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What drives peasant household to commercialize? An investigation of the factors leading to commercialization of semi-subsistence farming in Ukraine

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More than half of the total number of households in Ukraine are engaged in agricultural activities both for food self-sufficiency and for the production of marketable agricultural products, acting as subsistence or semi-subsistence farms. The determination of the right strategy for the further development of this form of farming is the key to the effective development of the agricultural sector, rural areas and the national economy as a whole. Instigated by Europe's CAP policy and its implementation, the study seeks to and delivers the factors influencing the commercialization of the semi-subsistence farms in Ukraine, based on the wealth of statistical data. The findings also show the lack of a strategy to support the establishment of a model of individual farming, which must counteract the risks of industrialized agro-production.
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WHAT DRIVES PEASANT HOUSEHOLD TO COMMERCIALIZE?
AN INVESTIGATION OF THE FACTORS LEADING TO
COMMERCIALIZATION OF SEMI-SUBSISTENCE FARMING IN
UKRAINE
Inna Koblianska1, Oleh Pasko2, Tetiana Marenych3,
Nataliia Kotseruba 4, Viktoriia Tkachenko 5
*Corresponding author E-mail: koblianska@protonmail.com
A R T I C L E I N F O
Original Article
Received: 27 October 2020
Accepted: 20 November 2020
doi:10.5937/ekoPolj2004169K
UDC 338.43:[64:711.3(477)
A B S T R A C T
More than half of the total number of households in
Ukraine are engaged in agricultural activities both for
food self-sufciency and for the production of marketable
agricultural products, acting as subsistence or semi-
subsistence farms. The determination of the right strategy
for the further development of this form of farming is
the key to the effective development of the agricultural
sector, rural areas and the national economy as a whole.
Instigated by Europe’s CAP policy and its implementation,
the study seeks to and delivers the factors inuencing
the commercialization of the semi-subsistence farms
in Ukraine, based on the wealth of statistical data. The
ndings also show the lack of a strategy to support the
establishment of a model of individual farming, which
must counteract the risks of industrialized agro-production.
© 2020 EA. All rights reserved.
Keywords:
households, semi-subsistence
farming, commercialisation,
self-sufciency, policy
JEL: О13, R38, Q18
1 Inna Koblianska, PhD, Associate Professor, Faculty of Economics and Management, Sumy National
Agrarian University, H.Kondratiev str., 160, 40021, Sumy, Ukraine. Phone: +380501966431.
E-mail: koblianska@protonmail.com, ORCID ID (http://orcid.org/0000-0002-7844-9786)
2 Oleh Pasko, PhD, Associate Professor, Faculty of Economics and Management, Sumy National
Agrarian University, H.Kondratiev str., 160, 40021, Sumy, Ukraine. Phone: +380503073138.
E-mail: oleh.pasko@snau.edu.ua, ORCID ID (http://orcid.org/0000-0002-6275-5885)
3 Tetiana Marenych, Doctor of science, Professor, Head of the Department of Accounting and Audit,
Educational and Scientic Institute of Business and Management, Kharkiv Petro Vasylenko Na-
tional Technical University of Agriculture, Alchevskikh str., 44, 61002, Kharkiv, Ukraine, Phone:
+380661036811. E-mail: oblikua7@gmail.com, ORCID ID (http://orcid.org/0000-0002-8502-1884)
4 Nataliia Kotseruba, PhD, Associate Professor, Faculty of Accounting and Finance, Vinnytsia
Institute of Trade and Economics of Kyiv National University of Trade and Economics,
Soborna str., 87, 21050, Vinnytsia, Ukraine, Phone: +380983185267. E-mail: kotseruba@
vtei.com.ua, ORCID ID (http://orcid.org/0000-0001-5161-318X)
5 Viktoriia Tkachenko, PhD, Associate Professor, Faculty of Economics and Management,
Sumy National Agrarian University, H.Kondratiev str., 160, 40021, Sumy, Ukraine. Phone:
+380994377427. E-mail: viktoriia.tkachenko@snau.edu.ua, ORCID ID (https://orcid.
org/0000-0002-2924-4012)
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Introduction
As of early 2019, there were 8,175.8 thousand households in Ukraine that are in one
way or another related to agricultural production (identied legally as households
plots (hereinafter referred to as HP or households)). To illustrate the scale (prevalence)
of this phenomenon, it should be noted that it is more than half (55%) of the total
number of households in the country. Aggregate households that include, according
to the methodology of the State Statistics Service of Ukraine, households engaged in
agricultural activities both for food self-sufciency and for the production of marketable
agricultural products (households in rural areas, households in urban areas, as well as
physical persons - entrepreneurs who conduct their activities in the eld of agriculture
without creating a legal entity) in 2018 produced 41.24% of agricultural production
in Ukraine (for comparison - farmers - just over 7%) (SSSU 2015). Furthermore,
households are indeed the main producer of such food as potatoes, vegetable and melon
crops (92%), fruit, berry and grapes (79.74%), livestock products, including milk
(73.14%), wool (87.5%) and other livestock products, including honey (98% according
to 2017). Households account for more than a third of total meat production (36.14%)
and a signicant proportion of egg production (44.83%) (AGRICULTURE OF
UKRAINE, 2018; SSSU; SSSU 2018). This determines their crucial role in providing
the population with food and guaranteeing country’s food security.
However, for the most part, households are production units with low land-use efciency.
According to 2018 data, the average yield in households is, for the most part, lower
than in the enterprises, with the exception being the production of grapes and fruits
and berries. Households are characterized by a low level of technological development
of production (for example, on average, only 9.8% of producers use breeding stock,
articial insemination - 13.8%). Another problem is the lack of assurance of product
safety (for example, only 17.9% of producers use milk sanitary quality control and
a little more than half - 57.7% resort to the sanitary treatment of livestock premises)
(AGRICULTURE OF UKRAINE, 2018; SSSU; SSSU 2018). Moreover, without the
status of entrepreneurial units, such organizational forms of business do not contribute
much to the development of the local economy (due to the lack of income tax obligations
and voluntary social insurance (LAW OF UKRAINE 2003). Therefore, low efciency
and technological level, a small contribution to the development of the local economy
are the hallmarks of such a large category of producers as “households” in Ukraine.
