Forecasting the Consequences of the Cost of Mineral Fertilisers on the Development of the Corn Market in Ukraine Using AGMEMOD Models

Abstract

In the past decade, from 2012 to 2021, Ukraine has doubled its maize production. The increase in gross corn yields is associated with the use of modern cultivation technologies by farmers, which increase the resistance of plants to adverse environmental factors and adjust the mineral nutrition of plants with regard to weather conditions. One of the most important components of such technologies is the use of mineral fertilisers, the optimal amount of application of which depends not only on the level of grain yield, but also on the efficiency of production and grain quality. However, the rapid increase in world natural gas prices during 2021 has created new challenges and threats for the further development of the grain market in Ukraine. After all, world prices for mineral fertilisers have increased by 110% since 2021, according to the World Bank. Under these conditions, a radical increase in the cost of mineral fertilisers threatens to ensure the competitiveness of Ukrainian corn in the domestic and foreign markets, which would eventually lead to higher food prices and deterioration in the level of food security in the country. This may negatively affect the gross yields and export potential of the grain industry. The purpose of the study is to assess the current state of supply and demand in the corn market in Ukraine and predict the consequences of the impact of changes in the cost of mineral fertilisers on the main parameters of its development according to probable scenarios, using the AGMEMOD econometric partial equilibrium model for the period up to 2025, which creates prerequisites for improving the efficiency of making and implementing management decisions and contributes to achieving the goals of national agrarian policy. The following methods were applied: monographic, abstract and logical, comparative analysis and expert assessments, tabular, statistical and economic, factor analysis, economic and mathematical modelling. The result of the study is an assessment of the current state and identification of the main factors influencing supply and demand in the corn market. Using multiple linear regression, the influence of the main factors on the yield of corn for grain in agricultural enterprises of Ukraine for 2001-2020 is determined. The dynamics of the balance of supply and demand in the corn grain market in Ukraine is analysed. The consequences of changes in the cost of mineral fertilisers on the main parameters of the corn market development in Ukraine are predicted according to probable scenarios using the AGMEMOD econometric partial equilibrium model for the period up to 2025. Based on the calculations made, it is proved that the high yield of corn and the favourable current price environment for grain will ensure a sufficient level of profitability of this grain crop. Methods for improving the mechanism of reducing the cost or compensation of expenses for the purchase of mineral fertilisers for commodity producers are proposed. Methodological and practical aspects of forecasting the consequences of changes in the cost of mineral fertilisers on the main parameters of corn market development in Ukraine using the AGMEMOD econometric partial equilibrium model for the period up to 2025 have been further developed. The proposed methodological approaches and findings can be used by state and industry management bodies in the development of priority areas for improving the effectiveness of the grain industry in Ukraine.