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Vol. 3 No. 1, 2022

Corresponding author:
1 Kyiv National University of Technologies and Design, Ukraine
E-mail: vladyslava.tymkovan@gmail.com
ORCID: https://orcid.org/0000-0003-4178-6719

DOI: https://doi.org/10.30525/2661-5150/2022-1-27

THE ROLE OF AGRO-INDUSTRIAL ASSOCIATIONS  
IN INDUSTRIAL AGRICULTURE

Vladyslava Tymkovan1

Abstract. The subject of the study is agroindustrial associations and their role in the industrial agriculture of Ukraine. 
During the study the following research methods were used: empirical, theoretical methods, as well as observation, 
analysis and synthesis. The purpose of the study is to analyze the state of the enterprises-participants of agro-
industrial associations to identify positive or negative trends in the sustainable development of their activities and 
to provide suggestions for their further effective development. The relevance of the topic is confirmed by the need 
to ensure food security of Ukraine, which can be supported primarily by enterprises of agro-industrial complex. 
The study analyzed the volume of products produced by agricultural enterprises and compared the size of the 
costs of agricultural production and the amount of net profit of enterprises. It was concluded that the sustainable 
development of agro-industrial enterprises has declined. To improve these indicators, the authors proposed a 
number of measures that would help enterprises to get out of the pre-crisis state, namely, state support in various 
manifestations. The study "Support for Agrarian and Rural Development" within the framework of the project of the 
United States Agency for International Development (USAID) was also taken into account. The study examined in 
detail the external and internal negative factors affecting on the activities of agro-industrial associations.

Key words: agro-industrial associations, development of agro-industrial associations, government support, 
industrial agriculture, activity of agro-industrial enterprises.

JEL Classification: Q13, Q18, O13, P32

1. Introduction
Industrial agriculture is a system of national  

economy, which forms a significant part of the gross 
domestic product of Ukraine. In particular, the 
system of industrial agriculture includes production,  
processing of agricultural products and logistical  
support of production areas. The system of industrial 
agriculture on the territorial basis is formed of  
national, regional and local agro-industrial formations. 
In particular, regional agro-industrial formations are 
mainly represented by agro-industrial associations. 
The author believes that agro-industrial associations 
play an important role, because after the association 
of enterprises the production and economic relations 
between industrial agriculture enterprises and  
industries that are related to each other develop.  
This, in turn, has a positive effect on the sustainable 
development of the national economy, which is the 
main objective of the Law of Ukraine "On State  
Support of Agriculture in Ukraine", the Law of 
Ukraine "On the Priority of Social Development of 
the Village and Industrial Agriculture in the National 

Economy " and a number of orders of the Ministry of 
Agrarian Policy and Food of Ukraine. This, in turn,  
has a positive effect on the sustainable development  
of the national economy, which is the main objective  
of the Law of Ukraine "On State Support of Agriculture 
in Ukraine", the Law of Ukraine "On the Priority of 
Social Development of the Village and Industrial 
Agriculture in the National Economy " and a number  
of orders of the Ministry of Agrarian Policy and Food 
of Ukraine.

The purpose of the study is to analyze in detail the 
state of industrial agriculture and to determine the role 
of agro-industrial associations in industrial agriculture.

In accordance with the purpose of the study, the 
scientific and research objectives are:

1. A study of the essence of the concept of industrial 
agriculture.

2. Determination of the current state of agroindustrial 
associations and their role in industrial agriculture.

3. A detailed study of the problems and prospects  
for the future development of members of agro-
industrial associations. 

This is an Open Access article, distributed under the terms 
of the Creative Commons Attribution CC BY 4.0



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2. The theoretical essence of the concept  
of industrial agriculture

A number of scientists, including Andriichuk V. 
(2002), Andriichuk V. (2013), Dakhno I. (2002), 
Kachan E. (2011), Derhalyuk M. O. (2018), 
Sivachenko I. Yu., Korovjakovskij D. Z. (1987),  
Atamas O. P. (2011) and others investigated the  
essence of the concept of industrial agriculture.

