Farm production costs to increase by 7.6% in 2023

In 2023, farm costs are expected to increase by 7.6% compared to 2021 to about UAH 27,000 per 1 hectare of land. This was reported by Oleksandr Zakharchuk, Head of the Investment and Logistics Department of the National Research Center "Institute of Agrarian Economics". This study was conducted on the example of small and medium-sized farms in Vinnytsia and Cherkasy regions.

The increase in production costs is due to a number of factors. However, it is noted that a decrease in the application of mineral fertilizers from 4-5 centners to 2-2.5 centners will be one of the reasons. It is also expected to reduce the number of employees and the payroll per hectare of land.

It is expected that technological operations related to fuels and lubricants will be reduced by 20-30%, which may negatively affect yields due to simplified technologies.

The main types of expenses include:

Mineral fertilizers, which will cost UAH 7.1 thousand, or 26.4% of all production costs.
Fuel and lubricants, which will amount to UAH 3.2 thousand or 12%.
Crop protection products and seeds, which will amount to UAH 2.1 thousand or 7.7%.
More than 1/6 of the expenses are for the maintenance of fixed assets, current repairs and maintenance, namely UAH 4.1 thousand (15.2%), including depreciation.

Calculations of break-even points for crop production in 2023 indicate that winter wheat should reach 60 centners per hectare at a market price of UAH 4,500 per ton, corn - 67.5 centners at a price of UAH 4,000 per ton, and sunflower - 27 centners at a price of UAH 10,000 per ton.

Given the current situation in Ukraine, financial support for small farms and support from donor countries for the purchase of mineral fertilizers and seeds is extremely important. Lending under the 5-7-9 program for the purchase of agricultural machinery is also a successful form of support for agricultural producers.

In a challenging environment, farms must carefully plan and utilize resources, innovate, and manage rationally to ensure breakeven production.