Grain farming is the basis for functioning of grain product sub-complex

Purpose – complex multifunctional and dynamic system, which includes a wide range of national economic functions, which is represented by grain farming, and requires priority attention to its development from the state has been analyzed. It is noted that the stability of grain trade, functioning of national and general grain markets depend on the quantity, quality, species range and price level of grain produced, demand, government influence on its production and sale, situation on the world grain market and other factors of an internal and external nature. The research methods are reflected in the improvement of territorial division of labor in the process of grain production and development of grain trade between countries, taking into account the scientific approach to the development and implementation of projects and programs of an interstate association, which should be comprehensive and take into account the positive aspects and barriers in expanding the single grain market. Results – it was revealed that innovative activity, promising innovations for the systems of breeding and seed production of grain crops, development of mechanization, land reclamation, chemical processing, expansion and strengthening of transport routes, information support, management in the fields of grain production and market relations allow the formation of specialized grain zones. Conclusions – in Kazakhstan, it is necessary to create a domestic accounting system in accordance with interstate agreements, according to which, in 2022, a mechanism for the identification and traceability of grain should function in the EAEU. It will require its development, similar to dairy products, which will significantly increase the cost of using these technologies.

Estimating Demand for Third-party Quality Testing in Rural Grain Markets: Evidence from an Experimental Auction for Measuring Moisture Content in Kenya

Traders in informal grain markets often lack incentives to sell grain dried to a moisture level that is safe for storage, due to weak regulations and lack of low-cost moisture testing technologies. This study estimated the demand for a third-party moisture testing service in western Kenya that can encourage safe drying and reduce asymmetric information between buyers and sellers. We utilised a Becker–DeGroot–Marschak (BDM) auction to obtain maize traders’ willingness to pay (WTP) for the moisture testing service and compared it with two alternative multiple price list (MPL) mechanisms for eliciting WTP. Traders had the opportunity to bid on the testing service with two different moisture metres. The first was a low-cost hygrometer that measures temperature and relative humidity and costs about $2.50. The second was a commercial moisture metre that costs $170 in USA but provides a more precise reading. Results suggest that the standard BDM auction and both MPL variants produced similar estimates of demand for our moisture testing service. On average, traders were willing to pay $0.28 to have their maize tested with the hygrometer and $0.39 with the moisture metre. An additional take-it-or-leave-it auction for the hygrometer itself revealed that traders were not sensitive to price changes around market price, although only 15% of the traders purchased the device. A service provider model using either device could be a way to make moisture testing accessible in rural grain markets in the absence of a supply chain that sells these devices directly.

SYSTEM DYNAMICS MODEL OF REGIONAL GRAIN MARKETS

The paper develops a methodology for modeling regional markets for field crops, taking grain markets as a case. It proposes and tests a new combination of model assumptions that solves the problem of reproducing the actually observed stability of product supply to the consumer in the context of predominantly market regulators. A basic model of the grain market functioning is developed, describing in continuous time the chain of commodity flows linking producers and consumers. Interregional transportation is taken into account. This is a prototype of a future model, which should be calibrated on actual data and include markets for grain processing products, as well as the possibility of simulating economic policy instruments. The model is based on the principle of market fundamentalism when modeling the volume of grain production, setting them in a sole dependence on prices. The same principle, yet with reservations, is applied in the modeling of exports and interregional transportation. Consumption modeling combines opposing principles of market fundamentalism, which guides consumers, and market skepticism of resellers – counterparties of consumers. Resellers, when deciding on the volume of supplies, neglect prices – they are guided by the size and dynamics of grain stock. As a result of computer simulations, it is shown that a set of assumptions underlying the model provides, with an appropriate selection of parameters, the necessary dynamic properties of the model: in all regions, the relative stability of consumption and prices during the season is secured, and short-term fluctuations in domestic prices effectively direct grain transportation to regions in need. Moreover, the volume of grain exports weakly correlates with domestic price of grain, which is typical for the real Russian grain market. The ultimate aim of the study, one of the stages of which is the algorithm presented in the paper, is to create tools for analyzing the interaction effects of the economic policy measures applied in different sections of the production and processing chains of various types of field crops for periods shorter than a year.

