The place of small agricultural entrepreneurship in the development of amalgamated territorial communities

  • Viktor Shyshkin Zaporizhzhya National University
Keywords: decentralization, united territorial communities, small agribusiness, farming, state support, financing program, economic development of the region


Relevance of research topic. The number of Ukrainian holding-type organizations and their land bank continues to grow, "displacing" small and medium-sized producers from the agricultural economy.Since 2019, state policy has been refocusing on forced support for small and small-scale farms, and after the Ukrainian decentralization reform the leadership of the united territorial communities of the new tools they received depends on the development of small and medium-sized businesses. Formulation of the problem. Today, the actualization of local economic development requires significant financial resources from the united territorial communities. And the formation of their budget depends on the effective agricultural sector operation. After the Ukrainian reform of local self-government and decentralization, the economic development of the territories and of Ukraine as a whole, depends on the using of new tools and resources by the community leadership. The solution of the agrarian sphere problems of the united territorial communities is in the plane of small agrarian entrepreneurship state support, strengthening of the state control over the activity of large agro-traders, as well as their social and financial responsibility to the united territorial communities. Analysis of recent research and publications. Theoretical questions on the study of small agrarian entrepreneurship in the development of united territorial communities were engaged in such scientists of the Institute of Economics of NASU, Institute of Agrarian Economics of NAAS of Ukraine, as Shemyakin D., Finagina OV., Lysetsky AS., Onishchenko OM., and other national and foreign scientists. Selection of unexplored parts of the general problem. The issue of the impact of decentralization on the agricultural sector development of the united territorial communities needs to be detailed and further researched. Setting the task, the purpose of the study. The article aim is to investigate the theoretical aspect of organizational and legal foundations of the formation of united territorial communities in Ukraine, assess the small agricultural business current state and trace its relationship with the activities of united territorial communities for economic development. Method or methodology for conducting research. The set of general scientific methods of cognition and special methods of economic research are used in the work. Among them: analysis and synthesis, generalization and comparison, system-structural and comparative analysis, systematic method of cognition of economic processes and phenomena, index method, and method of statistical groupings for analysis of united territorial communities activity development of the agro-industrial complex of Ukraine. Presentation of the main material (results of work). The article considers the theoretical aspect of organizational and legal foundations of the united territorial communities formation in Ukraine, assesses the current state of small agricultural business and reveals it’s main relationships with the united territorial communities activities for region economic development. Territorial communities are voluntary associations of residents of city, village and settlement councils, which directly receive funding from the state budget for the development of education, medicine, sports, culture, and social protection. Financial support from the state gives more opportunities to local communities to implement their own projects. The more active the territorial community, the more projects will be implemented and the territorial community profitability level will be higher, which it will spend on the development of territories. This is the main incentive to attract additional investment to improve people's living standards. In 2020, the Ukrainian Cabinet of Ministers adopted 24 orders on the definition of administrative centers and approval of regional community’s territories. There are 1469 territorial communities in our country. After the launch of the decentralization process in Ukraine the transfer of powers and resources to places from which the community itself determines the direction of funding, small communities require for resource lack for rural development. The solution has been a decision to consolidate several councils by merging, which allowed communities to use common resources for territorial development. Ukraine owns 60.3 million hectares, which is about 6% of Europe's territory.There are 32.7 million arable land hectares of land in the structure of Ukrainian agricultural territory, of which almost 9 million are used as pastures, hayfields, and other agricultural lands. The quarter of agricultural land was never distributed, remaining on the balance of the state. Thus, state and the communal property include 10.5 million hectares of agricultural land, which is 26% of the total area, of which 3.2 million hectares in the permanent use of state enterprises, 2.5 million hectares in stock, and the rest for rent. Almost 40% of the total number of Ukrainian enterprises in the agricultural sector and 38% of the area of agricultural land cultivated by agricultural enterprises are absorbed by agricultural holdings and large agricultural traders. On June 1, 2019, there were more than 160 large agricultural holdings in the country, they cultivate more than 3.6 million hectares of agricultural land. Thus, today in Ukraine the number of holding-type organizations and their land bank continues to grow, "displacing" small and medium-sized producers from the agricultural economy. The community agrarian branch is a complex multi-sectoral system, the individual subsystems of which are unevenly represented in different territorial formations, but are in close interaction with each other. The role of small agrarian businesses in the development of the united territorial community’s agriculture is constantly growing. In recent years, the share of farms has increased by 30%. With the development of farming in the agricultural regions of Ukraine, the opportunities to solve the problem of employment in rural areas and the revival of territories, in general, are increasing. Therefore, state support for agricultural producers is an important step in order to obtain funds for small business development in the agro-industrial sector. If earlier the preference of vectors of state support was in large agro-traders, then from 2019 the policy of the state was reoriented to the strengthened support of small and small-scale farms. Such support is confirmed by financial preferences for small agribusiness through regional branches of the Ukrainian State Farm Support Fund. Agricultural cooperatives will receive state support through cooperation with the Ministry of Agriculture of Ukraine with the assistance of the Department. Thus, today the promissory note form of payment has been abolished, and 70% of the cost of their equipment has been reimbursed for cooperatives. As a result of the crisis of 2014-2016, many