Impact of the Russian invasion on Ukrainian small and medium farmers’ productivity

Abstract

Data on 2251 small and medium-size Ukrainian farms in 2021 and 2022 is used to assess the short-term impact of the Russian invasion on productive performance of a sector that is often excluded from official statistics. Once weather is adjusted for, the area response remained limited. However, higher transport cost and input prices severely reduced farm profitability, implying that 46 % of farms had a negative cash flow and most were credit constrained. Total factor productivity varies significantly across size groups, but it is not significantly different between formal and informal farms in the same size group. Despite the war, agricultural producers remain optimistic about the sector’s fundamentals, implying that enabling them to invest, e.g., via digital access to markets and mortgage lending, could foster investment in higher value products and better coverage of small and medium producers by official statistics could capture such improvements and inform policy-making.