Impact of the Russian Invasion on Ukrainian Farmers’ Productivity, Rural Welfare, and Food Security

Data from 2,251 small and medium-size farms for 2021 and 2022 show that area reductions inresponse to the Russian invasion of Ukraine remained limited. However, worsening terms of trade reduced farmprofitability, implying that 46 percent of farms had a negative cash flow and 54 percent (67 percent in the 50-120hectare group) were credit constrained in 2022, implying that longer term effects may be more adverse. Total factorproductivity varies significantly across size groups but is not significantly different between formal and informalfarms in the same size group. This suggests that limited transferability of land use rights that aredisproportionately used by smaller farms may be one reason for low productivity. Improving transferability of land,digital access to markets, and mortgage lending could thus trigger investment and growth in higher value products bysmall and medium-size farms to solidify Ukraine’s comparative advantage in agriculture and improve ruralliving conditions in the context of reconstruction.