Ukrainians started doing business and many successful cases of micro and small agricultural enterprises operating in the regions appeared in the country. However, barriers to rural development are a lack of financial resources and a lack of economic knowledge. Therefore, in order to maximally support farms and agro-industrial entrepreneurship in rural areas by the state, high-quality interaction and communication on the ground is needed. Thus, in addition to financial support, the state program also includes advising agricultural producers. Experienced specialists will help to structure the business, calculate the financial and create a business plan. In 2020, the budget of financial support for the agro-industrial sector of Ukraine is set at 4 billion UAH, which is only 43% of the limit does not meet 1% of GDP. the real need for financial state support of a key sector of Ukraine's economy. The implementation of the program of financing micro and small agribusiness has great potential not only in the country, but also within each united territorial community. Each of them, which participates in the program of state support of small agrarian business, annually receives about 75 thousand UAH of taxes to its budget. On a national scale, this is an additional UAH 75 million ($ 3.06 million) in taxes to local budgets over 5 years. The possibility of organizational and legal forms of micro and small agribusiness, according to the current legislation of Ukraine, to hire labor partially solves the problem of unemployment in rural areas. A significant contribution is also made by micro and small agribusiness in increasing the volume of gross domestic product in Ukraine. Small and medium business in Ukraine brings 55% of gross domestic product to the country's economy, and micro and small business 16%, while in Europe the figure is twice as high, and their efficiency is 10 times higher than in our country. It is the subjects of small and medium-sized businesses in the field of agriculture that are powerful catalysts and stimulators of business activity, determine the unification of all participants in economic relations in the country. Therefore, state support and effective development of the united territorial community’s agribusiness create the basis for the emergence and functioning of the institutional environment. Thus, giving 12% of Ukraine's GDP and providing jobs for members of the local community, small agribusiness entities need the development of agricultural equipment suppliers, agricultural processors, research institutions that conduct breeding work and develop modern technologies, logistics infrastructure, market structures, as well as institutions of agricultural education. The agro-industrial sphere of the community is the main means of ensuring the socio-economic development of territorial united territorial communities and the effective functioning of rural areas. However, the distribution of agricultural land and land ownership remains an urgent problem for united territorial communities, as in addition to the territorial base, the land is a means of agricultural production. The population of the united territorial community is the main consumer of agricultural products produced by small agricultural enterprises. So, it provides a reproduction of labor for the industry. The vector of development of the united territorial community’s agricultural production depends on the availability of natural, productive, and labor resources of the community. The most energy-intensive are the production of vegetable crops, sugar beets, potatoes, industrial crops, as well as certain livestock industries, which are more often engaged in by farms and small agricultural enterprises. The study found that in Ukraine, government measures are the main obstacle to the development of agro-industrial entrepreneurship in united territorial communities, because it creates an extremely unfavorable climate for the development of small and medium enterprises or prohibits it altogether. For many years in a row, the sources of budget formation, which are generally local taxes, remain a significant problem in the development of agriculturally oriented united territorial communities. The limitation of incomes of agricultural enterprises and the population is the low efficiency of agricultural enterprises, the main reason for which is the low wages of peasants. The reason for this problem in the agricultural sector is low productivity, which forms the added value of agricultural products. Examining the structure of Ukrainian small agrarian business, its players in general education were classified into two large groups: 1. Farmers and agricultural producers living and working in rural areas. They live in a society within the lands of which they rent shares, pay all the necessary taxes, provide residents of general education with jobs, finished agricultural products at affordable prices. 2. Farmers who are registered in Ukrainian cities, however, use the land of the community, paying only the rent of agricultural land, depleting them due to non-compliance with crop rotations. Such agro-traders enjoy state support, soft loans, and other preferences, receive super-profits and in no way contribute to the development of agricultural areas and society. These are the activities of large agro-industrial holdings, the form of interaction with rural general education and the mechanisms of social responsibility which need to be worked out with the help of the following measures by the government and agricultural producers: 1) development and restoration of the infrastructure of the united territorial communities and its elements used by agricultural holdings; 2) use of modern ecologically safe agrotechnologies. 3) training of qualified specialists in the field of agro-industrial complex, their employment in modern agro-industrial companies; 4) state support, restoration, and preservation of recreational and health facilities of the united territorial communities, including agricultural lands, which are leased by large agricultural holdings; 5) involvement in the economic activity of the agricultural holding of farms on a partnership basis. Thus, partnerships and cooperation between large agricultural holdings and small agricultural producers of united territorial communities can contribute not only to the development of small agricultural businesses in Ukraine, but also to the socio-economic development of society and rural areas in general. The field of application of results. The scientific research results on the problems of small agricultural entrepreneurship in the development of united territorial communities can be used in the field of state regulation of agribusiness and united territorial communities to support local agricultural producers. Conclusions according to the article. The agro-industrial sphere of the communities is the main means of ensuring the socio-economic development of territorial communities and the effective functioning of rural areas, because the development of farming opportunities increases the problem of rural employment and the revival of territories in general. That is why state support for agricultural producers is an important step to obtain funds for small business development in the agro-industrial sector.


