Economics of soil erosion: case study of Ukraine

Purpose. The main objective of this paper is (і) to determinate the economic loss due to crop productivity loss caused by soil erosion in Ukraine, and (іі) to present the results of the econometric modeling of soil erosion impact on the efficiency crop production at the regional and district level. Methodology / approach. This study uses the following methods: expert assessments and monographic (for the assessment of economic losses due to crop productivity loss from spreading soil erosion); graphical (for building three-dimensional graphs); econometric modeling (to develop a mathematical model of the dependence of the gross crop production and income from sales per 100 hectares from the share of eroded arable land in its total area and production costs in crop industry per 100 hectares); abstract-and-logical (for generalization of the research results). To solve the assigned tasks, linear and quadratic econometric models (production functions) were developed using a dataset (і) from 168 observations (on the example of Ukrainian regions for 2010–2016) and (ii) from 189 observations (on the example of districts of Kharkiv region for 2010–2016). This study was conducted in order to test the hypothesis that the increase in the area of eroded arable land has a negative effect on the gross output of crop production. Results. Our expert assessment of economic losses due to crop productivity loss from spread of soil erosion on agricultural land in Ukraine is 224 mln USD. The obtained results confirm the hypothesis about the negative relationship between gross crop output and the level of land erosion. The obtained data confirm that an increase in the area of eroded arable land by 1 % leads to a decrease in the gross output of crop production by 0.20 % per 100 hectares of agricultural land in total, and in the third group of the studied subjects (the share of eroded arable land in their total area is more than 50 %) – by 0.61 %, respectively. Originality / scientific novelty. For the first time, linear and nonlinear (quadratic) econometric models were developed, which made it possible to carry out quantitative assessment of the impact of the soil erosion and the financial support (production costs in crop industry) per hectare on the formation of the financial results (gross crop output and income) of business entities in Ukrainian agriculture. The provision on the economics of soil erosion was further developed in terms of expert assessment of losses from this type of degradation and confirmation of the effect of the economic law of diminishing returns, which should be taken into account when developing measures for sustainable land management. Practical value / implications. The main results of the study can be used for the development, substantiation and implementation of soil protection measures for the sustainable use of agricultural land and/or to informed decision-making at different levels of management concerning restoration of eroded land.

On the way to balance of forestry land use of Ukraine: ecological-and-economic aspect

Purpose. The purpose of this work is to investigate the ecological-and-economic aspect of certain factors to ensure the balanced use of forest lands; develop proposals for the formation of the basis for the development of sustainable forestry. Methodology / approach. We used the following methods: dialectical method of cognition for the analysis of scientific works of scientists concerning problems of balanced use of lands of forestry purpose; method of analogies (transfer of patterns of development of one process with certain amendments to another process or territory); statistical (based on quantitative indicators that allow drawing conclusions about the pace of the process); comparative analysis (comparison of indicators of forest resources and their use for Ukraine and Poland); correlation analysis (identification of factors on which the forecast significantly depends; clarification of relationships, their relationship with the predicted phenomenon under the influence of certain factors), graphical, abstract-logical (theoretical generalizations and formulation of conclusions). The information base of the study is the data of the Global Assessment of Forest Resources of FAO 2020, the data of the Monitoring of Land Relations in Ukraine, the reporting of the State Forest Agency of Ukraine, the data of the Forest Stewardship Council®. Based on the annual reports of the State Forestry Agency of Ukraine, some indicators of the report of 288 state forestries for 2018–2020 are consolidated in terms of 24 regional departments of forestry and hunting. Results. In the dynamics for 2018–2020, changes in the volume of forest resources, forest reserves, biomass, and carbon density were studied; the indicators of forest resources and their use for Ukraine and Poland are compared. The volumes of forest certification by regions of Ukraine are estimated. The relationships between capital investments in forestry production and the price of sold wood, the volume of net income of state forestry, the amount of profit, the degree of depreciation of fixed assets; between the tax burden on state forestries and financial stability was studied. Based on the assessment of the relationships and changes in individual indicators, the need to update the fixed assets of forest enterprises through the improvement of the investment instrument is justified. The results of this study are a summary of evidence on the environmental and economic aspects of the impact of certain factors on the sustainable use of forest lands, which in turn forms the scientific basis for achieving the goals of state environmental policy of Ukraine. Originality / scientific novelty. The studied interdependencies between the statistical characteristics of individual indicators of forestry land use made it possible to identify factors to ensure balanced use of forestry lands. It is substantiated that reforestation, forest certification, renewal of fixed assets of forestry enterprises through the improvement of the investment instrument, optimization of the tax burden of forestry activities are favorable factors to ensure the balance of forestry land use. It is proved that the excessive tax burden is a deterrent to the balanced use of forest lands. It is proposed to alleviate the tax burden on forestry activities by reducing the rate of deduction of net income of state forestry enterprises, eliminating the problem of double taxation of the forest fund, which under limited budget funding will allow state forestries to accumulate their own financial resources to ensure sustainable land use. Practical value / implications. The main results of the study can be used to: (I) structure the factors of sustainable use of forest lands; (II) defining the goals of sustainable development when developing the strategy of forestry enterprises; (III) analysis of the achievement of sustainable development goals at the national level, defined by the Basic Principles (strategy) of the state environmental policy of Ukraine for the period up to 2030. The results of the study can be used both at the level of forest management entities, as well as at the regional and national levels, to make management decisions on the implementation of measures that ensure the balanced use of forest land. Also, the causal links between indicators that arise from the response of indicators to certain factors open up new opportunities for forest management planning. These results can provide important information for the protection and use of forest resources in all regions of Ukraine.

