Головна Market News Agricultural sector continues to set the profitability records according to Institute of...

Agricultural sector continues to set the profitability records according to Institute of Agrarian Economics (IAE)

In 2016, the level of profitability of agricultural production was 37.3%. After a record in 2015, this is the second largest indicator in the history of agricultural development in Ukraine since 1995.

It has been reported by ProAgro with refference to Institute of Agrarian Economics (IAE).

According to the Director of IAE, Yuriy Lupenko, by 2015 the level of profitability of the industry has decreased by 8.3 percentage points (p.p.) – from 45.6% to 37.3%. At the same time, this indicator decreased only by 6.3 percentage points for crop production – from 50.6% to 44.3% while in livestock it decreased by 14.4 percentage points (from 22.1% to 7.7%). Notably, the level of profitability of livestock production has become the lowest since 2010.

It is noted that the level of profitability of production decreased for almost all the main types of crop production, including grain crops and sunflower. Potato production became unprofitable having negative -3.2% profitability versus positive 24.2% in 2015. Particularly, for grain and leguminous crops, the level of profitability decreased by 5.4 percentage points – from 43.1% to 37.7%; sunflower seeds – by 18.6 percentage points (from 80.5% to 61.9%); vegetables – almost by 2.5 times (from 47.5% to 19.4%).

The profitability of production increased only for soybean – by 13.2 percentage points (from 38.6% to 51.8%). Profitability of rapeseed production also increased – from 44.3% to 45.0%.

In livestock production, the production of poultry (without industrial processing) has become profitable. The level of its profitability became 4.9%, while in 2015 it was at the negative level of -6.1%. The profitability of milk also increased by 5.8 percentage points – from 12.6% to 18.4%.

At the same time, the production of pork became unprofitable. In 2015, its profitability level was 12.7% and last year it became negative – 4.6%.

“The production of eggs barely saved the minimum profitability – last year its profitability level was only 0.6% compared to 60.9% in 2015”, – Lupenko said.

Loss of production of cattle for meat increased from negative -17.9% to -24.9% as well as sheep and goats for meat – from -29.6% to -35.3%. In terms of wool production, the loss ratio slightly decreased – from -61.9% to -31.8%.

According to the IAE, the profitability of production in 2016 was influenced by a significant increase in the prime cost of most types of products (by 11-38%) against the background of a much slower growth in prices for the sale of agricultural products, which in 2016 amounted to 109% and for livestock production – only 101,7%. The cost price decreased only for the production of wool (by 10.3%) and slightly increased for soybeans (by 1%).

“Thus, ensuring the cost-effective production of agricultural products will continue to depend on the price environment and the containment of growth in the cost of production, including inflation”, – Yuriy Lupenko summed up.

At the same time, according to the results of research conducted by the scientists of IAE, the statistical indicators of the profitability of agricultural production are overestimated by about a third due to the absence of fixed assets evaluation and another 20% due to a lower than the average the level of labor remuneration in the industry.

“That is, the current level is approximately twice higher than the estimated, taking into account these factors underestimation of expenditures, which are not present in other sectors of the economy”, – the expert said.

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