On the other hand, the role of these farms is signicant in terms of the social development
of rural areas (Popescu, 2014). Keeping traditional methods of production and culture,
households also act as employers, as an average of 2.3% of them attract permanent
employees, for seasonal work - 52.3%, and for one-time work - 45.4%. However, it
should be emphasized that this employment is informal and generally run counter to
the requirements of the law. Here we should emphasize the need to clearly distinguish
between households plots (HP) and Personal peasant household (hereinafter referred
to as PPH), although, and it is very important, the latter are included into the former.
Persons whose main activities are carried out within the framework of Personal
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peasant household under the Law of the same name (LAW OF UKRAINE 2003)
(which is 48.9% of the total number of “households”) are recognized as self-sufcient
and are self-employed persons. Thus, PPHs emerge as the “primary” form (a form
of rst preference) of organization of business activity in the countryside (although
the Law does not recognize this), and the massive stratum of people involved in the
production processes of PPHs forms the potential for rural business development. We
also emphasize that the socio-economic role of households, in particular in rural areas,
is that they help urban relatives in terms of income and food.
At the same time, following the typology proposed in (Davidova, 2014), the class of small
food producers in Ukraine - the “household” - formed in Ukraine leads to a subsistence
form of farming. This is conrmed by the fact that in 2018, on average, 20.7% of urban
land is used for growing produce for own use only, while only 1.3% for own use and
sale. In rural areas, on average, 15.7% of the land area of the farm is devoted to growing
produce for own use only, while on average 10.0% is allocated for own use and sale. We
utilize the data on the distribution of land area due to the paucity of reliable statistical
estimates of the volume and share of products sold by farms on the market.
The risks of the spread of subsistence farming in terms of food security, social efciency
of rural production and development have been extensively explored in the works of
EU researchers (Buchenrieder, 2009; Fritzsch, 2010; Davidova, 2011; Forgács, 2012;
Alexandri, Luca and Kevorchian, 2015; Jędrzejczak-Gas, 2018) and illustrated by us
above in the national context: low resource use efciency, low technology and product
safety, low contribution to community development, informal employment, etc.
Thus, in the conditions of globalization of the world agricultural market, digitization
of all spheres of public life, strengthening of market relations in various sectors of the
Ukrainian economy, including agrarian in the conditions of world competition, such a
phenomenon as a semi-subsistence economy cannot continue to exist on such scales.
Determining the right strategy for the further development of this form of business
is the key to the effective development of the agricultural sector, rural areas and the
national economy as a whole. Moreover, it is not only a matter of economic policy but
of public policy in general, as the focus is on the well-being, safety and quality of life
of more than 20 million Ukrainians.
Moreover, the EU has similar to Ukraine situation where about 70 per cent of EU
holdings have an area of fewer than 5 hectares and around half are dened as semi-
subsistent (Davidova, 2014). We emphasize that this idea denes, to a large extent,
the current format of the EU’s Common agricultural policy - CAP, where the problem
of the spread of the semi-subsistence farms has been exacerbated with the Eastern
European enlargement of the EU borders and the accession of new members. Today,
the need to look for mechanisms to transform this form of business into market-adapted
is recognized as one of the important tasks of the CAP and EU rural development
policy (SECTION 1 Axis 1, Article 20 (i) Council Regulation (EC) No 1698/2005 of
20 September 2005).
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Another important question is to see the perspective clearly and to act according to
it employing all governance mechanisms available. The FAO, for example, estimates
that global agricultural output will need to rise by at least 70 per cent by 2050 (FAO,
2009) and given the efciency gap between large-scale and family farms the balance
inevitable will be shifting towards former. The CAP’s direct payments slow this shift,
but “cannot, in the long run, prevent the structure of EU agriculture evolving to an
industry where the overwhelming bulk of production is generated by larger- scale,
capital intensive farms” (Rickard, 2015, p. 51)
For Ukraine, the urgency and importance of overcoming this problem also lie in the fact that
restructuring of farming should be seen as an important component of market transformation
and a necessary condition for the success of land reform aimed at the effective use of all
productive means by market-oriented users (Lerman, Csaki and Feder, 2002).
The paper contributes to the literature in several ways. The study introduces into the
English language scholarly literature Ukraine’s case of semi-subsistence farming
(hereinafter referred to as SSF), covering the decade long period (2008-2018) of its
evolution in Ukraine. Doing so, the paper put on the map of SSF literature the biggest
(in terms of area) country in Europe rich on the fertile ground (black soil). Instigated
by Europe’s CAP policy and its implementation, the study seeks to and delivers, based
on the wealth of statistical data, to identify the factors that have a positive impact on
the commercialization of the SSF in Ukraine. The ndings of the paper due to similar
institutional and cultural settings are applicable to the host of other countries sharing
common past with Ukraine.
This paper proceeds by presenting the literature review in Section 2. After that, Section
3 presents the research methods, followed by the presentation of the main ndings in
Section 4. Finally, Section 5 brings the conclusions, highlighting the main ndings as
well as theoretical and practical implications, and venues for future research.
Literature review
As mentioned above, the need to overcome the problem of subsistence and the
spread of subsistence farming, in particular through the introduction of measures to
commercialize such farms, is one of the objectives of the CAP and EU rural development
policy (SECTION 1 Axis 1, Article 20 (i) Council Regulation (EC) No 1698/2005
of 20 September 2005). At the same time, other potential directions for transforming
farms are offered: by integrating them into larger-scale companies or by maintaining
the existing status quo (mainly through the social, cultural and environmental function
of farms) (Davidova, 2011). Some tools within the outlined areas have also been
introduced in the EU CAP (EUROPEAN PARLIAMENT 2013), but it is obvious
from the results of the CAP implementation that this is not a one-size-ts-all situation
(EUROPEAN PARLIAMENT 2013). An effective policy aimed at overcoming the
SSF path dependence should study the rationale, reasons and motives that determine
the involvement of the people in conducting this form of farms.
