Problems of the Organic Agricultural Production Development as Threats to Ukraine's Economic Security

Abstract

Purpose: The research is aimed at the mechanisms of solving the identified problems in the development of organic agricultural production against the background of the ongoing Russian invasion. Taking into account the need to increase the volume of such output in response to the demands of world markets, the development of state stimulation tools that have been tested in the EU to help achieve both the individual Sustainable Development Goals and to strengthen the components of Ukraine's economic security, which are currently under constant attack. Design/Method/Approach: Based on the data of the Research Institute of Organic Agriculture (FiBL), Diia Business, OrganicInfo, and World Bank, we used economic and statistical methods: average, relative values of dynamics, structure, coordination, Le Masne similarity index, Herfindahl-Hirschman concentration index, non-parametric criterion for assessing the tightness of the connection (Spearman's rank correlation coefficient) and graphically depicted the obtained results. Findings: Ukrainian organic production is characterized by imbalance and weak diversification. In 2021, 96.85% of the area of domestic crop production was allocated to the cultivation of grain and oil crops. In 2022, the volume of sales of organic products in the domestic market of Ukraine fell by almost half (-48%). Unlike in European countries, organic products are not a priority for retail trade in Ukraine. The hypothesis about the non-randomness of the correlation between the consumption of organic products and GDP per capita was confirmed: with a probability of 99.9%, there is a direct and strong (0.86) correlation between the indicators. Theoretical Implications: The work identifies the current problems of organic agricultural production and possible ways to solve them, in particular, based on state incentive mechanisms approved in the EU, the introduction of which will strengthen the economic security of Ukraine. Practical Implications: Calculations prove that the reorientation of the Ukrainian producer to the domestic consumer is not a solution to the problems associated with blocking the export of Ukrainian agricultural products until the level of GDP per capita is similar to European indicators. Originality/Value: The development of organic production is one of the priorities of the agricultural policy of the EU from the financial perspective of 2021-2027. It is a direction for realizing Ukraine's competitive advantages against the background of the ongoing Russian invasion. Research Limitations/Future Research: In further research, it is advisable to compare the development trends of Ukrainian organic production with European ones since this article focuses on internal problems. Paper Type: Empirical JEL Classification: Q01, Q14, Q18