may prevent many of the original recipients from formally exiting farming and transferring their land to younger farmers able to make better use of it and mechanisms to ensure such transfer will be important.

As smaller farms rely disproportionately on land held under use rights, high levels of tenure insecurity and limited investment incentives for land held under permanent use could be a plausible explanation for the low levels of TFP by farms below 50 ha. Using the cadastral designation of land can provide a quick check and suggests that 58% of land by farms below 20 ha and 36% for those below 50 ha, as compared to 20% for farms in the 50-120 ha class, is for ‘personal farming’ rather than ‘commercial agriculture’, a difference that is significant at 1% in both cases. Making use rights more transferable, possibly by helping the smallest farm size group acquire full ownership rights to the land they farm thus seems to have potential to boost Ukraine’s future development by increasing the welfare of this group, competitiveness of the land market, land-related investment and use of land as collateral, as well as the amount of local land tax receipts.

# **5. Conclusion and policy implications**

This paper aimed to complement existing studies by assessing impacts of Russia’s invasion of Ukraine on agricultural performance and food supply based on a micro-level economic data and by including informal farms, a segment of Ukraine’s agriculture sector that is often overlooked in official statistics. Two findings are noteworthy. First, our data show that surveyed farmers kept their cultivated area in 2022 almost unchanged, a sign of farmers’ resilience. At the same time, worsening terms of trade for agriculture led to a precipitous regionally differentiated decline in farm profitability and productivity. Monitoring changes in planted area for winter as well as summer crops in 2023 based on satellite imagery will be important to identify the extent to which such changes in profitability triggered longer-term adjustments like decapitalization. Second, our data suggest that, especially with the country undergoing a significant crisis, an exclusive focus on (large) farms that are formally registered risks permeating old biases and in doing so tilting the playing field against potential sources of dynamism in rural areas that will be needed if Ukraine is to emerge from the war with a more diversified rural economy that focuses on high value crops in addition to grains and oilseeds. Three implications are particularly relevant: First, efforts to improve factor and output market competitiveness will be essential to prevent war-induced problems of market access and logistics being exacerbated by exercise of market power and efforts to curtail competition. Ukraine’s success in facilitating competitive electronic procurement and transfer of rights to state assets including land via e-auctions (Deininger _et al._ 2022) together with the advances made in setting up the SAR and using it to disburse emergency productive cash support to small farmers during the war, suggest MAPF is well placed to quickly work with input suppliers, output traders, banks, and crop insurance providers, to explore how SAR can be used as an electronic platform to increase competitiveness and reduce risk, including via forward contracts, even at a time of war.

18