Management and marketing of the wartime agribusiness in Ukraine

Nehrey and Trofimtseva (2022) investigated the impact of war on changes in the volume of agricultural production and analyzed the importance of human capital in agriculture during the war and post-war periods. This conclusion was expanded and supplemented in the present study.

Herasymchuk (2023) studied the process of ensuring the sustainability of agricultural enterprises during war and post-war periods. The need for proper access to water and land resources is indicated as a necessary condition for sustainable activity. However, it is not clear how exactly military actions make this task difficult. The influence of public organizations on ensuring sustainable agricultural production under hostile conditions is exaggerated in Herasymchuk (2023).

Vuychenko (2022) claims that mainly “small and medium-sized businesses suffered losses” from the war and points to the effectiveness of the process approach to the management of agrarian enterprises, which, according to the author, can provide agrarian enterprises with anti-crisis stability. However, the use of this approach under significant risks has not been sufficiently substantiated. Ishchenko et al. (2022) indicate that significant “changes in the economic, market, and legal environment of the functioning of business structures caused by military aggression” require a significant level of adaptation of managers and information support to the needs of management in martial law conditions.

This factor was considered in the present study and a mathematical model was developed to provide proper information support for management.

Shevchenko-Perepolkina (2022) grouped the problems caused by the war for the functioning of agrarian business enterprises in Ukraine: “capture and destruction of agricultural territories, lack of seed materials, fertilizers and plant protection products, fuel, issues of technical support and human resources”.

Unfortunately, the author did not rank these problems or determine their relative importance. Shevchenko-Perepolkina (2022), and Mohylnyi et al. (2022) see access to foreign markets as the task of agricultural management in wartime conditions. management mathematical model agribusiness

Rusan (2022) investigated the “directions of ensuring the sustainability” of agricultural activity in war conditions: direct and indirect financial support of farmers, institutional measures aimed at preserving personnel potential, financial and technical support for harvesting, and ensuring food security of communities.

However, the possibilities of state financing during the war are limited; investments in agricultural production, etc., have also suffered a significant reduction, so Rusan's (2022) approach needs to be refined, which is considered in the present study.

Didur et al. (2023) indicate that during the war, agrarian management's main task was to ensure enterprises' survival. For this, Didur et al. (2023) suggested strengthening institutional measures to support small agribusiness, lifting the ban on using technical means of production without their registration, limiting the use of uncertified seed material, and arranging online assistance with logistics.

The sufficiency of such measures must be studied in this study. In addition, Didur et al. (2023) note that “loss of agricultural land and low prices in the domestic market” create uncertainty about whether farmers can recoup their costs in the next season.

At the same time, Volkova et al. (2023) define the main goal as “competitiveness and ensuring the high quality of agricultural products of Ukrainian agricultural enterprises in the conditions of Russian military aggression”. Volkova et al. (2023) also point out that agribusiness needs the right management strategy and approaches in times of war and “serious challenges”.

Panchenko (2023) indicated that the state of war determined the need to strengthen the viability of agrarian enterprises and substantiated the main tasks of management for this purpose. At the same time, both Panchenko (2023) and Volkova et al. (2023) leave the possibility of changing the goal owing to changes in external conditions.

Stakhovych (2023) studied the risks for agricultural enterprises in war conditions. The specified risks are crop losses, “problems with sales logistics and crop sales, risks of damage to stocks, and risks of loss of equipment and crops”. To manage these risks, Stakhovych (2023) proposed an external insurance tool, which needs to be revised given the limited budgetary capabilities of the state during the war and the significant risks for private financial institutions.

Movchaniuk and Diachenko (2023) investigated the factors that negatively impact agricultural enterprises' activity in war conditions. Petrychenko et al. (2022) and Movchaniuk and Diachenko (2023) also studied the indirect costs of agrarian business due to military aggression. They provided the result of the assessment of these losses. At the same time, the relative importance of negative impact factors has yet to be determined, which does not provide an opportunity to develop a realistic strategy and tactics for managing an agricultural enterprise in wartime conditions.

Malik et al. (2023) investigated the functioning of agrarian microenterprises under martial law. It pointed out the effectiveness of management in micro-enterprises, which, due to “compact production, are more adapted to activities in wartime conditions”. It is indicated that the sustainable nature of the agricultural production of micro-enterprises in the conditions of war is facilitated by their orientation towards the production of niche products.

