Modelling of Agricultural Import Demand in Ukraine

Based on the monthly data from four aggregated agricultural sectors for the 2001-2014 period, this paper investigates the determinants of demand for agricultural imports in Ukraine by using the time-varying parameter technique (the Kalman filter). The outcome suggests that the real exchange rate depreciation contributes to a lower demand for meat, fish and dairy products; vegetable oil and foodstuffs, while not affecting demand for wheat and vegetables. Domestic industrial output correlates with a higher demand for all four groups of agricultural imports. Import substitution effect of domestic agricultural production is found for three out of four groups of agricultural imports, except meat, fish and dairy products. Following an increase in international prices, there is a decrease in demand for wheat and vegetables, as well as for foodstuffs, while there is an opposite effect in demand for other groups, i.e. meat, fish and dairy products and vegetable oil.