Organic Agriculture and Family Farming as a Perspective Branches of Ukrainian Economy

Органічне землеробство та сімейне фермерство як  перспективні галузі української економіки

Наукова стаття про українське органічне землеробство англійською мовою. Йдеться про перспективи розвитку "зеленого" фермерства на базі малих та середніх сімейних підприємств.

Last three years were hard times for Ukrainian economy. In this case our country has to find new ways of improving situation in this sphere. One of the most perspective branches of Ukrainian economy is agriculture.

Problem formulation. Our farmers have to use some innovative decisions to become more competitive on world market. Organic agriculture and family farming could improve economic situation in Ukraine. Organic farming can also make synergetic effect for economy, nature and society.

Conception of organic farming was founded by Japanese philosophe Mokishi Okada. Ukrainian scientists V. Vovk, N. Sirenko, V. Kyporenko and others researched procedure of ecological audit of agriculture, ways of transition to organic farming and motivation for such transition etc.

Purpose of our research is to show positive effects of deeper implementation of organic agriculture in Ukraine.

Research results. Agricultural business in our country has many problems. It is lack of investments, degradation of soils, pesticide using, sowing fields only a few plant species, growing of which is the most profitable, bad conditons for small and medium-size agricultural business etc. Decision of most of these problems can be organic agriculture and family farming.

International Federation of Organic Agricultural Movement (IFOAM) gives such definition of organic agriculture: it is «a production system that sustains the health of soils, ecosystems and people. It relies on ecological processes, biodiversity and CYCLES adapted to local conditions, rather than the use of inputs with adverse effects. Organic Agriculture combines tradition, innovation and science to benefit the shared environment and promote fair relationships and a good quality of life for all involved» [1].

«Consoliated Annual Report of IFOAM – Organics Internetional 2015» shows rising of organic farming all around the world (look at Picture №1).

Organic farms produce organic products. We can call organic «only those products that are produced according to the approved rules (standards), and production has been the procedure of certification in the prescribed manner»[7]. The problem of Ukraine in this sphere is that on our market we have great quantity of «eco», «bio», «organic», «green» products that are not certificated. It is just marketing course that doesn’t mean this products meet the criteria of organic production. In 2014 was accepted Law of Ukraine № 425-VII «About the production and circulation of organic agricultural products and raw materials». This Law prohibite «in the labeling of products which do not meet the requirements of this law, to use the designation with the words «organic», «biodynamic», «biological», «ecological», words with the prefix «bio» and so on»[4]. However, many Ukrainian providers continue to use such words and nobody controle them.

Nevertheless, area of organic agricultural lands increasing year after year (look at Table 1). It is almost 1% of rural lands of our country now. «Аccording to scientists, «in Ukraine there are about 8 million ha of clean black earth»[3]. it should be noted that «the total area of land used for organic production in the European Union is 3.8 million hectares» [10]. So, our country has great potential to develop this branch.

 Table 1: The total area of organic agricultural land and amount of organic

farms in Ukraine, 2002-2015 [7]

	2002	2003	2004	2005	2006	2007	2008
Total area, hа	164449	239542	240000	241980	242034	249872	269984
Amount of farms	31	69	70	72	80	92	118

	2009	2010	2011	2012	2013	2014	2015
Total area, hа	270193	270226	270320	272850	393400	400764	410550
Amount of farms	121	142	155	164	175	182	210

Сertainly there are potential to the development of agricultural sector, but «to compete globally, fertile land is not enough. Ukrainian farmers harvested in 2 times less wheat from one hectare than their colleagues in France and Germany» [6]. In such case our farmers should pay attention to organic agriculture. It can give much more economic benefits than traditional farming. For example, prices of organic products  «in Europe are higher by 150% in the US – in 8 – 12 times»[9].

Skeptics argue that the yield of organic crops is low. It is not true, it all depends on the type of plant. Some cultures give higher yield when they are grown by organic technology (look at Table 2).

In 2005, Organic Federation of Ukraine was established. Their «objectives are primarily to promote environmental conservation, creation of the legal framework for organic production, the formation of a certification organizations»[8]. Research of OFU shows that income from selling organic products in our country increased from «400 000 euros in 2006 to 17 millions euros in 2015» [7]. If Ukraine will use 8 million hectares of land that are suitable for organic farming, it will be possible to get income at least in 20 times more, which is 340 million euros annually.