Modelling and forecasting of potato sales prices in Ukraine

Purpose. Under the background of the climate change and other crises, the world food system is becoming increasingly vulnerable to price fluctuations. This highlights the need to consider and better manage the risks associated with price volatility in accordance with the principles of a market economy and simultaneously protecting the most vulnerable groups of population. Responding to these challenges, in this study we aim to determine the main parameters of time series of potato sales prices in agricultural enterprises in Ukraine, to build an appropriate model, and to form a short-term (one-year) forecast. Methodology / approach. We used in the research the data from the State Statistics Service of Ukraine on average monthly sales prices of potatoes in agricultural enterprises from December 2012 to July 2021 (104 observations) adjusted for the price index of crop products sold by enterprises for the month (with December 2012 base period). Decomposition was used to determine the characteristics of the time series; exponential smoothing methods (Holt-Winters and State Space Framework – ETS) and autoregressive-moving average were used to find the model that fits the actual data the best and has high prognostic quality. We applied the Rstudio forecast package to model and to forecast the time series. Results. The time series of potato sales prices in enterprises is characterized by seasonality (mainly related to seasonal production) with the lowest prices in November, and the highest – in June; although, other periods of price growth were identified during the year: in January and April. The ARMA (2, 2) (1,0)12 with a non-zero mean was found to be the best model for forecasting potatoes sales prices. ARMA (2, 2) (1,0)12, compared to the state-space exponential smoothing model with additive errors – ETS (A), better fits the observed data and provides more accurate forecasting model (with lower errors). Forecast made with ARMA (2, 2) (1,0)12 shows that potato sale prices in agricultural enterprises in November 2021 (months with the lowest price) will range from 2154.76 UAH/t to 7414.57 UAH/t, in June 2022 – from 3016.72 UAH/t to 14051.63 UAH/t (prices of July 2021) with a probability of 95%. The forecast’s mean absolute percentage error is 14.87%. Originality / scientific novelty. This research deepens the methodological basis for food prices modelling and forecasting, thus contributing to the agricultural economics science development. The obtained results confirm the previous research findings on the better quality of food prices forecasts made with autoregressive models (for univariate time series) compared with exponential smoothing. Additionally, the study reveals advantages of the state space framework for exponential smoothing (ETS) compared to Holt-Winters methods in case of time series with seasonality: although the ETS model overlaps with the observed (train) data, it is better in terms of information criteria and forecasting (for the test data). Practical value / implications. The obtained results can serve as an information basis for decision-making on potato production and sales by producers, on more efficient use of resources by the population, on more effective measures to support industrial potato growing, to implement social programs and food security policy by the government.

