of employment which can provide the creation of new jobs is needed for restructuring agriculture. Taking into account unlimited possibilities in the development of small business, services, social infrastructure, etc., this program has a real future. Here opportunities for creation of joint ventures with foreign partners also would be found.

The market reform also can cause the appearance of some other social problems. For example, high degree of labor motivation can (in many cases already does) lead to self-exploitation of private farmer families. Often hard and intensive labor is shared by a farmer with his wife and children. It is important to prevent the turning of private farming into an obstacle to normal life, rest, full restoration of labor capacity, and for children — to education and having happy childhood. There are no prepared recipes for solution of this problem. It is a matter to understand every farmer family. Society as a whole and community in particularity must do their best to promote this understanding in proper way.
The experience of countries that passed through a market reform testify that new incentives of production development are not always in harmony with natural environment. Of course, private ownership increases individual interest in preservation and improving natural resourses, but it also gives more freedom in their use. It is important for education and extension service to promote ecological thinking of private farmers, and when it does not work to use state power of control and influence. Creation of environmental service in each municipality will make this real.

And the final remark. The complexity of the market transformation process is such that it cannot be done in one night. The reform needs national consent, patient work, new challenges, and pluralism of approaches to the principal aid — a new, better quality of life for Ukrainian people. This study was only an attempt to use the experience of real cooperatives. The idea of cooperation had already made a great contribution in many countries. It may be done once more on Ukrainian ground. Hopefully, its coming to our country is mostly a matter of time.