Andriichuk V. (2013) believes that industrial 
agriculture is the broadest concept and includes  
5 spheres in the system, namely: the first sphere –  
products for agriculture, food industry enterprises, 
means of production; the second sphere – own 
agriculture; the third sphere – production and storage 
of agricultural raw materials, its processing, which  
is the main section of this sphere; the fourth 
sphere – market infrastructure (agricultural exchanges,  
wholesale markets, auctions, own trading network of 
agricultural producers and processing enterprises);  
the fifth sphere – production infrastructure.

Kachan E. (2011) believes that the industrial 
agriculture of Ukraine is "part of the national economy, 
which is the only holistic production and economic 
system that connects a number of agricultural,  
industrial, educational, scientific and production  
sectors aimed at obtaining, transporting, storing, 
processing and marketing of agricultural products." 

Dakhno I. (2002) gives the following definition 
of this concept: "Industrial agriculture is a set of  
branches of the national economy associated with 
the production of food and consumer goods from 
agricultural raw materials and their supply to the 
population."

In turn, Derhalyuk M. O. (2018) believes that 
industrial agriculture should be considered as a  
complex holistic socio-economic system of interrelated 
industries for the production, distribution, exchange 
and consumption of agricultural products. The  
scientist believes that these interrelated branches 
have specific functional features that complete the 
reproduction of products and production relations.

Sivachenko I. Yu. and Korovjakovskij D. Z. (1987) 
note that "industrial agriculture is a system of  
production and economic relations of agriculture 
with the industries serving it and other sectors of the 
national economy, reaching the level of agro-industrial 
integration".

Atamasd O. P. (2011) believes that industrial 
agriculture is an inter-sectoral territorial production 
unit, the level and balance of development of its 
constituent spheres depends on the provision of food 
and well-being of the population. 

Scientists have different views on the definition of 
industrial agriculture, but if we connect all the above 
definitions, we can give the following definition of 
the concept. Industrial agriculture is a system of 
agriculture and interrelated branches of the national 

economy, between which production relations are 
created to improve food security and reproduction of 
manufactured products.

3. The role of agro-industrial associations  
in industrial agriculture

Before examining in detail, the role of agro-industrial 
associations in industrial agriculture, it is necessary to 
define the concept of "agro-industrial associations". 
The widest definition is given by Andriichuk V. (2002): 
“Agro-industrial association – a voluntary association  
of enterprises on the basis of the main enterprise –  
meat processing and packing plant or dairy plant,  
which retain their economic independence and the 
right of a legal entity.” The purpose of the association 
is to unite the interests of agrarian and processing 
enterprises and to achieve an increase in the  
production of meat and meat products, milk and dairy 
products and obtain greater profits.

Currently, there are almost 90 Ukrainian agro-
industrial associations in Ukraine according to USAID 
(2017), among which the largest are: Association 
of Enterprises-Manufacturers of Machinery 
and Equipment for Agro-Industrial Complex 
"Ukragromash", Association "Ukrainian Club of 
Agrarian Business", Association of Farmers and 
Private Landowners of Ukraine, All-Ukrainian Public 
Organization "Ukrainian Agrarian Confederation", 
the Ukrainian Stockbreeders Association, Association 
of Milk Producers, the “Ukrainian Agrarian Council”, 
National Association of Sugar Producers of Ukraine, 
the Ukrainian Pig breeders Association, Association 
"Union of Poultry Farmers of Ukraine", Ukrainian  
Grain Association, Ukroliyaprom Association, 
“Ukrsadprom” Association, Public Organization 
"Agrarian Union of Ukraine". 

It should be noted that the main objectives of any 
association are:

1. Protection of the rights and legitimate interests of its 
members.

2. Supporting conditions for their development.
3. Assistance in the reform and development of the 

relevant industry and market. 
With the decline in agricultural production in 

industrial agriculture, one possible support body for 
agricultural enterprises is their membership in agro-
industrial associations, as there is mutual support 
among association members for the effective operation 
of the enterprise.

