Mechanism of financial support for the agrarian sector on preferential terms

The purpose is to study the efficiency of using state support funds for agricultural producers from the standpoint of assessing the performance of both financial institutions providing lending and subsidization services and loan recipients agricultural entities as well as to consider new approaches to financing the sector and the effectiveness of proposed preferential credit programs.

Methods – a methodology of comparative monitoring of the functioning of agricultural entities and the financial sector based on economic and statistical techniques of comparison and dynamics, an abstract-logical approach, analysis, and generalization of the obtained production indicators.

Results – the need of agricultural producers for the allocation of credit loans and subsidies from the republican budget is demonstrated. However, there is a low share of investments in fixed capital due to insignificant attraction of long-term loans. The volumes of utilized appropriations in the agro-industrial complex as a whole are characterized by a small share, since their activities are often unproductive and unstable. Issues of objectivity and transparency of investment are insufficiently addressed. Subsidies are often distributed unevenly, which leads to the concentration of budgetary funds in large agroholdings. This exacerbates inequality and weakens the competitiveness of small and medium-sized forms of farming.

Conclusions – the mechanism of material support for the agrarian sector should take into account that agribusiness structures operate on the principles of self-financing and that specific support measures are nothing more than additional measures designed to ensure sustainable economic conditions of activity. A gradual transition from direct subsidization of grants to AIC market participants toward the provision of accessible credit resources should be carried out on the principle of repayability of borrowed capital, which is ensured primarily by the level of income of the borrower. Food security of the republic, preservation of jobs, and development of rural areas depend on successful production activity in the agrarian sphere.

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