Vietnam labour policies and its impact on rural wages: an experience from hired farm labourers in the Red River Delta

Purpose. The purpose of this article is to understand how Vietnamese policies for labour impacting on wage of rural labourers in agricultural sector. To do that, the paper particularly pays attention on analyzing wage of hired farm labourers in the Red River Delta region, the rice basket of Vietnam. Methodology / approach. Analyzing the above-mentioned impact of Vietnamese policies was performed by using data surveyed from 150 hired farm labourers in the Red River Delta of Vietnam. The survey on wages of rural labourers was conducted in Bac Ninh, Thai Binh and Hai Duong which are the three typical agricultural production areas in the Red River Delta in 2019. In this survey, the author interviewed 150 people who work as hired labourers in rice cultivation in Bac Ninh, clam farming in Thai Binh and pig raising in Hai Duong. The sample was randomly drawn among farm households which hire labourers in these provinces. This sample was divided into 2 groups of female and male labourers. The main purposes of this survey were to gather both qualitative and quantitative data on hired labourers including: age, gender, education level, money wage, wage in kind and other remunerations that they received from employers. Information relating to their participation in social insurance and vocational training were also collected like: number of years involving in social insurance; money that they used to purchase social insurance; frequency and time spending in vocational training courses. The personal interviews using a standard questionnaire with open and close questions were implemented separately with male and female hired farm labourers. They were interviewed in different places to ensure that their responses do not affect others. After checking for missing values, the author used the following methods: frequency distribution with mean and standard deviation for a description of respondents; cross tabulation and T-test were also used to test for differences in proportions and significant difference between groups; a linear regression model was applied to examine impact of wage regulation, social insurance and vocational training policies on wage of hired labourers in agricultural production (dependent variable was average money wage per month, it was estimated by sum of money wage and other remunerations that a labourer gets each month; independent variables were age, gender, education level and dummy variables which represented labourers’ participation in mentioned labour policies). Results. Among policies relating to agricultural sector, the ones about minimum wage and vocational training statistically impact the most on labour wage. Longer time of vocational training brings an additional 3 USD to a labourer’s monthly wage. Being supported by the policy of minimum wage, labourers can achieve higher wage when negotiating with employers. The author found that wage of a labourer who is aware of this policy is about 5 USD higher than that of others. Meanwhile, social insurance policies do not impact on wage of rural farm labourers. It is stated in the Labour Code that a part of social insurance fee of a contracted labourer is paid by his/her employer. However, hired agricultural labourers usually are excluded, because they mostly work under verbal agreements which are not specified by the Code. This loophole in the Labour Code need to be corrected in the future. Originality / scientific novelty. Despite the fact that industrialization process is rapidly developing in recent years, rural labour force still contributes a remarkable proportion in the Red River Delta region of Vietnam. The transferring skilled and young labourers from farm to off-farm sectors, from rural to urban areas leads to the existence of un-skilled and old-age labourers for agricultural production. This labour force is working in the poor condition with unstable and low wage jobs. However, they are not much concerned by labour policies and there is still a gap in research on their wage. Therefore, this study takes the advance to shed the light on the impact of labour policies on wage of rural farm labourers as well as to propose recommendations to adjust labour policies regarding this issue. Practical value / implications. The author identifies that attending vocational training and understanding of minimum wage will increase the chance for labourers to obtain higher wage.

Evaluation of the level of the usage of social instruments for human resource management: example of agro-processing enterprises of Ukraine