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The causes of the emergence and spread of such a phenomenon as semi-subsistence
farming have not yet been fully established (Buchenrieder, 2009). Some studies
(Fredriksson et al., 2016) indicate that the need for subsistence farming increases as
the economic burden on its members’ increases, while alternative (off-farm) income
reduces the need for subsistence consumption and increases the volume of products
consumed/sold in the market (Fredriksson et al., 2016; Csata, 2018), and therefore
is a factor of the commercialization of farm operations. Davidova notes that the SSF
is a consequence of market imperfection, but market-oriented subsistence farms and
subsistence-oriented farmers can be distinguished. The former are highly motivated to
produce to the market, while the leftovers are consumed, they are more responsive to
market and political signals (Davidova, 2011, p. 505).
Equally important is the role of socio-cultural factors. The mentality is one of the reasons
for maintaining the SSF in Moldova (WORLD BANK 2016). In this case, the prevailing
distrust of the population in the formal institutions and the need to create a ‘cushion’
against poverty in an inadequate state welfare system determine the dominance of the
SSF in Moldova (WORLD BANK 2016, p. 27). From this stems low activity in the
land market, while the land is considered as a stock and a source of constant income
(WORLD BANK 2016). Summarizing the ndings of research by scholars on this
problem in Hungary, Moldova, Romania (Giurca, 2008; Fritzsch, 2010; Forgács, 2012;
Alexandri, Luca and Kevorchian, 2015), we emphasize that the common problem
is the moral and ethical basis running a semi-subsistence farm in a semi-legal form,
which consists in efforts to avoid taxation and exploit the opportunities available to
them while avoiding responsibility for community development, paternalistic attitudes
(Strochenko, 2016).
Among the reasons for the spread of the SSF in the Eastern European area can be
distinguished historical and cultural, due to the dominance of the socialist system.
In this case, the imperfection of the relations (incompleteness of transformational
accomplishments) regarding the disposal of the land, which was transferred to private
hands, raises the problem of SSF. In particular, Lerman, Csaki and Feder point out that
the rationing and privatization of land must go hand in hand with ensuring the free
movement of rights to these land (sale, lease), emphasizing that this is a prerequisite for
effective land relations reforms in post-socialist countries (Lerman, Csaki and Feder,
2002). At the same time, not all countries implemented these transformations on time
(Lerman, 2012), including Ukraine.
After all, the above mentioned are factors of an external nature, formed by general
historical, cultural, organizational, political, and socio-economic conditions. At the
same time, several internal factors determine a person’s (landowner’s) predisposition to
forms of land use. These factors include, but are not limited to, age, level of education,
psychological characteristics, etc. Depending on these factors, Buchenrieder et al.
(2009) identied in their work the types of SSF owners such as 1) Rural pensioners,
2) Farmers, 3) Rural diversiers and 4) Rural newcomers, modelling different policy
strategies aimed at improving economic efciency for each type of SSF. Combining
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external factors and internal characteristics of household owners, Davidova (2011)
identies the following types of farmers: (i) farmers pushed to subsistence by market
imperfections and an underdeveloped social safety net for whom semi-subsistence is a
coping strategy; (ii) part-time farmers with other gainful activities; (iii) semi-subsistence
farmers by choice, sometimes known as hobby or lifestyle farmers (Davidova, 2011, p.
505). Despite the differences in those approaches, researchers are united that SSF is a
heterogeneous group of farm owners with different motivation and degree of aptitude
for agriculture, which determines the difculty of nding effective and efcient
measures of political regulation (Buchenrieder, 2009; Davidova, 2014).
Given the scale of the spread of subsistence farming in Ukraine, the risks of neglecting
this problem in the area of policy decisions on agriculture and rural development, and
the paucity of research related to it (although some aspects of this problem are explored
in Strochenko, 2016; Strochenko, 2017; socio-economic and legal problems of PPH
functioning were investigated in the works of Svynous (2009), there is an objective
need to study the factors that inuence the propagation and preservation of semi-
subsistence farming as well as the identication of the factors that have a positive
impact on the commercialization of the activities of households as the main producer
of end-use agricultural products in the country. All those denes the main purpose
of this study and, in our view, should lay the groundwork for formulating effective
policies aimed at the organizational transformation in agricultural production and rural
economy under the current conditions: European integration, expansion of Ukraine in
the world agri-food market, market reforms and others. It is our understanding that the
results of the paper due to shared institutional settings are applicable to the numerous
other jurisdictions who are on the same footing with Ukraine.
Materials and methods
Our method is analytical logic based on ofcial statistics underpinned by the correlation
analysis. Ofcial statistics provided by the State Statistics Service of Ukraine were
used in the paper. Applying the correlation analysis, the relationship between the trends
and the main characteristics of agricultural activity of households in regions as well
as socio-economic conditions of regions development is investigated. Based on a
comparison of changes in the basic parameters characterizing the agricultural activity
of farms over time, structural changes in the private sector of the agricultural sector of
the country are established.
Results and discussions
Semi subsistence framing requires a certain resource base - land in ownership or use.
Available land has both urban (3376.0 thousand in 2018) and rural (4799.8 thousand
in 2018) households in Ukraine. Of course, owning land does not necessarily mean
cultivating it directly by the owner, and therefore, unlike to the case of livestock, poultry
and bees households, it does not mean becoming a household model of subsistence
farming. However, the availability of land is a prerequisite for the formation of a
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layer of SSF. So, let’s examine the socio-economic factors that have an impact on the
dynamics of the number of landowners in the regional context and the way they use
their land (Table 1).
