This work aims to analyse and foresee positive and negative effects of WTO accession on the development of the Ukrainian agriculture and rural sector. As negotiations progress, they investigate probable consequences of changes in export treatment, domestic market risks in general, and changes in the scope of support for medium-sized and large agricultural enterprises, whereas the issues of their impact on rural areas in general and small-scale farms (represented mostly by PPHs), in particular, virtually remain neglected.

When analyzing probable consequences of WTO accession for agriculture it is necessary to take into consideration the following common rule: after the agriculture related WTO requirements have been met the domestic support structure of transition economies undergoes gradual transformation towards the increase in Green Box measures (WTO member states are entitled to finance any volume of Green Box measures within their budgets).

Following the EU enlargement on 1 May 2004, Ukraine has a common borderline with EU. Now the EU Common Agricultural Policy (CAP) applies to the post socialist countries – new EU members. In fact, CEE countries have been implementing comparable agricultural policy instruments since late 1990-s. These countries are our close neighbours and traditional trade partners. Therefore, in order to adjust to the changes in a prompt and efficient way, CAP peculiarities should be taken into account.

According to the world classification, there are three basic farm types in the Ukrainian agricultural sector:

Financial results. In the years 1996 through 1999 agriculture was unprofitable in Ukraine. Agricultural enterprises had the poorest financial results in 1998 –1999, prior to the mass reorganisation.. In 1998, the share of loss-making enterprises in agricultural sector was 70%, and their losses amounted to UAH4060.1 million (Chart1,2). In the following year of 1999 84% agricultural enterprises were unprofitable, and the sum of losses was UAH 3391.1 million.