Foreign researchers also pay considerable attention to the actions of Ukrainian agricultural management during the war. So, Chinese scientists Ma et al. (2022), with the use of modern digital and space technologies, investigated the condition of fallow lands in eastern Ukraine since long-term laying of fallow lands leads to a loss of soil fertility.

Ma et al. (2022) indicated that “in the west of the Kherson region and in the centre of Luhansk, where the war has been going on for a long time, centres of fallows that arose during the war were discovered. This shows that the war had a significant negative impact on the management and development of agriculture”.

The review of research on the specified topic indicated the need for: developing directions and tools for managing agricultural enterprises in war conditions, establishing conditions for changing agribusiness goals, assessing the impact of war on the components of the resource potential of agricultural enterprises.

Methodology. The application of the comparison method made it possible to investigate the use of resource potential during the war and to establish a new resource potential based on the distance of the enterprise from the war zone. The use of the method of analysis and synthesis made it possible to substantiate the need for a quick manoeuvre with the main goals of agrarian enterprises, namely, maximizing competitiveness or business survival (Kotenko et al., 2021). The application of the statistical analysis method made it possible to establish the growth of the share of individual entrepreneurs (IE) in the total number of agricultural enterprises in war conditions. This indicates that the impact of war requires planning a new structure of agricultural production using the theoretical analysis method.

Results

The main directions of management activity in the agricultural sector before the start of full-scale aggression were to ensure an increase in production volume, innovative development of the enterprise, expansion of developed markets, access to new markets, and provision of state support. The actions of the management at that time were aimed at realizing the sustainable functioning of the value creation mechanism, which included: infrastructure reconstruction, provision of production activities: labour resources, technologies, machinery, fuel and lubricants, fertilizers. Also, agribusiness needed state support not only in providing subsidies, benefits, and financial resources but, most importantly, in ensuring stable business conditions, simplifying crossborder transportation, ensuring investment activities, and reducing the unpredictability of external factors.

This was consistent with one of the main goals of agribusiness in peacetime, such as strengthening competitiveness.

The scientific community has established approaches to the formation of the competitiveness of agricultural enterprises: resource, market, institutional, focused on competitors; identified sources of competitiveness: resources, key competencies, management, innovation, assets, cooperation, and marketing. Competitive advantages are formed by implementing effective economic mechanisms, innovative development, and proper use of existing potential (Danko & Sliusareva, 2020). To assess the competitive potential of the enterprise, the following must be taken into account: its geographical, spatial, and natural capital; consumer prospects; client base; position in promising areas of the competitive environment, in particular for the diversification of sales markets; human resources; infrastructure quality: property, primarily land assets; financial reserves (Orel & Nevmerzhitskyi, 2020).

The war conditions did not change the specified provisions but significantly changed their relative importance. In particular, maintaining competitiveness by reducing the price in conditions of significant uncertain risks during the war is very limited. Also, the conditions of a full-scale war indicated the limitations of the thesis of Hnatkivskyi (2022), Kosovych et al. (2022), and Chikov et al. (2022) that the amount of resources does not determine competitiveness but depends on the permanent application of innovations. As the wartime experience showed, more financial resources must be needed to implement innovations.

Therefore, the competitiveness of agricultural producers in wartime conditions is primarily based on the use of resources, mainly implicit resource potential (Melnyk & Koval, 2021). First of all, this refers to personnel potential as the ability of managers to manoeuvre with logistical flows in the conditions of dynamic changes in military threats to supply their products to consumers and provide production with the necessary material resources. The war creates another resource potential for creating competitive advantages, such as the remoteness of production from the war zone and the influence of military risks on competitors, which in such conditions also requires using the latest approaches to organizational and management measures.

With a significant increase in the level of threats in war conditions, the main goal for a large part of agricultural producers is to ensure the enterprise's survival, which requires management actions. Moreover, this management activity also needs an innovation and investment mechanism (Yefremova, 2023). Only acquiring investments in war conditions requires much greater effort since the military actions also led to a crisis in innovation and investment activities.

This determines the need in crisis conditions, relying on the existing potential, to decide the priority of one of two goals: ensuring the long-term competitiveness of the enterprise or its adaptation to threatening changes in external conditions. This requires acquiring new qualities in agricultural management: adaptability and responsiveness to dynamic changes in threats.