Table 1. Results of the correlation analysis of the relationship between
the spread of subsistence farming in regions with socio-economic conditions
for regional development, 2018
Indicator
Share of households located in
urban areas, %
Number of households with
land plots, thousand units
Share of households that have
land plots
Number of households keeping
cattle, poultry and bees,
thousand units
Percentage of households
keeping livestock, poultry, bees
Number of households, total, thousand units 0,73 0,89 -0,81 0,10 -0,79
Number of households located in urban settlements,
thousand units 0,83 0,82 -0,84 -0,09 -0,84
Share of households located in urban areas, % 1,0 0,51 -0,80 -0,42 -0,90
Number of households located in rural settlements,
thousand units -0,28 0,56 -0,10 0,85 0,06
Average household size, persons -0,65 -0,32 0,33 0,24 0,55
Number of households without a single worker,
thousand units 0,77 0,86 -0,74 0,00 -0,79
Percentage of households with workers, % 0,22 -0,07 0,11 -0,25 -0,08
Average number of employees per farm, persons -0,38 -0,02 0,05 0,30 0,24
The coefcient of economic load per worker, times -0,22 -0,35 0,32 -0,15 0,31
The level of economic activity at the age of 15-70
years, % 0,29 0,04 -0,12 -0,09 -0,21
Unemployment rate as a percentage of economically
active population of 15-70 years, % 0,05 -0,37 0,29 -0,37 0,18
Percentage of informally employed population as %
to employed population, % -0,54 -0,56 0,50 -0,01 0,59
The average area of land (in hundredth parts of a
hectare) used by the farm
0,54 -0,17 -0,32 -0,62 -0,47
Distribution of land area by the direction of its use, %
for the grow of produce only for their own needs -0,48 -0,07 0,23 0,47 0,47
for the grow of produce for own needs and for sale -0,48 -0,66 0,45 -0,25 0,50
leased out 0,60 0,29 -0,37 -0,33 -0,60
for leisure only 0,00 0,01 -0,07 0,16 0,09
just started to master -0,42 -0,38 0,46 0,08 0,55
The number of Personal peasant households (PPH),
thousand units -0,59 0,29 0,22 0,84 0,39
The area of land used by PPH, thousand hectares,
including: 0,28 0,29 -0,56 0,08 -0,39
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Indicator
Share of households located in
urban areas, %
Number of households with
land plots, thousand units
Share of households that have
land plots
Number of households keeping
cattle, poultry and bees,
thousand units
Percentage of households
keeping livestock, poultry, bees
• for the construction and maintenance of a
dwelling house, outbuildings and structures -0,54 0,32 0,19 0,79 0,35
• for the conduct of personal peasant households -0,39 0,00 0,10 0,53 0,35
• for conducting commodity agricultural
production 0,61 0,26 -0,68 -0,33 -0,66
• of which were rented 0,74 0,31 -0,70 -0,46 -0,75
Source: calculated by data (SSSU) and data from http://www.ukrstat.gov.ua/
As an introduction to your analysis, we would like to note that, by examining both absolute
and relative indicators of land use, we try to: 1) nd out whether there is a relationship
between the socio-economic conditions of the region’s development and the dynamics
of the number of households with land and households engaged in animal husbandry; 2)
to nd out whether there is a link between the socio-economic conditions of the region’s
development and the prevalence (proxy: the share in the total number of households in
the region) of households with land and households engaged in animal husbandry.
Our analysis based on the calculation of the correlation coefcients, allows us to draw
the following conclusions:
1. There is a close and positive relationship between the number of households in the
region and the number of households with land (0.89). Close but inverse relationship
exists between the number of households and the share of those who have land
(-0.81). From this, we can conclude that in regions with more households (more
densely populated) such phenomenon as land ownership will be less common. The
same applies to households keeping cattle, poultry and bees (-0.79);
2. The relationship between the level of urbanization (share of households in urban
settlements) and the number of households having land plots is positive, albeit
of medium intensity, but given the degree and nature of the relationship between
urbanization level and land ownership (-0.8) it can be inferred that with increasing
urbanization in the region there is a decrease in the prevalence of such phenomenon
as land ownership. The same is true for the number of livestock households (-0.42)
and the prevalence of this phenomenon (-0.9);
3. The land ownership is characteristic of both rural and urban areas. At the same
time, the phenomenon of cattle, poultry and beekeeping is characteristic of regions
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with lower levels of urbanization (-0.42). With the increase in the number of
rural households in the region leads to a growing number of livestock holding
households (0.85).
4. With the increase in the average household size in the region, there is a decrease
in the number of households with land (-0.32), but an increase in the prevalence
of this phenomenon (0.33). Commenting on these results, it should be noted that
larger average household size is typical for rural areas. This, to some extent, explains
together with the above comments such results, and should also be taken into account
when assessing the degree and nature of the relationship between the average size of
the households and the number and prevalence of such a phenomenon as household
keeping livestock, poultry and bees (0,24 and 0.55, respectively).
5. In regions with a difcult socio-economic situation (higher proportion of households
without workers, a higher ratio of economic burden per worker), land tenure is
more common (0.11 and 0.32, respectively). At the same time, the proportion of
households with no workers is reversely related, although not signicantly to the
number of livestock households and the prevalence of this phenomenon (-0.25 and
-0.08, respectively). With increasing labour availability (the average number of
employees per farm) grows also the number of livestock households (0.3) and the
prevalence of this phenomenon (0.24). It should be emphasized that the proportion
of households without workers, although not insignicant, is related to the level
of urbanization (0.22). Therefore, that corroborates our ndings regarding the link
between workforce availability and livestock farming and is not predicated on the
overall difcult situation in rural Ukraine.
6. The economic burden is higher in rural areas, and this explains the positive
(although insignicant) link of this indicator and the prevalence of land ownership
and animal keeping (0.32 and 0.31, respectively), although, in our opinion, this
does not preclude some interdependence of those phenomena.