Download data is not yet available.


1. Information portal «Aquarius». What is UNITED TERRITORIAL COMMUNITIES - in simple words? URL: territorial communities-prostymy-slovamy/.

2. Online platform «». On the formation of territorial communities. Why capable communities are created in Ukraine. URL:

3. Online news platform «». URL: territorialcommunities-otrimayut-vid-derjgeokadastru-dvi-osnovni-funktsiyi-kontrolyu-za-zemlyami—solskiy.

4. Agrarian and political site of Ukraine «». State Agricultural Holding "Ukraine" – why agricultural land under the Ministry of Agriculture is used inefficiently? URL:

5. online platform. Top 100 latifundists of Ukraine. URL:

6. Official page of the Ukrainian club of agrarian business "". Agroholdings cultivate a third of the lands of all agricultural enterprises. URL:

7. The official site of the State Statistics Service of Ukraine (2019), Business entities' performance indicators. URL:

8. The Verkhovna Rada of Ukraine (2003). The Law of Ukraine «Economic Code of Ukraine». URL:

9. Official page Vinnytsia Regional Association of Local Self-Government Bodies. Development of agrarian business in UNITED TERRITORIAL COMMUNITIES. A seminar on state support for farmers was held at the Vinnytsia Center for Farmers. URL: territorial communities-seminar-z-pytan-derzhavnoyi-pidtrymky-fermeriv-projshov-u-vinnytskomu-tsrms/.

10. Multimedia platform of foreign broadcasting of Ukraine «Ukrinform». UNITED TERRITORIAL COMMUNITIESs are «greenhouses» for small and medium-sized businesses - the EU representation in Ukraine. URL: territorialcommunities-e-teplicami-dla-malogo-ta-serednogo-biznesu-predstavnictvo-es-v-ukraini.html.

11. Online news platform "". State support for the agricultural sector for 2020-2025 - watch the hands of lawmakers. URL:

12. Online platform «». A program for the development of microbusiness in communities has been launched in Ukraine. URL:

13. Shemyakin, D. (2019). Small and medium business in Ukraine. URL:

14. Finagina, O. V. (2005). Rynkova transformatsiia v rehioni: osoblyvosti rozvytku ta diahnostuvannia [Market transformation in the region: features of development and diagnosis], Yuho-Vostok, Donetsk, Ukraine.

15. Information portal «Agricultural sector of Ukraine». Progressive forms of business organization. State support for small business development in Ukraine. URL:

16. Information platform «». Other forms of small business in the agricultural sector. URL:

17. Official web portal of the Ministry of Economy, Trade and Agriculture of Ukraine. Support for small and medium enterprises at the state level. URL:

Author Biography

Viktor Shyshkin, Zaporizhzhya National University

Ph. D. in Economical Sciences, Associate Professor of the Entrepreneurship, Organization Management and Logistics Department

How to Cite
Shyshkin, V. (2021). The place of small agricultural entrepreneurship in the development of amalgamated territorial communities. University Economic Bulletin, (48), 7-20.
Agrarian Еconomy