Economics and management of national economy

Grain logistics in Ukraine: the main challenges and effective ways to reach sustainability

Economic Annals-XXI

Economic Annals-ХХI: Volume 178, Issue 7-8, Pages: 70-83

Citation information:
Nekrasenko, L., Pittman, R., Doroshenko, O., Chumak, V., & Doroshenko, A. (2019). Grain logistics in Ukraine: the main challenges and effective ways to reach sustainability. Economic Annals-XXI, 178(7-8), 70-83. doi: https://doi.org/10.21003/ea.V178-06

View Full-TextDownload PDF

Larysa Nekrasenko
PhD (Biology),
Associate Professor,
Poltava State Agrarian Academy
1/3 Skovoroda Str., Poltava, 36003, Ukraine
nekrasenko.la@gmail.com
ORCID ID: http://orcid.org/0000-0002-2867-6139

Russell Pittman
PhD (Economics),
Visiting Professor,
Kyiv School of Economics
92-94 Dmytrivska Str., Kyiv, 02000, Ukraine;
Antitrust Division,
U.S. Department of Justice
Washington D.C., USA
russellpittman3@gmail.com
ORCID ID: http://orcid.org/0000-0001-9498-0561

Olga Doroshenko
PhD (Economics),
Associate Professor,
Poltava State Agrarian Academy
1/3 Skovoroda Str., Poltava, 36003, Ukraine
sunlife87@ukr.net
ORCID ID: http://orcid.org/0000-0003-1163-8635

Valentyna Chumak
PhD (Economics),
Associate Professor,
Poltava State Agrarian Academy
1/3 Skovoroda Str., Poltava, 36003, Ukraine
valentyna.chumak@pdaa.edu.ua
ORCID ID: http://orcid.org/0000-0002-5109-4233

Andrii Doroshenko
PhD (Economic),
Associate Professor,
Poltava State Agrarian Academy
1/3 Skovoroda Str., Poltava, 36003, Ukraine
doroshenko82_a@ukr.net
ORCID ID: http://orcid.org/0000-0002-6314-1586

Grain logistics in Ukraine: the main challenges and effective ways to reach sustainability

Abstract. One of the most important sectors of the economy in Ukraine is agriculture. Ukraine today is one of the world’s leading grain producers and exporters. The growth of world food needs contributes to the integration of Ukrainian agricultural products into the EU economy. It is a key for the Ukrainian agricultural products to be a part of EU economy. However, this outcome may depend on the constraints on growth.

The article summarizes the arguments and counterarguments in the scientific discussion of the identification of the main challenges and ways in the sustainable development of grain logistics in Ukraine, compares the situation in Ukraine, Poland, Romania and the Czech Republic.

The main purpose of the study was to identify the peculiarities of logistics and search for alternative forms and methods of grain products delivery to the storage and sale sites (ports). The research was done on existing transport corridors and the cost per ton. The relevance of the problem lies in the fact that current growth trends in the volume of grain transportation and current situation of transport infrastructure require improvement of the logistic quality and the formation of new logistic routes.

The article presents issues of the development of freight logistics in the following way: determination of the actual situation of freight logistics; identification of the main trends in recent years; determination of freight transportation advantages and efficiency level using various types of transport; formation of proposals and prospects of the development of grain products transportation considering the existing needs as well as prospects for growth of agricultural production in Ukraine. Methods used in the study included empirical research and scientific retrospective analysis.

Ukrainian grain logistics was chosen as the object of research, as the trends in the agro-industrial complex and the growing volumes of grain exports through seaports require finding better ways to improve the efficiency of freight transportation on the basis of cost reduction as well as increase in transportation speed. The article presents the results of an empirical analysis of freight transportation of grain products. The analysis showed that railroad is the main mode of grain transport.

The state of the railway system of Ukraine was featured as the most serious problem reported and a limitation on market participants in the results of our survey. 80% of the respondents consider high railway tariffs a problem; 70% consider the poor quality of the railway network and infrastructure to be a problem; and 60% noted the lack of freight cars.

At the same time, road transport is used for transportation over relatively short distances. However, it has limitations due to the low road capacity. In addition, water transport can be an important reserve for increasing the volume of transportation. Nevertheless, it will be possible only in case of investment growth and infrastructure restoration.

The study empirically confirms and theoretically proves that improvement and optimization of Ukraine’s transport infrastructure is a prerequisite for ensuring the growth of agricultural exports and overall economic growth. The results of the study can be useful for grain products exporters and authorities.

Keywords: Agricultural Logistics; Grain Export; Transport; Land Reform; Vertical Restructuring; Competition; EU

JEL Classification: L43; L92; O18; P31; Q15; Q17; Q18; R40; R42

Acknowledgements and Funding: The authors received no direct funding for this research.

Contribution: The authors contributed equally to this work.