7. It is worth noting that the number, as well as the prevalence of land ownership
as well as keeping animals by households, is only insignicantly correlated with
levels of economic activity and unemployment. Unemployment is a “universal
phenomenon” (in terms of universality for rural and urban areas) and even more
positively related to the level of urbanization (albeit not signicantly - 0.05).
Therefore, as it (the unemployment rate) rises in the region, the number of
households with the land is decreasing, although the prevalence of this phenomenon
is increasing (-0.37 and 0.29, respectively). At the same time, the number of
households keeping livestock, poultry and bees is also decreasing (-0.37).
8. Informal employment is positively, although indirectly related to the proportion
of rural households (0.54), this can explain the signicance of the correlation
coefcients between the share of the informally employed population and the
prevalence of land tenure and households that keep animals (since these phenomena
are common in rural areas) - 0.5 and 0.59, respectively.
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9. As the level of urbanization increases, the average land area of a household grows
(0.54), with most of it being used for renting (0.6), while decreasing the proportion
allocated for growing produce for own use only (- 0.48), for own use and sale
(-0.48).
10. The larger the share of households that have land, the greater the proportion of
space allocated for growing produce for their own use and sale (0.45). The same is
true for the prevalence of livestock farming in households (0.5).
11. The value of the correlation coefcient between the allocation of the share of land
used only for the cultivation of produce for own use and the number and prevalence
of livestock households (0.47 and 0.47) indicates that such farms are predominantly
used the land for self-sufciency purpose, both in rural and urban settlements.
12. With increasing urbanization, the number of households is decreasing (-0.59),
although such farms are larger, as there is a positive (albeit mediocre 0.29)
relationship between the size of the total land area of the HP in the region. In
the more urbanized territories, larger areas of HPs allocate most of the area for
agricultural commodity production (0.61), actively using leased land (0.74).
13. The more widespread in the region is land ownership and livestock farming
(regions with less urbanization), the smaller the share of land used in commodity
production (-0.68 and -0.66). However, this is not generally the case for livestock
farms. They mainly use the land area to maintain a house and a household. However,
for rural areas (where livestock farms are more prevalent), this relationship is
mediocre (0.35 and 0.35), whereas in general, and thus more closely for urban
areas, its closeness is increasing (0.79 and 0, 53, respectively). Obviously, with
the increase in both the number and the prevalence of livestock farms, allotment
of land for commodity production is shrinking, which suggests that such farms are
predominantly geared to meeting their own food needs.
Considering that the availability of land is not directly related to subsistence farming,
let us analyze the features (causes and extent) of subsistence farming in urban and rural
settlements. However, we will rst of all comment on the general trends in the dynamics
of indicators on the functioning of farms in rural and urban settlements (Table 2).
Table 2. Prole of households’ plots in rural and urban settlements, 2008, 2018
Indicator
Located in rural
settlements Located in urban areas
2008 2018 2008 2018
Number of households, thousand 5334,2 4873,6 11864,8 10061,3
Average size, persons 2,74 2,67 2,54 2,54
Percentage of households without workers 50,2 44,2 28,9 31,2
Average number of employees per household,
persons 0,8 0,9 1,2 1,1
The coefcient of economic load on a working
member of the farm, times 3,41 3,01 2,09 2,30
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Indicator
Located in rural
settlements Located in urban areas
2008 2018 2008 2018
Share of expenditure on food in expenses, % 55,4 44,60 49,6 49,80
Share of remuneration and income from
entrepreneurship and self-employment in
aggregate resources, %
36,4 47,00 61,4 67,30
Personal peasant households having land plots,
thousand 5262,6 4799,8 4454,7 3376,0
Share of households with land, % 98,66 98,49 37,55 33,55
The average size of the land, in hundredth parts
of a hectare 314,3 292,1 21,1 46,9
Share of households keeping cattle, poultry and
bees, % 80,9 76,0 9,2 8,1
Distribution of land area by type of household use (among households having land and using it by
direction), %
for the growing of produce only for their own
needs 13 15,7 42,3 20,7
for the growing of produce for own needs and
sale 16,4 10,0 3,9 1,3
leased out 69,6 73,2 52,8 77,3
for leisure only 0 0,0 0,2 0,1
just started to master 1 1,1 0,8 0,6
Source: calculated by data (SSSU) and data from http://www.ukrstat.gov.ua/
Therefore, as the data show, there is a reduction in the number of households in general
as well as of HP in rural and urban areas. Particularly notable is the decrease in the
proportion of the latter in urban settlements (by 4.0%). In this case, the average size of
the land plot in a rural area decreases (by 22.2 hundredth parts of a hectare), but almost
twice the average size of a plot of an urban household increases. The share of households
keeping livestock, poultry and bees in rural and urban settlements is reduced; rural
households are becoming more oriented on semi-subsistence (by the proportion of land
allocated for cultivation for their own needs), reducing the proportion of land used
for the commercial aim. The same is true for urban households, which, besides, have
signicantly (more than 2 times) reduced the proportion of land reserved for their own
food needs. Distinctive for rural and urban households is the tendency to lease out the
land. This, in turn, is one way of overcoming the naturalization of economic activity
(EU Policy Review).
Therefore, considering the signicant differences in the directions of land use in
urban and rural settlements, as well as the difference in socio-economic conditions
of urban and rural territories development, let us examine what factors inuence the
transformation of semi-subsistence households in urban areas (Table 3).
The number of subsistence farms in urban settlements (those with land plots) correlates
closely and positively with the number of urban households in general (0.97). At the
same time, the dynamics of the prevalence of this phenomenon is not closely related
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to the dynamics of the number of households. Indeed, over time, the proportion of
subsistence farms in urban settlements has decreased: 33.55% in 2018 versus 37.55%
in 2018 (Table 2).