Purpose. The purpose of the article is to suggest an evaluation method of the level of the usage of social instruments for human resource management by example of agro-processing enterprises of Ukraine. Methodology / approach. The research described in the article was carried out according to the method developed by the authors for evaluation of the level of the usage of social instruments for human resource management on the enterprise. This method is based on the self-evaluation of social instruments for human resource management by HR managers together with top managers of the enterprise, comparing these results with the desired indicators of development of each of the social instruments in accordance to strategic guidelines, and development of a Plan of actions on the development of social instrument for human resource management. Results. According to the results of authors’ method approbation of analysis of the level of the usage of social instruments for human resource management on the agro-processing enterprises of Ukraine it is established that the usage of social instruments of human resource management by these enterprises is estimated as average (41–58 points). The predominant social instruments for human resource management on the enterprises under investigation are the welfare of employees and working life, planning and development of employees’ career, efficiency management and conflict management. The low level of the usage of social instruments of employees’ participation in enterprise management, setting-up of effective social partnership, feedback, counseling and coaching reflect the out-of-date understanding of the staff as a work force rather than the most important resource. On the basis of the conducted analysis it was determined that unsystematic usage of social instruments for human resource management is observed at the enterprises of agro-processing industry of Ukraine. Neglecting of the social instruments as an important factor of formation of human resource of an enterprise and increasing its competitiveness reduces industrial and innovative development of an enterprise in general. Originality / scientific novelty. The methodical provisions for evaluation of the level of the usage of social instruments for human resource management on the enterprise are improved. For the first time the content of each social instruments of human resource management is offered and a total scale for evaluation of the level of the usage of social instruments for human resource management on the enterprise and the characteristics of each level are submitted. Practical value / implications. The proposed authors’ evaluation method of the level of the usage of social instruments for human resource management of the enterprise is successfully tested at the agro-processing enterprises of Ukraine and it demonstrates its viability and practical usefulness. The evaluation method is recommended for enterprise’s HRM services as a tool to evaluate the level of the usage of social instruments for human resource management.

Analysis of export of agricultural products in the context of the global food crisis

Purpose. The purpose of this article is to study the nature, main trends and problematic aspects of realization of the export potential of agricultural production in the countries of South America, OECD, North America and Europe in the context of aggravating food crisis. Methodology / approach. Theoretical and empirical methods of cognition are used in their dialectical combination. The main methods used in this study are statistical analysis, index, graphical and analytical methods, methods for estimating structural dynamic shifts, comparisons and monographic method. The study also involved general methods of economic research, in particular: theoretical generalization and comparison, induction and deduction are used in revealing the content of the export potential of agricultural production, drawing conclusions; the current condition and tendencies of development of export of agricultural products is estimated by means of synthesis and the economic analysis; graphic, economic, statistical and interstate comparisons are used to analyse the export of agricultural products; statistical methods (grouping) are applied to assess the domestic and external export potential of agricultural products in the regional context. The influence of external and domestic export potential on wheat exports is studied by regression analysis. Results. The need to ensure food security by countries around the world urges the importance of the agricultural sector as a catalyst for economic development, sources of foreign exchange earnings, investment direction, etc. The study of agricultural specialization led to the conclusion that wheat and sugar are goods with the highest export potential. It is substantiated that the countries of South America, OECD, North America and Europe have the highest level of fulfilment of export potential of agricultural production, and African countries are import-dependent. Besides, the low export orientation of Africa and Asia due to the peculiarities of their natural and climatic conditions is established based on the assessment of export-import operations in the regional context. The internal and external export potential of each of the regions is analysed. The direct correlation between the exports volume and area of land used for wheat cultivation, as well as with its yield, was established through the correlation and regression analysis. Originality / scientific novelty. The scientific novelty of the results of the study is that the authors were the first who carried out a comprehensive analysis of the potential capacity and ability to increase exports of agricultural products in the world and by product groups. The essence and features of economic representation of export potential of agricultural products at the international and national levels are determined. The main factors influencing the development of the export potential of agricultural products in the regional context are outlined and their influence is investigated by carrying out the regression analysis. The study of domestic and foreign export potential by regions of the world is further developed. Practical value / implications. The analysis of the internal and external export potential of agricultural production was carried out in the regional context, which resulted in the identification of the main recommendations for increasing their level in order to enhance the development of the agro-industrial sector of the economy.