DOI: https://doi.org/10.21003/ea.V178-06

References

  1. Abromavičius, A., & Mushak, A. (2017, April 19). The Right Land Reform Could Transform Ukraine Now. Atlantic Council.
    Retrieved from http://www.atlanticcouncil.org/blogs/ukrainealert/the-right-land-reform-could-transform-ukraine-now
  2. Allina-Pisano, J. (2007). The Post-Soviet Potemkin Village: Politics and Property Rights in the Black Earth. Cambridge: Cambridge University Press.
  3. Arrigo, U., & Di Foggia, G. (2014). Public Expenditure on Railways in Europe: a cross-country comparison. Milan: University of Milano-Bicocca, Dipartimento di Scienze Economico-Aziendali e Diritto per l’Economia.
    Retrieved from https://boa.unimib.it/retrieve/handle/10281/56247/84419/
    2014_Arrigo_%26_Di_Foggia_gov_exp_rail_europe.pdf
  4. Arvis, J.-F., Saslavsky, D., Ojala, L., Shepherd, B., Busch, C., Raj, A., & Naula, T. (2019). Connecting to Compete 2019: Trade Logistics in the Global Economy: The Logistics Performance Index and Its Indicators. Washington D.C.: World Bank.
  5. Bukovskiy, A. V., & Kvartalna, N. A. (2012). Basic Premises and Trends of Reforming Railway Sector in Ukraine. Economic Herald of the Donbas, 30(4), 129-135 (in Ukr.).
  6. Csaki, C., & Lerman, Z. (1997, August). Land Reform in Ukraine: The First Five Years. World Bank Discussion Paper No. 371. Washington D.C.: World Bank.
    Retrieved from http://documents.worldbank.org/curated/en/936661468319489762/Land-reform-in-Ukraine-the-first-five-years
  7. European Conference of Ministers of Transport (ECMT) (2005). Railway Reform and Charges for the Use of Infrastructure. Paris: European Conference of Ministers of Transport (now International Transport Forum).
    Retrieved from https://www.itf-oecd.org/sites/default/files/docs/05railreforme.pdf
  8. Embassy of the Netherlands in Ukraine (2017, January 19). Establishment of a land market in Ukraine: current state and prospects.
    Retrieved from http://infagro.com.ua/eng/establishment-of-the-land-market-in-ukraine-current-state-and-prospects
  9. Eurostat (2018). Transport by type of good. Official web-site.
    Retrieved from https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=iww_go_atygo&lang=en
  10. Eurostat (2018). Goods transported by group of goods. Official web-site.
    Retrieved from http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=rail_go_grpgood&lang=en
  11. Eurostat (2018). Annual road freight transport, by type of goods and type of transport. Official web-site.
    Retrieved from http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=road_go_ta_tg&lang=en
  12. European Commission (2019). Report from the Commission to the European Parliament and the Council. Sixth report on monitoring development of the rail market, SWD(2019)13. Brussels.
    Retrieved from https://ec.europa.eu/transport/sites/transport/files/6th_rmms_report.pdf
  13. FAO (2012). Agriculture and Trade Background Policy Note: Ukraine. Rome: Food and Agriculture Organization.
    Retrieved from http://www.fao.org/fileadmin/templates/est/meetings/wto_comm/
    Trade_Policy_Brief_Ukraine_final.pdf
  14. Hausman, R., Rodrik, D., & Velasco, A. (2008). Growth Diagnostics. In J. Stiglitz, & N. Serra (Eds.), The Washington Consensus Reconsidered: Towards a New Global Governance. New York: Oxford University Press.
    doi: https://doi.org/10.1093/acprof:oso/9780199534081.003.0015
  15. Ilchenko, S., & Oneshko, S. (2017). Prospects for the Development of Waterway Transport Enterprises in Ukraine. Problems and Perspectives in Management 15, 46-54 (in Ukr.).
  16. Keyzer, M. A., Merbis, M. D., Halsema, A. N., Heyets, V., Borodina, O., & Prokopa, I. (2017). Unlocking Ukraine’s Production Potential. In S. Gomez y Paloma., S. Mary, S. Langrell & P. Ciaian (Eds.), The Eurasian Wheat Belt and Food Security (pp. 141-154). New York: Springer.
    doi: https://doi.org/10.1007/978-3-319-33239-0
  17. Klok, E. M. (2017). Enhancement of intermodal transport in terms of a coherent rail and maritime transport. Collected Scientific Works of Ukrainian State University of Rail Transport, 169, 82-87 (in Ukr.).
  18. Ministry of Infrastructure of Ukraine (2015, June). Investment opportunities. Official web-site.