4. Study of problems and prospects  
for the development of members  
of agro-industrial associations

To study the problems of the members of the agro-
industrial association it is necessary to analyze the 
volume of products produced, the cost of production, 



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the trend of increasing or decreasing net profit (loss)  
of agro-industrial enterprises and the level of  
profitability of operating activities of enterprises. 

According to the Ukrstat (2020), the volume of 
production has been increasing over the past 6 years. 
According to Figure 1, it can be concluded that the  
crisis situation in Ukraine did not affect the activities  
of the enterprises in terms of production. 

The next step is to compare the costs of agricultural 
production and net profit (loss) of enterprises, 
presented in Figure 2.

The increase in the cost of production and a decrease 
in net profit indicate the emergence of a pre-crisis state  

at most enterprises, which negatively affects the 
industrial agriculture of Ukraine as a whole. 

Negative trends in the development of agricultural 
enterprises are also described in a study on the 
assessment of institutional capacity and development 
of self-sufficiency of industry associations and public 
associations in the agricultural sector of Ukraine. 
This study was conducted within the framework 
of the U.S. Agency for International Development 
(USAID) project "Support for Agricultural and Rural 
Development". According to USAID (2017), one  
of the reasons for the negative impact on the 
effective activities of agricultural associations is the 

 

409,11

465

511,16

600,96

620,55

660,95

0

100

200

300

400

500

600

700

2015 2016 2017 2018 2019 2020

The volume of production of agricultural enterprises in Ukraine

The volume of production of agricultural enterprises, billion UAH

Figure 1. The volume of production of agricultural enterprises in Ukraine for 2015–2020, billion UAH

0,0

100000,0

200000,0

300000,0

400000,0

500000,0

600000,0

2015 2016 2017 2018

Comparison of agricultural production costs and net profit (loss) 
of agricultural enterprises for 2015–2020

costs for the production of agricultural goods, million UAH

2019 2020

net profit (loss), million UAH

Figure 2. Comparison of agricultural production costs and net profit (loss) of agricultural enterprises for 2015–2020



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lack of government funding for rural development,  
dependence on one source of funding, lack of qualified 
initiative personnel.

5. Conclusion
The study of the role of agro-industrial associations 

in industrial agriculture has shown the importance of 
effective activities of associations and the impact of 
membership in them on the activities of agricultural 
enterprises. The main advantages of joining an 
association are the constant receipt of legal and 
methodological assistance, the offer of modern  
scientific developments, access to information on the 
main trends in the development of the industry, etc. 

The author believes that the analysis of the main 
performance indicators of agricultural enterprises 
(the cost of agricultural production, the volume of 
production and the amount of net profit) indicates 
a negative trend of reducing the effectiveness of the 

participants of agroindustrial associations, which is 
caused by the following factors: 

1. Lack of a systematic and targeted policy to support 
associations.

2. Unapproved Unified Comprehensive Strategy  
and Action Plan for Agricultural and Rural  
Development in Ukraine for 2015–2020.

3. Instability of the competitive position of  
agricultural products on the foreign market.

4. Delayed technological and technical production. 
In turn, government support in the form of state 

support is necessary to improve the activities of the 
participants of agro-industrial associations:

1. Adoption of a unified strategy and action plan  
for the development of industrial agriculture for  
2022–2028.

2. Guaranteed annual state support for the develop-
ment of members of agro-industrial associations.

3. Tax cuts for small and medium-sized agricultural 
enterprises.

References:
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Andriichuk, V. (2002). Economy of agricultural enterprises: a textbook. Kyiv: KNEU, 624.
Dakhno, I. (2002). The international economy. Kyiv: IAPM, 248.
Kachan, E. (2011). Regional economy: textbook. Kyiv: Znannya, 670.
Derhalyuk, M. O. (2018). Pidkhody shchodo vyznachennya sutnosti ponyattya" ahropromyslovyy kompleks" 
[Approaches to defining the essence of the concept of "agro-industrial complex"]. Ekonomika ta derzhava, (5), 
34–37.
Sivachenko, I. Yu., & Korovjakovskij, D. Z. (1987). Formirovanie i razvitie celostnoj sistemy agropromyshlennogo 
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