INNOVATIVE DEVELOPMENT OF THE AGRICULTURAL MARKET: RESEARCH OF MODERN TENDENCIES AND STRATEGIES

The global economic crisis and the aftermath of the COVID-19 pandemic are shaping strong trends of deterioration in food security around the world. At the same time, it is expected that in the 2020/21 crop year, world grain markets will remain secure despite the reduction in production and stocks in October compared to September. However, there are certain systemic problems in agriculture in Ukraine exacerbated by quarantine measures, especially at the level of small farms. The paper presents some of main problematic aspects in the agricultural sector. The solution of the considered problem aspects lying in the plane of development of innovative approaches of sustainable agriculture integration, introduction of special measures and definition of indicators of efficiency of such measures presented in given paper. This study aims to identify strategic approaches to reducing the gap between knowledge creation and dissemination in the innovative development of the agricultural market through the introduction and dissemination of sustainable agricultural practices. It is shown that in order to ensure competitiveness in the markets of agricultural products, producers need to innovate. The studied examples of successful implementation of innovative projects in the field of agricultural production in the world allowed summarizing the experience and proposing strategic approaches to the development of the domestic agricultural market. The proposed strategic approaches can provide a space for an open dialogue on technologies and ways of commercializing products. The recommendations proposed in this paper are aimed at further research into ways and means of creating horizontal and vertical networks and platforms that provide knowledge dissemination (creation and training), create new markets, resources, and provide political support at various levels of government for interaction with national and international organizations.

CURRENT STATE OF THE GRAIN MARKET AND TRENDS OF ITS DEVELOPMENT

The article outlines the role of the grain market, assesses its condition, identifies trends and develops new scientific approaches to strategic areas of improvement and development of the grain market, which will help overcome the information asymmetry of the market environment.It is noted that the grain market forms the basis of food security and significantly affects the living standards of the population, so qualitative and quantitative indicators of its condition, development trends are of strategic importance for the entire national economy, as it is a crucial prerequisite for sustainable growth. It is substantiated that the need for state regulation of the grain market is associated with the rapid growth of production of cereals and legumes, which generates additional challenges and problems, among which are the following: intensification of competition in global markets; lower world prices and, accordingly, falling export revenues; lack of capacity and storage space for reliable storage and quality processing of grain and their obsolescence; logistical capacity of domestic ports and rail transport; limited distribution channels; modern agricultural innovative technologies, providing high productivity, contribute to increasing unemployment in rural areas; low capacity of processing plants; deformation of traditional production chains. In addition, it should be emphasized that the COVID-19 pandemic has provoked a decline in incomes. The following directions of development of the grain market are defined: increase of transparency of the grain market; strengthening the importance of the state agent in the grain market; expansion of grain export channels; diversification of grain use areas; expanding the financial capabilities of grain producers; improving information support for the functioning of the grain market; increasing the effectiveness of state support programs; establishment of reliable distribution channels; assistance in entering world grain markets; formation of a protectionist environment for domestic grain market participants; creation of a favorable regulatory field for grain producers; timely provision of necessary public services in a pandemic.

Agricultural Grain Markets in the COVID-19 Crisis, Insights From a GVARModel

The objective of this paper is to combine cross-commodity and spatial price transmission analysis to study the dynamics of the global cereal feed market during the COVID-19 pandemic. After reviewing the nascent literature on the impact of COVID-19 on agricultural markets, we discuss the different impact channels on prices. Then we provide stylized market reactions of three relevant feed markets, wheat, barley and maize to a set of simulated possible future shocks on oil prices, stock-to-use ratios, and export restrictions. These three shocks are useful to assess what could be the consequences of policy responses to the COVID-19 (export restrictions) or disruptions due to the virus (stock-to-use reductions), in a context of lower oil prices. To generate these market reactions, we use a Global Vector Auto Regression (GVAR) model (Dees et al., 2007) where each market is modelled independently, and connected through trade based composite variables. We expand the work of Gutierrez et al. (2015) on the global wheat market by introducing maize and barley. The results of the empirical analysis indicate that the fall in the oil price may have contributed to the stability of the world grain market in early 2020, despite fears of supply chain disruption. We also note that export restrictions could significantly increase global prices, and that such restrictions could affect more than the targeted commodity, through significant cross-commodity price linkages.