    Retrieved from https://mtu.gov.ua/files/for_investors/MIU%20
    Investment%20Opportunities%20detailed%20version%20.pdf
  19. Laing, E., & Nivievskyi, O. (2017, September 1). What is Wrong with Port Tariffs in Ukraine and How to Make them Competitive? How to Reform Sea Port Tariffs in Ukraine. VoxUkraine.
    Retrieved from https://voxukraine.org/en/what-is-wrong-with-port-tariffs-in-ukraine-and-how-to-make-them-competitive
  20. Lapa, V., Gagalyuk, T., & Ostapchuk, I. (2015). The Emergence of Agroholdings and Patterns of Land Use in Ukraine. In A. Schmitz & W. H. Meyers (Eds.), Transition to agricultural market economies: the future of Kazakhstan, Russia and Ukraine (pp. 102-111). Gainesville: University of Florida.
    doi: https://doi.org/10.1079/9781780645353.0000
  21. Liefert, W. M., & Liefert, O. (2015). The rise of the former soviet union region as a major grain exporter. In A. Schmitz & W. H. Meyers (Eds.), Transition to agricultural market economies: the future of Kazakhstan, Russia and Ukraine (pp. 27-38). Gainesville: University of Florida.
    doi: https://doi.org/10.1079/9781780645353.0000
  22. Lomtieva, I. M., Snachiov, M. P., & Shalenyi, O. M. (2012). Financial Resources Management During Major Overhaul of Main Facilities of Railway Transport in the Process of Its Reforming. Science and Transport Progress (Bulletin of the Dnipropetrovsk National University of Railway Transport), 42, 269-273 (in Ukr.).
  23. Lopakhin, A. (2016, March 21). Why Vessel Calls at Ukrainian Ports are the Most Expensive in the World Centre for Transport Studies.
    Retrieved from http://en.cfts.org.ua/articles/
    why_vessel_calls_at_ukrainian_ports_are_the_most_expensive_in_the_world
  24. Martsenyuk, L. V. (2012). Impact of Rail Transport in the Development of the National Economy of Ukraine. Science and Transport Progress (Bulletin of the Dnipropetrovsk National University of Railway Transport), 42, 274-278 (in Ukr.).
  25. Martsenyuk, L. V. (2014). Organization of Freight Transportation in Ukraine in the Reformation Conditions. Science and Transport Progress (Bulletin of the Dnipropetrovsk National University of Railway Transport), 51, 15-23 (in Ukr.).
  26. Martynuk, M. (2018, April 26). How do railroads get around grain problems? Ekonomichna Pravda.
    Retrieved from https://www.epravda.com.ua/columns/2018/04/26/636371 (in Ukr.)
  27. Maslak, O. (2016, November 16). Logistics of grain exports in Ukraine. Unpublished paper, Sumy National Agrarian University.
    Retrieved from http://propozitsiya.com/logistika-eksporta-zerna-v-ukraine (in Ukr.)
  28. Maslak, O. (2016, September 1). Development of grain logistics in Ukraine. Agribusiness today.
    Retrieved from http://agro-business.com.ua/agro/ekonomichnyi-hektar/item/7937-rozvytok-zernovoi-lohistyky-v-ukraini.html (in Ukr.)
  29. Ministry of Infrastructure of Ukraine (May 2017). National Transport Strategy of Ukraine 2030. Kyiv (in Ukr.).
  30. Murova, O. (2015). Agricultural Land Policy of Ukraine: State Legislation and Efficiency Analysis. In A. Schmitz & W. H. Meyers (Eds.), Transition to agricultural market economies: the future of Kazakhstan, Russia and Ukraine (pp. 204-215). Gainesville: University of Florida.
    doi: https://doi.org/10.1079/9781780645353.0000
  31. Nizalov, D., Thornsbury, S., Loveridge, S., Woods, M., & Zadorozhna, O. (2015). Dynamics of Agricultural Production and Land Use in Post-Soviet Ukraine. In A. Schmitz & W. H. Meyers (Eds.), Transition to agricultural market economies: the future of Kazakhstan, Russia and Ukraine (pp. 215-228). Gainesville: University of Florida.
    doi: https://doi.org/10.1079/9781780645353.0000
  32. Okorokov, A. M., & Bulakh, M. O. (2018). Proposals for Improving the Process of Forming Programs of Reforming the Railway Transport Industry. Science and Transport Progress. Bulletin of the Dnipropetrovsk National University of Railway Transport, 74(2), 57-66 (in Ukr.).
  33. Petrenko, E. A. (2012). The Problem of Monopoly in Rail Transport. Science and Transport Progress. Bulletin of the Dnipropetrovsk National University of Railway Transport, 40, 296-300 (in Ukr.).
  34. Pidlisny, P. (2016, January). Inland Water Transport: History, Problems, and Directions of Development. Challenges of Time (in Ukr.).