Household income as a factor forming potential demand on the market of organic products

Purpose. The purpose of the article is to analyze the situation of households in terms of income, expenditure, food quality, consumption of individual products and to assess the potential development opportunities for organic products market. Methodology / approach. The dialectical method of cognition, the systematic approach to the study of economic phenomena and processes, the monographic method (the analysis of scientific achievements of domestic and foreign scientists on the assessment of income, cost structure, quality of life) were used in the research. The abstract-logical method (for theoretical generalizations and formulation of conclusions), the economic-statistical method (when assessing the reliability of differences between groups of households), the graphic method (when constructing graphical images), correlation analysis (to make a correlation between the level of consumption of meat and meat products based on the amount of income in the households) were used among the special methods of research. To assess the actual state of affairs, the authors used data from the statistical observation regarding the level of income and expenditures of the population of Ukraine according to 2018, which was called “Anonymous microdata on the main indicators of income, expenditures and living conditions of households”. The total number of households that responded to questions about their income level was 7698 from 8051, or 95.6 %. Results. The article emphasizes that one of the important criteria for social protection is the quality of food supply in accordance with scientific norms and established standards. The income level and food consumption by households were compared. It was noted that in general the distribution of respondents in cash income levels was not considered to be normal. A clear correlation was established between the level of household income and the level of food consumption in both monetary and physical units. These differences were tested using the statistical method of t-test for comparing averages, which provided evidence of the difference between groups of households. Originality / scientific novelty. For the first time, the level of discrepancies in income and food consumption between households was assessed using the t-test method of comparison of averages, which allowed establishing statistically a significant difference between groups in these indicators. The assessment of the impact of household income on the level of expenditures and consumption of certain types of food products has been further developed with the identification of promising focus groups for consumers of organic products. Practical value / implications. The practical value of the results is that the identification of patterns allows to predict further trends in the level of consumption of certain types of food, particularly organic.

Defuzzification in the process of managerial estimating the value of agricultural lands

Purpose. The main purpose of the research is to substantiate the methodological approach of defuzzification and to define its peculiarities in the process of estimating the value of agricultural lands. Methodology / approach. The research purpose included the use of a set of appropriate methods. In particular, the fuzzy logic techniques formed the basis of the research. The system approach was used in order to determine the role of land resources in the enterprise potential and the corresponding spheres of their management. The analysis and synthesis methods were used in the process of definition of impact factors of land resources value. The cartographic method was used for the needs of graphical display of humus content in the land plots of the analyzed enterprise. The generalization method was used in the process of forming conclusions. Results. The article defines the peculiarities of defuzzification in the process of estimating the value of agricultural lands. The results provided the methodological basis for considering the qualitative metrics in the process of estimation as well as for granting the numerical interpretation for linguistic variables. The corresponding methodology was overviewed at the example of land plot size. The quantitative reference limits for “small”, “medium” and “large” land plots were defined. Research results made it possible to form the sequence of stages, which are to be undertaken, in order to provide numerical values for qualitative characteristics of agricultural lands. A decision tree was built for the needs of formation of management decisions. According to the data of researched enterprise, the dependence of the value of agricultural lands (for the needs of management accounting) on the size of the land plot and the humus content was determined. Originality / scientific novelty. The article improves the methodological approach to determining the value of agricultural lands as of an element of enterprise potential based on the use of fuzzy logic techniques, which, in contrast to existing approaches, allows taking into account both quantitative and qualitative factors in the process of estimating the value of land resources for the needs of their management. Applying the respective approach increases the level of accuracy, relevance, and adequacy to market realities of the results of estimating the value of agricultural lands for the needs of their management. Practical value / implications. The results of the research provided an opportunity to improve the quality and efficiency of the process of estimating the value of agricultural lands. The corresponding process is characterized by a high level of complexity and uncertainty due to the presence of a significant number of qualitative factors influencing the value of the land resources. The approach considered in the article makes it possible to take into account the influence of relevant qualitative factors by giving them numerical certainty through the use of fuzzy logic techniques. The proposed approach will provide an opportunity to increase the accuracy and relevance of estimating the value of land resources as of an element of enterprise potential for the making of corresponding managerial decisions. The proposed methodological approach was implemented with the use of data of agricultural enterprise, which made it possible to take into account linguistic variables (land plot size and chemical properties of the soil) when forming the managerial decisions about land plots. The decision tree was also formed, which serves as a means of supporting management decisions in the process of forming the value of agricultural lands.