The first quality is that full-scale military operations increased the need for adaptive management of agricultural enterprises, taking into account the challenges of the war and the formation of long-term economic mechanisms given the post-war period.

The requirement of responsiveness to dynamic changes in threats is related to the fact that management in crisis conditions must make and implement management decisions in realtime to effectively level the impact of threats. This is new for agricultural management, which is accustomed to implementing long-term, at least seasonal management measures.

Sets of management tools for achieving the stated goals are different, and each tool's importance in achieving one goal also varies. For example, increasing competitiveness requires the development and purposeful use of a marketing strategy. The importance of marketing reduces the degree of uncertainty in agribusiness's market strategy, increases adaptability to crisis conditions, stimulates sales, and enabling agribusiness to gain competitive market advantages (Bahorka & Yurchenko, 2023). However, the importance of strategic marketing in terms of enterprise survival is significantly reduced. At the same time, the need to choose a priority goal does not exclude the possibility of management actions that ensure a different level of proximity to achieving the result for each goal.

This requires introducing a compromise approach and a dynamic management of priorities. The need for operational management of priorities under dynamic changes in external conditions requires a permanent assessment of the level and direction of threats, a variable forecast of the development of events over time, and an analysis of the effectiveness of management decision options, which can provide an opportunity to achieve various goals with limited resources.

Thus, if the achievement of agribusiness goals relies more on the effective use of the factors mentioned above in peacetime, then in wartime, the most important direction of activity becomes minimising the impact of direct and indirect threats from military actions. The management of agricultural enterprises under war conditions must take into account and eliminate negative factors (The Institute for Economic Research and Policy Consulting, 2021) , which can be stratified by the magnitude of their impact as follows: The increase in prices for components, fertilizers, and other materials makes up 55%; the lack or irregular supply of fuel and lubricants makes up 54%; difficulties with logistics make up 44%; the lack of labour resources makes up 39%; the lack of working capital accounts for 36%; the increase in military hazards for the performance of production processes is 34%; damage to property and products is 7%. Military actions made it extremely difficult to restore agribusiness in the liberated areas due to: mine contamination of agricultural land or its direct destruction; destruction of irrigation infrastructure; removal or destruction of agricultural machinery; purposeful destruction of elevator complexes; destruction of livestock; and removal of agricultural products by the aggressor, primarily stocks of grains.

Institutional measures limited to wartime conditions, such as providing soft loans to agricultural producers for land demining, need to be revised. A combination of private, state, and international organizations is needed to fully recover agribusiness in liberated areas. The basis of the resource potential on which the management of agricultural enterprises is based has always been land (Stepanenko & Vlasenko, 2022).

The possibilities of strengthening this potential to increase the competitiveness of products and the sustainability of production are due to the following circumstances: to date, the national volume of 42,000 thousand ha of agricultural land has been distributed as follows: in private use, 75% of the land; in state ownership, 24%; in communal ownership, 1.06%; and in collective ownership, 0.04% (Shelenko et al., 2022).

The distribution of the state-wide land volume led to an increase in the share of sown areas under grain and leguminous crops and a significant decrease in the share of sown areas under fodder crops. This led to an imbalance in the crop and livestock sectors, in particular, to a decrease in the volume of organic fertilizers, which has the consequence of an imbalance in crop production.

With the continuation of this management approach to land use, the productivity of the land will decrease, and, accordingly, the yield will decrease, resulting in the loss of financial sustainability for agricultural enterprises. This requires agricultural management to introduce appropriate economic mechanisms, in particular, to increase cooperation.

The cooperative is able to provide agricultural enterprises, primarily individual entrepreneurs, with a small land resource, more significant opportunities in land use, and, in particular, more effective implementation of crop rotation. Cooperation will also increase the possibilities of forming a logistics infrastructure, its dynamic management, which is essential in the event of military threats to transport routes, and the possibilities of forming an infrastructure for the storage and processing of agricultural products (Vitkovskyi, 2019). The war also changed the conditions for acquiring land resources. Thus, the risks of war led to uncertainty regarding long-term capital investment in land resources by influential investors. On the other hand, due to full-scale military operations, the supply increased due to, in particular, the impoverishment of the population and, first of all, the owners of small plots of land. This is also evidenced by a 25% decrease in the size of alienated land since the beginning of the war (Table 1).

Table 1. Number, area and average value of alienated land plots.