What are the factors that matter here? The reduction in the number and proportion
of households with the land is closely correlated with the increase in the proportion
of households without any single worker (-0.71). In 2008, there were 28.9% of such
households and in 2018 - 31.2%. So, contrary to popular belief, that households are
chiey for retirees - in fact, this is not the case. Also, the reduction in the average
number of workers per farm (from 1.2 in 2008 to 1.1 in 2018) correlates closely and
positively with the reduction in the share of households (0.82) and slightly less closely
with their number (0.57). An increase in the economic load ratio per working member
of the household is closely linked to a decrease in the number (-0.92) and the prevalence
(-0.87) of households’ plots.
Table 3. Results of the correlation analysis of the relation between the characteristics of HPs
in urban settlements with socio-economic conditions of urban settlements development, 2008-
2018
Indicator
Number of urban households, thsd.
Average size, persons
Share of households without a single
worker,
Average number of employees per
household, persons
The coefcient of economic burden on a
working member of the farm, times
Share of expenditure on foodstuffs, in
expenditure, %
Share of remuneration and income from
entrepreneurship and self-employment in
aggregate resources, %
Households with land, thousand units
Share of households with land, %
The average size of the land plot, in
hundredth parts of a hectare
Share of households keeping cattle, poultry
and bees, %
PPH having
land plots,
thousand
0,97 -0,37 -0,71 0,57 -0,92 0,08 -0,51 1,00 0,89 -0,74 0,21
Share of
households
with land in the
total number
of urban
households, %
0,75 0,02 -0,71 0,82 -0,87 -0,11 -0,58 0,89 1,00 -0,76 0,44
The average
size of the
land plot, in
hundredth parts
of a hectare
-0,66 0,16 0,69 -0,81 0,89 0,20 0,31 -0,74 -0,76 1,00 -0,03
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Indicator
Number of urban households, thsd.
Average size, persons
Share of households without a single
worker,
Average number of employees per
household, persons
The coefcient of economic burden on a
working member of the farm, times
Share of expenditure on foodstuffs, in
expenditure, %
Share of remuneration and income from
entrepreneurship and self-employment in
aggregate resources, %
Households with land, thousand units
Share of households with land, %
The average size of the land plot, in
hundredth parts of a hectare
Share of households keeping cattle, poultry
and bees, %
Share of
households
keeping cattle,
poultry and
bees, %
0,07 0,22 -0,22 0,40 -0,04 -0,08 -0,53 0,21 0,44 -0,03 1,00
Distribution of land by type of household use, %, including:
for the grow of
produce only
for their own
needs
0,54 0,09 -0,70 0,90 -0,86 -0,33 -0,25 0,66 0,78 -0,96 0,13
for the grow
of produce for
own needs and
for sale
0,38 0,16 -0,15 -0,04 -0,23 0,30 -0,24 0,39 0,33 0,16 0,06
leased out -0,68 -0,19 0,58 -0,57 0,75 -0,03 0,38 -0,76 -0,79 0,49 -0,15
for leisure only 0,39 0,36 -0,64 1,00 -0,72 -0,46 -0,25 0,57 0,82 -0,81 0,40
just started to
master 0,40 0,01 -0,31 0,69 -0,45 -0,18 -0,41 0,52 0,65 -0,55 0,40
Source: calculated by data (SSSU) and data from http://www.ukrstat.gov.ua/
The share of food expenditure in household’s expenditure is insignicant, although
inversely related to the prevalence of households (-0.11). Such a somewhat unexpected
result can be explained by the fact that lower income and, consequently, a higher share of
food costs are typical for households where there are no workers (retired), and with the
increase in the number of such farms, the share of subsidiaries decreases signicantly
(-0.71). At the same time, an indirect inverse relationship exists between the share of
active income in total household resources and the number and prevalence of households
(-0.51 and -0.58, respectively). Consequently, as other income opportunities expand,
the propensity to farming in urban areas is reduced.
Regarding the average size of the land, it should be noted that it increases as the
households prevalence decreases (-0.76, which is logical, since it is caused by limited
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land resources). In 2008, the average size of the land was 21.1 hundredth parts of a
hectare, and in 2018 - 46.9. The majority of the land is leased out (-0.79). The larger
the size of the land plot, the smaller the amount allocated for growing produce for its
own needs (-0.96). Similarly, in the absence of workers and with increasing economic
burden, less and less of the area is allocated for food self-sufciency (-0.7 and -0.86,
respectively). With the increase in the number of working members of the farm, the
land is mainly used for self-sufciency in food (0.9) and leisure activity (1.0). As the
share of active income in total household resources increases, the share of leased out
land increases (0.38). The prevalence of cattle and poultry holdings is decreasing as
the average number of employees per household decreases (0.4) and the share of active
income in total household resources increases (-0.53).
Therefore, in urban households, households (owning a land plot) are not a form of food
self-sufciency in a difcult economic situation. This conclusion can be drawn from
the fact that an increase in the economic burden, an increase in the share of households
without any single worker, and an increase in the share of food costs in expenses leads
to the decreasing propensity to maintain subsistence households (as in the number of
households, and the allocation of land plots to provide for their own food needs). At
the same time, it is conrmed by the thesis (Fredriksson et al., 2016) that with the
increase of other incomes (in other spheres) the propensity to do subsistence farming
decreases. It should also be noted that for urban territories (households with land plots),
a typical trend is an increase in the average size of a land plot with the leasing out of
an increasing part of it. At the same time, urban households are not indicative of the
transformation of subsistence farming into market-oriented forms. That is due to the
traditions of semi-subsistence farming in urban settlements with the aim, rst of all,
to satisfy their own needs for food and leisure, and on the other hand - because of the
small size of land plots. So let us further explore what factors are important in terms
of facilitating the market transformation of subsistence farms in rural areas (Table 4).
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Table 4. Results of the correlation analysis of the relationship between subsistence
households in rural settlements with socio-economic conditions for rural settlements
development, 2008-2018
Indicator
Number of households, thsd.
