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In Search for Development Trend

Elizaveta Svyatkivska, Agro Perspectiva

Lack of modern sophisticated agricultural machinery is one of the main reasons for domestic agricultural and industrial complex unprofitable operation. The problem has been indicated. The only thing left is to find efficient methods for the solution. That is where the problems start.

The Government Saves Agrarians in its Own Way

Methods called by the Government to rescue agrarians and measures that can be actually applied in the present market situation are principally different.

The bid of the Government on supplying the agrarians by manufacturing of domestic machinery can be most likely considered in a long-term perspective. Meanwhile, farmers have to seed and harvest crops nowadays already. The decay in the fleet of harvesters and field engines is exaggeraiting from year to year. This fact prevents harvesting in proper time and leads to considerable grain losses.

It is intended to purchase 2,300 grain harvesters (including 1,500 domestically manufactured machines) in the current year. By the way, last year 630 machines out of 2,760 purchased harvesters were made in Ukraine. These indices evidence unpopularity of locally produced harvesters and small chances that procurement of local machinery would drastically increase in 2003. There exist number of reasons for that. First of all, experience of manufacturing sophisticated agricultural technique is absent in Ukraine. Therefore quality of Ukrainian-made machinery is much less than that of foreign analogues. Secondly, industrial production of harvesters has not been tuned up yet leading to high cost of output. While some imported harvesters (Claas, Massey Ferguson, KUHN, John Deere, and others) are much more expensive than domestic ones, though they are considered more reliable, Russian-made Don and Enisey are superior to Ukrainian harvesters in terms of quality and often are cheaper. Even taking into consideration 30% rebate calculated upon cost of sophisticated agricultural technique that is paid by the Ukrainian Government to farmers purchasing Ukrainian-made machinery, our harvesters only equal to Russian machines in terms of price. At the same time, present tendency to create joint ventures could eliminate this price advantage, because production of joint ventures is also eligible for 30% reimbursement from the State budget.

In addition, the Government stakes on repairing of machinery already possessed by the farms. As said by Sergey Ryzhuk, Minister of Agrarian Policy, 4 ths. tractors are repaired per day nowadays. More machinery would be fixed by the beginning of seeding time than last year. Due to dilapidation of main harvesting fleet, even fixed ones would not be able to operate efficiently.


361 ths. tractors (field engines) 54 ths. of which are out of repair, 90 ths. of ploughs, 105 ths. of seders, and other machinery would be employed at spring field works this year. Besides, Ukrainian agricultural farms are going to purchase agricultural machinery for the amount no less than UAH 1 bn in 2003. The figure of the last year made UAH 1.1 bn, including UAH 700 mn for locally made machinery. At the same time specialists estimate the annual requirements of Ukrainian agrarians in reequipment of machinery in UAH 3-4 bn. As calculated by Petr Sabluk, director of Institute of agrarian economics at Ukrainian Academy of Agrarian Sciences, if tempos of machinery supply would not change, agriculture would cease producing output by 2007.

Alternative Decisions Proposed by the Market

Obviously, the market was not brought to a stand waiting until the Government would supply machinery to agrarians. Joint ventures to manufacture machinery, machine and tractor stations, and companies trading with used foreign technique appear in the market.

At the moment two main Russian manufacturers, holding "Novoye Sodruzhestvo" (New commonwealth), owner of the controlling block of shares of the enterprise Rostselmash (60% of the Russian market) and Sibmashholding Krasnoyarsk harvester plant (30% of the market), compete for the Ukrainian market. Both holdings count on our market mostly due to the fact that recession in demand for harvesters is witnessed nowadays in Russia. Meanwhile, experts project that demand for Russian-made machinery would increase in the nearest three years in the CIS countries. Alexander Savostyanov, representative of "Novoye Sodruzhestvo", has estimated capacity of the market: "Russia produced 86 mn tons of grain last year, having reequipped the fleet of harvesters in the country by approximately 8,000 machines. At the same time, Ukraine has grown 40 mn tons of grain with replenishment of harvester fleet by only 1,500 units."

Experts note that positions of Sibmashholding have strengthened in Ukraine recently, because the company managed to propose machinery of higher quality. In response the management of "Novoye Sodruzhestvo" decided to reconsider weak points of Rostselmash output and to replace harvester's axle, the second important joint in the mechanism of harvester after its engine. There were a lot of claims on the quality of this unit.

