Financial and Credit Support of Sustainable Development of Agriculture in Ukraine: Problems and Ways to Solve Them
Financial and Credit Support of Sustainable Development of Agriculture in Ukraine: Problems and Ways to Solve Them

Author(s): Lubov Moldavan, Olena Pimenowa, Igor Britchenko
Subject(s): Politics / Political Sciences, Politics, Economy, National Economy, Business Economy / Management, Agriculture, Economic policy, Geopolitics
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: agriculture; small and medium sized agribusiness; cooperative banks; institutional and legal support; state support
Summary/Abstract: The paper studies financial and credit support mechanisms necessary for sustainable development of agriculture in Ukraine, with a focus on addressing the challenges faced by small and medium-sized agricultural producers. The study emphasizes the unique economic characteristics of agricultural sector, which make it highly dependent on external financing due to factors such as price volatility, climatic variability and the high cost of production inputs. Given these challenges, the aim of the article is to analyze the institutional and legal framework of financial and credit systems in Ukraine and to propose approaches for enhancing access to credit for small and medium-sized farms, drawing on successful experience of developed countries. The authors hypothesize that the financial sustainability and growth of small and medium-sized agricultural producers in Ukraine can be significantly improved through the establishment of cooperative financial institutions and targeted state support programs. The study uses a combination of methods, including monographic analysis to explore the role of state support of agriculture in both Ukraine and developed countries, comparative analysis to high-light differences in credit service structures between Ukraine and countries such as United States and European Union members and empirical methods to assess social and environmental benefits of establishing a specialized credit system for agriculture. The study also utilizes abstract-logical methods to synthesize findings and formulate recommendations for the development of Ukraine's financial and credit institutions. The results of the study reveal significant gaps in Ukraine's current financial infrastructure of agriculture, particularly the lack of specialized financial institutions capable to meet the needs of small and medium-sized farms. An analysis of the practice of commercial bank lending in Ukraine shows that these institutions are interested in working only with those who use 500 or more hectares of agricultural land. The article identifies cooperative banking systems in countries like France, the United States and Poland as models that could be adapted for Ukraine. The study concludes that the establishment of cooperative financial institutions, supported by legislative and regulatory reforms, is essential for fostering the sustainable development of agriculture in Ukraine. Additionally, state support is critical to ensure the financial viability of small and medium-sized farms, which contribute significantly to agricultural output but are often excluded from traditional credit markets. Authors recommend the introduction of targeted state programs, the restructuring of existing financial institutions and the creation of legal frameworks that would enable the formation of cooperative banks and credit unions tailored to the agricultural sector. Such measures would improve credit access, enhance the profitability of agricultural enterprises and promote rural economic development.

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