Average size, persons
Share of households without workers, %
Average number of employees per household, persons
The coefcient of economic load on a working member of
the farm, times
Share of expenditure on food in expenses, %
Share of remuneration and income from entrepreneurship
and self-employment in aggregate resources, %
Households with land, thousand
Share of households with land,%
The average size of the land plot, in hundredth parts of a
hectare
Share of households keeping cattle, poultry and bees, %
PPH having land
plots, thousand 1,00 0,90 0,64 -0,35 0,60 0,53 -0,54 1,00 0,47 0,19 0,62
Share of
households with
land, %
0,38 0,56 0,28 -0,44 0,33 -0,24 -0,13 0,47 1,00 0,62 0,67
The average size
of the land plot,
in hundredth
parts of a hectare
0,13 0,26 0,39 -0,48 0,51 -0,41 -0,01 0,19 0,62 1,00 0,55
Share of
households
keeping cattle,
poultry and
bees, %
0,58 0,67 0,71 -0,66 0,63 0,17 -0,54 0,62 0,67 0,55 1,00
Distribution of land area by type of household use, %
for the grow of
produce only for
their own needs
-0,87 -0,77 -0,59 0,41 -0,67 -0,37 0,45 -0,88 -0,49 -0,52 -0,61
for the grow of
produce for own
needs and for
sale
0,68 0,66 0,64 -0,56 0,74 0,45 -0,69 0,69 0,41 0,55 0,69
leased out -0,29 -0,31 -0,59 0,63 -0,70 -0,36 0,70 -0,29 -0,17 -0,49 -0,53
just started to
master -0,11 -0,26 0,43 -0,41 0,51 -0,11 0,00 -0,12 -0,19 0,30 -0,15
Source: calculated by data (SSSU) and data from http://www.ukrstat.gov.ua/
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Thus, as evidenced by the results of the calculations (Table 4) and the available
statistics (Table 2), the overall tendency to reduce the number of households in rural
areas with land plots is closely and positively correlated with a decrease in the average
household size (0,9), a decrease in the proportion of households without employed
persons (0.64) and a reduction in the economic burden per worker employed in the
household (0.6). Also, the decrease in the share of expenditures on food in household
expenditures is slightly but positively correlated with the number of holdings that have
land (0.53). An increase in the share of active income in total household resources
is also associated with a decrease in the number of land-owned households. But the
greatest impact on their number has a decrease in the total number of rural households
(1.0), i.e. depopulation of rural areas. Therefore, let us examine the inuence of factors
on the prevalence of such households.
With the increase in the average number of employees, the share of households having
land plots declines on average (-0.44). The average size of the land plot is positively,
although not strongly related to the share of households with land plots (0.62), and is
lower, the greater the number of people working on the farm (-0.48), and more share of
expenditures on food in expenses of the household (-0.41). Also, the average land size
is positively and moderately related to the factor of the economic load: the smaller it is,
the smaller the land size (0.51).
The prevalence of such phenomenon as the animal farm is closely and positively
correlated with the average household size (0.67) and the share of households
without employed persons (0.71), whereas with the increase in the average number of
employees there is a tendency to livestock farming decreases (-0.66). The same is true
for increasing the share of active income in total household resources (-0.54). As the
economic burden decreases, the prevalence of animal husbandry also decreases (0.63).
An important feature of a household is how it uses land. As the average size of the
household decreases, the share of the area used to support its food needs increases
(-0.77). This is also true for the number of households without employed persons
(-0.59) and the coefcient of economic burden (-0.67). With the decrease in the share
of food expenditures (which can be construed as a rise in cash income), households
use the land more to cover their own food needs (-0.37) and lease it out (-0.36). Also
close and positive is the relationship between the factor of economic load and the more
use of land for growing products, including for sale (0.74). The average number of
employees positively but moderately correlates with the renting out of the land (0.63),
the provision of their own food needs (0.41), but inversely - with its use for growing
products, including for sale (-0.56). So, let us emphasize based on abovementioned that
the commercialization of households is closely associated:
• With the proportion of households without workers - the smaller this share is,
the less market-oriented the farms are (0.64);
• With the coefcient of economic load - the higher it is, the more market-
oriented is the market activity of the households (0.74);
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• With the share of food expenditure in all expenditures - the higher it is, the
more market-oriented the household is (0.45);
• With an average number of employees in the farm - the higher it is, the less
market-driven the farm (-0.56);
• With the share of active income in aggregate resources (the higher it is, the less
market-active is the household -0.69).
So, farms that use the land to a greater extent for growing produce for their use and sale
are non-working households. In the event of a socio-economic recovery when greater
employment opportunities arise, those households redirect their resources to support
their own food needs and rent the land out.
Finally, let us examine how the socio-economic factors of regional development affect
the activities and development of personal peasant households - a certain legal form of
agricultural activity by households, which comes closest to the market-oriented form
of activities (Table 5). While the households are more hobbies, the PPHs are a lifestyle,
a form of societal existence, as it not only provides for basic needs but also - a self-
employed job.