Honorable transfer of the first six out of forty grain harvesters took place in March 20 at the border of Russian Federation and Ukraine. OJSC Rostselmash would deliver machinery to Lugansk region in March April 2003 upon preliminary agreement.

As informed by press-service of "Novoye Sodruzhestvo", this agreement was attained during the visit of Lugansk region delegation to Rostov region in the end of the previous year. Administration of Lugansk region would reimburse its peasants 50% of banking loan rate to ease purchase new machinery. After harvesting Lugansk region plans to acquire forty Rostselmash harvesters more. (Rostselmash sold 28 harvesters to Ukrainian agrarians in 2000, 212 units in 2001 and 487 machines in 2002. 94 harvesters have been delivered to Ukraine this year 78 units of "Don 1500B" and 16 machines of SK-5M Niva). About 550 harvesters are planned to deliver to Ukraine by the end of the year.

Meanwhile, Sibmashholding takes serious steps to squeeze the competitor from the Ukrainian market where presence of Krasnoyarsk plant is still insignificant (Sibmashholding mainly supplies machinery to Kazakhstan). Sibmashholding and "Ukrainian industrial power engineering company" (UPEK) have reached the agreement on strategic partnership in agricultural machine building in the middle of February. As a result, assembling of Enisey harvesters would be organized at one of Ukrainian plants with the share of Ukrainian spare parts constituting no less than 50%. It would let domestic agrarians to purchase these units with reimbursement of 30% of cost. Besides, a model of base Ukrainian harvester adapted to Ukrainian conditions would be created on the basis of Enisey harvester. Sibmashholding would supply 100 machines annually, starting from 2003. Obviously, it is much less than deliveries of "Novoye Sodruzhestvo" company, but in the future positions of Sibmashholding are more beneficial.

Creation of machine and tractor stations could become another response of the market to present lack of grain harvesting machinery. However, cost of machine and tractor station's services would be too high in the opinion of Sergey Ryzhuk. Nevertheless, at present agrarians have to use these services. Enlargement of machine and tractor stations' number is projected in the future few years. Local businessmen started to invest capitals into them in 2002 having noticed possibility to gain profit.

Machine and tractor stations are equipped mainly by imported machinery, because it is important for the owners to use harvesters as long as possible during the season and in different regions of the country. Agricultural company can use its machinery two weeks a year, while machine and tractor stations provide harvesting services for two months or more ferrying units from region to region. Both Ukrainian and Russian harvesters would not stand such conditions of operation. Machine and tractor stations use powerful foreign machinery, though purchasing of used harvesters become more and more popular in Ukraine due to the high price of brand new machinery.

Nowadays issue of Ukrainian harvester existence still remains open. The chances are that this machine would be created applying Russian technologies and spare parts. As to industrial production of exclusively domestically made new machinery, this is a long-term perspective that can remain only a perspective in the conditions when Ukrainian market is intensively conquered by major Russian producers.


The list of major domestic manufacturers follows: State company "Malyshev plant" (harvesters of Obriy trademark), JSC Kherson harvesters (Slavutich trademark), and Lan Concern (Lan trademark). As reported by the State Statistics Committee, export of agricultural machinery constituted only 358 harvesters in 2002 (324 beet harvesters and 34 grain harvesters). OJSC Ternopol harvester plant (beet harvesters) and OJSC Kherson harvesters (corn harvesters) were the main exporters. Main deliveries of this machinery felt into Russia. 30 fodder choppers and 1,778 tractors were delivered in 2002. OJSC Kharkov Tank Plant and Yuzhmash are the main exporters. These machines were supplied both to Russia and the CIS countries. Import of agricultural machinery greatly exceeded its export in 2002. Thus, 1,403 harvesters were imported including 1,201 grain harvesters, and 202 beet harvesters and potato combines. The share of Russian import made 534 harvesters, while portion of Germany-made machinery reached 370 units. Mainly new units were supplied from Russia and used one from the West. 73 imported beet harvesters and potato combines were brought from Germany, 40 from Russia, and 30 from France. 134 fodder choppers were imported last year. 2,272 tractors were delivered to Ukraine in 2002, including 1,945 wheel tractors from Minsk Tractor Plant and 85 crawler tractors from Moldova.


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