System for evaluation of financial security of operational activity of oil-and-fat industry enterprises

Purpose. The purpose of the article is to develop a system for evaluation the state of financial security of operating activities of enterprises in oil-and-fat industry based on the coordination of the interaction of the main factors of influence and levels of its components. Methodology / approach. In the process of writing the article the following research methods were used: abstract-logical (at the systematization of scientific publications on the problems of management of enterprises in oil-and-fat industry, financial security of enterprises), grouping (by clustering enterprises depending on the obtained results), comparisons (by developing a model for assessing the degree of financial stability of operating activities of enterprises), coefficient (by developing a model for assessing the degree of liquidity of enterprises), formalization (by developing a matrix for diagnostics of the state of financial security of operating activities of enterprises), generalization (by formulating research conclusions). Results. In the process of research, the system of complex evaluation of degrees and levels of the main components of financial security of the operations activities of the enterprises in oil-and-fat industry was substantiated: a model for assessing the financial stability of operating activities and a model for assessing the liquidity of an enterprise. A diagnostic matrix for the financial security status of the operational activities of the enterprises in oil-and-fat industry was developed to define the security boundaries of the operation activity of enterprises. Approbation of the proposed system for assessing the financial security of operating activities on the materials of the selected group of enterprises in the oil-and-fat industry made it possible to analyze the dynamics of the state of the financial security of their operating activities. Originality / scientific novelty of the research is to develop tools for a comprehensive evaluation of the financial security of the operating activities of the enterprises in oil-and-fat industry. The method of determining the impact of the degree of financial stability and liquidity of the enterprise on the level of financial security of current activities was improved. For the first time, a nine-quadrant matrix of the state of financial security of operating activities of enterprises depending on the ratio of the degrees of the above factors was substantiated. Practical value / implications. The use of the proposed system of financial security evaluation of operating activities of the enterprise, according to the authors, can serve as an effective mechanism for managing the financing current activities of enterprises in oil-and-fat industry and become an informative tool for factor analysis in managing their overall financial security.

Risk analysis of companies’ activities on the basis of non-financial and financial statements

Purpose. The purpose of the article is to study the degree of disclosure of information about the risks of economic activity of enterprises in non-financial statements and to find ways to improve the organization and methods of analysis of such risks based on the financial statements of companies. Methodology / approach. The methodological basis of the study is a systematic approach, methods of generalization, comparison, abstraction, analysis, synthesis, induction and deduction, bibliometric analysis, cluster analysis, as well as methods of integrated economic analysis. The publications from the Scopus database, for 1988–01.04.2021, processed by VOSviewer software were the source of data for bibliographic and cluster analysis. The materials of the research on the state of disclosure of information about the risks of domestic enterprises of the food industry are based on their financial statements and management report. Results. The article analyzes the state and degree of disclosure of information about the risks of economic activity in non-financial reports of domestic food industry enterprises. It is established that the enterprises of the studied industry most often provide information about the following risks: economic, currency, financial, political, legal, judicial, interest, personnel, price, commercial, as well as liquidity risk and market risk. Originality / scientific novelty. Theoretical, methodological and organizational principles of risk analysis of companies based on non-financial and financial reports have been further developed. For the first time, we proposed our own approach to the methodology of analysis of such risks, based on financial reporting indicators. In particular, such analytical indicators include: financial risk – solvency, financial leverage; credit risk – investment coverage ratio, return on equity, return on assets; liquidity risk – coverage ratio, quick liquidity ratio, absolute liquidity ratio. Practical value / implications. The practical value of the research is that the results obtained by the authors will contribute to the disclosure of information about the risks of economic activity of enterprises in non-financial statements. Analysis of the status and level of disclosure of information about the risks of domestic food industry enterprises in non-financial reports showed that most companies provided information about the following risks: economic, currency, financial, political, legal, judicial, interest, personnel, price, commercial, and risk liquidity and the risk of changes in market conditions. As a result, the author's methodological approach to the analysis of internal risks of the studied industry (credit, financial risks, liquidity risk) is proposed. The proposed methodology is based on the indicators of financial reporting and is part of a comprehensive risk analysis of the enterprise for the purposes of the risk management system.