Table 5. Results of the correlation analysis of the relationship between the characteristics of
maintaining PPHs with the socio-economic conditions of regional development, 2018
Indicator
The number of PPH,
thousand units
Area of land, thousand
hectares including for:
for the construction and
maintenance of a dwelling
house, outbuildings and
structures
for the conduct of personal
peasant farming
for conducting commodity
agricultural production
of which were rented
Number of households located in urban
settlements, thousand units -0,14 0,43 -0,11 -0,18 0,57 0,66
Number of households located in rural
settlements, thousand units 0,89 0,27 0,86 0,46 -0,11 -0,24
Share of households located in rural
settlements, % 0,59 -0,28 0,54 0,39 -0,61 -0,74
Average household size, persons 0,50 0,04 0,44 0,42 -0,27 -0,46
Number of households with land, thousand
units 0,29 0,29 0,32 0,00 0,26 0,31
Number of households keeping cattle,
poultry and bees, thousand units 0,84 0,08 0,79 0,53 -0,33 -0,46
Number of households without a single
worker, thousand units -0,09 0,37 -0,01 -0,11 0,46 0,56
Average number of employees per
households, persons 0,55 0,03 0,39 0,08 -0,11 -0,18
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Indicator
The number of PPH,
thousand units
Area of land, thousand
hectares including for:
for the construction and
maintenance of a dwelling
house, outbuildings and
structures
for the conduct of personal
peasant farming
for conducting commodity
agricultural production
of which were rented
The coefcient of economic load per
worker, times -0,20 -0,01 -0,04 0,38 -0,19 -0,29
The level of economic activity at the age of
15-70 years, % -0,28 -0,16 -0,29 -0,62 0,21 0,28
Unemployment rate as a percentage of
economically active population of 15-70
years, %
-0,54 -0,32 -0,48 -0,22 -0,12 -0,03
Percentage of informally employed
population to employed population, % 0,01 -0,14 0,05 0,03 -0,18 -0,34
Source: calculated by data (SSSU) and data from http://www.ukrstat.gov.ua/
The number of PPHs is closely related to the number of rural households in the regions
(0.89). Although, this is not the case for PPHs land: as the share of rural households
increases, the total area of farmland is reduced (-0.28), that is, with the increase in their
number and share, the size decreases. The number of PPHs will be higher in those
regions where the average farm size is larger (0.5) (which is typical for rural areas).
PPHs are mainly livestock and poultry households (0.84). They are rather developed
in regions where the average number of employees on one farm is higher (0.55).
It is interesting that as the unemployment rate increases, the number of PPHs will
decline, meaning that this activity is not perceived as a proper alternative to a full day
engagement (-0.54), but rather as a part-time employment. In regions where the number
of households without a single worker is higher, the total area occupied by PPHs will
be higher (0.37), this is also true in the case of urban households (0.43). At the same
time, the area of PPH is more directed to commodity production with increasing level
of urbanization, as well as with the increase in the number of households where there
are no workers (0.46). In this case, these areas are formed through rented land (0.66 and
0.56, respectively). The number of PPHs, as noted above, correlates with the number of
livestock, poultry and bee holdings (0.84). Moreover, with the increase in the number
of such farms, PPH areas are allocated for the maintenance of a dwelling house (0.79)
and conduct of personal peasant farming (0.53) but are eliminated from commodity
production (-0.33) and rental relations (-0.46).
Conclusions
To sum up, we would like to emphasize that nowadays there is a decrease in the number
of households involved in agricultural production both for food self-sufciency and
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for the production of products for sale in Ukraine. And there is not only an absolute
reduction in the number of such farms but a reduction in their share in the total number
of households, that is, the prevalence of this phenomenon. There are “subsistence”
structural shifts in the sector, highlighted by Buchenrieder et al. (2009). At the same
time, it is necessary to pay attention to the nature of these structural changes: the
gradual disappearance of individualized agricultural production with the allocation
of agricultural land for use by large agricultural producers. This poses a threat to the
effective development of rural areas and the agricultural sector, as individual forms of
farming are seen as the basis for the development of efcient agriculture in a market
economy, in particular in European countries (Lerman, Csaki and Feder, 2002), and
the emergence of such an economic model in Ukraine, was the main goal of the land
reform started almost 20 years. Therefore, in the context of the need to tackle the
problem of semi-subsistence farming, one should pay attention to another aspect of this
problem - the lack of a strategy to support the establishment of a model of individual
farming, which must counteract the risks of industrialized agro-production. After all,
as the results of the analysis show, in the case of a revival of economic activity in rural
areas (peripheral territories) as a result of the implementation of social policy measures,
there will be a disappearance of the class of private small agricultural producers. This
poses risks to food security, as it is these structures that make up the bulk of consumer
basket products. So we should not throw out the baby along with the bath, to wit
commercializing it to the point where there are only big-scale holdings left and strive
to balance interests of big players with those of smaller producers and societal needs.
At the same time, the results of the conducted research give grounds to single out
the general problems of domination of semi-subsistence economy in Ukraine and
tendencies of development of such farms under different socio-economic conditions.
We found that the commercialization of households is closely associated: 1) With the
proportion of households without workers - the smaller this share is, the less market-
oriented the farms are; 2) With a coefcient of economic burden - the higher it is, the
more market-oriented is the market activity of the households; 3) With the share of
food expenditure in all expenditures - the higher it is, the more market-oriented the
household is; 4) With an average number of workers in the farm - the higher it is, the
less market-driven the farm; 5) With the share of active income in aggregate resources
- the higher it is, the less market-active is the household.
Factors that we have identied as those leading to the spread of the semi-subsistence
farming should be matched by incentives mechanism in relevant government programs.
On the governance level an understanding must come that the spread of SSF is
unattainable in the long run, so irrespective of any now-days rationales growing demand
for food, low efciency of SSF and ‘isolation’ (in terms of taxes paid to community
treasure) from local community needs determine palpable necessity to confront the
spread of SSF with countermeasures on a policy level.
Out of this dichotomy ‘commercialization or deeper self-sufciency’ as there couldn’t
be two victors, commercialization appears as a way forward for SSF. It is corroborated
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by EU experience and the predicted future trends in society and agriculture. Although
it must be wise and moderate commercialization which leaves the room for striving
individuals farms so vital for agriculture.
An interesting possibility for further research that would complement the analysis pursued
in the paper would be, to develop policy measures aimed at promoting the development of
private farms from an existing number of market-oriented households, to conduct more in-
depth qualitative studies needed to identify the rationale, motives and factors that determine
the inclination of people of a particular age, in a particular locality to single out the path
either of semi-subsistence farming or the commercialization of farm production activities.
Conict of interests
The authors declare no conict of interest.
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