  35. Pittman, R. (2007). Options for Restructuring the State-Owned Monopoly Railway. Research in Transportation Economics, 20, 179-198.
    doi: https://doi.org/10.1016/S0739-8859(07)20007-1
  36. Pittman, R. (2013). Blame the Switchman? Russian Railways Restructuring after Ten Years. In M. Alexeev & Sh. Weber (Eds.), The Oxford Handbook of the Russian Economy. Oxford, UK: Oxford University Press.
    doi: https://doi.org/10.1093/oxfordhb/9780199759927.001.0001
  37. Pittman, R. (2017). Reforming and Restructuring Ukrzaliznytsia: A Crucial Task for Ukrainian Reformers. Science and Transport Progress (Bulletin of the Dnipropetrovsk National University of Railway Transport), 67, 34-50.
    doi: https://doi.org/10.15802/stp2017/92775
  38. Pugachov, V., & Pugachov, N. (2017). Agrarian Reform in Ukraine. Wheat Belt and Food Security (pp. 67-80). New York: Springer.
    doi: https://doi.org/10.1007/978-3-319-33239-0
  39. Rodrik, D. (2008). One Economics, Many Recipes: Globalization, Institutions, and Economic Growth. Princeton, N.J.: Princeton University Press.
  40. Rodrik, D. (2017). Straight Talk on Trade: Ideas for a Sane World Economy. Princeton, N.J.: Princeton University Press.
  41. Ryabova, S. (2017, July 26). River strategist: why «Nibulon» builds elevators near the Dnipro and Southern Bug? Mind.
    Retrieved from https://mind.ua/publications/20174737-richkovij-strateg-navishcho-nibulon-budue-elevatori-bilya-dnipra-ta-pivdennogo-bugu (in Ukr.)
  42. Schmitz, A., & Meyers, W. H. (Eds.). (2015). Transition to Agricultural Market Economies: The Future of Kazakhstan, Russia and Ukraine. Gainesville: University of Florida.
    doi: https://doi.org/10.1079/9781780645353.0000
  43. Shepotylo, O., Kravchuk, K., Shapoval, N., & Tyshchuk, T. (2017). How to boost export and foster private sector growth in Ukraine? Analysis of Ukrainian manufacturing, agriculture and IT (MAIT) sectors. Discussion paper. Kyiv: Kyiv School of Economics.
    Retrieved from https://kse.ua/kse-research/how-to-boost-export-and-foster-private-sector-driven-economic-growth-in-ukraine-analysis-of-ukrainian-manufacturing-agriculture-and-it-mait-sestors
  44. Stolbunenko, N. M., & Tserkovna, A. V. (2017). Features and perspectives of development grain logistics in Ukraine. Market economy: modern management theory and practice, 16(2), 188-198 (in Ukr.).
  45. Strubenhoff, H.-W. (2016, March 3). Unleashing the potential of agriculture in Ukraine. Future Development blog. Brookings.
    Retrieved from https://www.brookings.edu/blog/future-development/2016/03/03/unleashing-the-potential-of-agriculture-in-ukraine
  46. Timtchenko, I. (2016, February 25). Cargill to investment $100 million into grain terminal at southern port. Kyiv Post (in Ukr.).
  47. Tkachev, V. (2019, January 21). Grain leaves in wagons. How the railway loses freight traffic. Liga.Net.
    Retrieved from https://biz.liga.net/all/transport/opinion/zerno-uhodit-v-furah-kak-jeleznaya-doroga-teryaet-gruzopotok (in Ukr.)
  48. Tovstopyat, A. (2013, May). Grain production in Ukraine, related infrastructure grain exports: Medium term development. Kyiv: Centre for Transport Strategies (in Ukr.).
  49. State Statistics Service of Ukraine (2018). Transport and communication of Ukraine. Official web-site.
    Retrieved from http://www.ukrstat.gov.ua (in Ukr.)
  50. United States Department of Agriculture (USDA) (2017, November). Grain: World Markets and Trade. Washington: U.S. Department of Agriculture, Foreign Agricultural Service.
    Retrieved from https://downloads.usda.library.cornell.edu/usda-esmis/files/zs25x844t/s7526c71b/00000036c/grain-market-11-09-2017.pdf
  51. Guadagni, M., Pachon, M. C., Karakulova, A., Nivievskyi, O., Nazhmidenov, K., Gobjila, A., Giogobiani, M., & Bucik, M. (2015, August). Shifting into Higher Gear: Recommendations for Improved Grain Logistics in Ukraine. Working Paper No. ACS15163. Washington, D.C.: World Bank Group.
    Retrieved from http://documents.worldbank.org/curated/en/451821468191333168/Shifting-into-higher-gear-recommendations-for-improved-grain-logistics-in-Ukraine

Received 19.04.2019
Received in revised form 20.07.2019
Accepted 23.07.2019
Available online 30.09.2019

View Full-TextDownload PDF
In, , , , , , ,

More Papers