Table 2: «Comparison of economic efficiency of cultivation winter wheat and spring barley through organic and traditional methods» [10]

Inicators	Deviation, %
	Winter wheat		Spring barley
	Traditional method	Orgnic method	Traditional method	Orgnic method
Yield, centners per hectare	100	64,3	100	111,23
The cost of 1 ha	100	77,8	100	63,3
Income per 1 ha	100	109,4	100	186,29

Of course conversion to organic farming is not easy. First of all farmer have to audit land and assess the possibility of organic farming on given territory. Secondly,  land should be conserved for a period of 3 to 5 years. Then owner have to certify his land. «In Ukraine there are 15 certification centers – five German, three Italian, two Austrian, one from Switzerland, from Turkey – 1, one from the Netherlands, one from France and one from Ukraine» [5]. Price for certification services in our country starts from 6 000 hrn. It is low price. For example, «in biggest certificational company of Germany AbСer royalty of inspector range from 640 euros per day» [5].

There are examples of successful organic farming in Ukraine. Agrarian firm

«Agroekologia» in Poltava region works in this field almost 40 years. Head of enterprise «Agroekologia» Semen Antonets told about new methods of land sertification: «Previously, for the land certification, they took soil for the analysis. Now, foreigners have found the easiest way to determine the quality of the land. They do not need equipment, they look at the plants, and even weeds. If among the wheat is plant that lives only in clean soil – land become certified» [11]. Those who are new in organic business can follow the example of «Agroekologia».

         For greater effect from conversion to organic agriculture it should be implemented on family farms. Such implementations will solve many economic and social problems in Ukraine. For example, in such way we can solve unempoyment problem and problem of poverty through the self-employment of people on their own land. It is possible because many Ukrainians have land. Beside this, legislative base gives chance to obtain land those who haven’t it yet.

         If speak about world practice «with more than 570 million farms in 93 countries, more than 500 million is family farms» [2]. On family farms produced at least 56% of agricultural products. «Such enterprises process most of the agricultural land in the world: 83% – in North and Central America, 68% - in Europe, 85% - in Asia, 62% - in Africa. Only in South America this share is 18%»[2].

Now, large agricultural holdings are renting lands of most land owners in Ukraine and paying them just few percent from their income. Holdings often violate the rights of landowners. In this case beginning of family farm business can decide problems of landowners.

It is difficult to start new business in Ukraine now, but there are some ways to help farmers to start organic business, for example it is goverment subsidies. In developed countries «the level of state subsidies as a percentage of the value of agricultural production in recent years amounted to: in Switzerland – 73%,  Norway – 70%, Japan – 63%, EU – 45% (for comparison: in Ukraine is only 4.3%)» [2]. So it is important to increase the level of subsidies for agricultural business in Ukraine.

This dotations will help not only farmers, for example «іn the EU, 25% of subsidies can be directed to implementation of the latest technologies, guaranteeing food safety, social development of rural areas» [2]. Except subsidies to all farmers, European countries provide subsidies to specific organic agribusinesses. In Germany organic farms get «from 350 to 1 thousand euros of subsidies per hectare» [5].

One more thing that can help development of family farms can be tax benefits. Example for Ukraine can be «Western countries with domination of a progressive tax system in which the majority of farmers belonging to the privileged taxpayers. Therefore, the share of taxes paid by farmers in their total expenditures is negligible (ranging from 2.5 to 6%)» [2]. Instead of this, Ukrainian government is planning to increase taxes for almost all groups of enterpreneurs in the next year.

Low credits and cooperation among small-size farms in buying technics can help to get start-up capital and machinery. In this case decentralization reform can help farmers. Thus, the garage of cooperative agricultural machinery for family farms could be organized on the basis of united communities.

All the facts that were presented helped us to create a scheme that demonstrates the synergistic effect of the widespread introduction of organic family farms in Ukraine (look Scheme 1). This scheme shows positive effects for the economy, environment, Ukrainian society, and political position of our country in the world.

         We also outlined measures that can help to achieve these effects. These measures are:

1.          To form a complete legal framework for organic and family farming. Create regulatory authorities in the field of organic agriculture.

2.         To implement state support for organic farming through subsidies, tax breaks etc.

3.         To create small agricultural cooperatives, to unite communities.

4.         To Organize retailers specializing in organic products.

5.         Not only to grow but also to process organic products.

6.         To carry out information and education programs on organic and family agriculture.

Ukraine has a chance to improve economic situation through the changes in agricultural industry. One of the ways to positive changes in Ukrainian agriculture is wide implementation of organic family farming.

         Our country has great rural potential and enough of clean soils (in 2 times more, than in EU). Implementation organic family farming in Ukraine will make synergetic effect on the economy, environment, Ukrainian society, and political image of our country. We proposed some measures for development of organic agriculture. Public interest and political will are necessary to implement these measures.

List of sources

1.          Definition of organic agriculture / International Foundation for Organic Agriculture [Electronic source] / article –  Access mode:  https://www.ifoam.bio/en/organic-landmarks/definition-organic-agriculture

2.          Беззуб І., Перспективи розвитку сімейних фермерських господарств в Україні [Електронний ресурс] / стаття –  Режим доступу:  http://nbuviap.gov.ua/index.php?option=com_content&view=article&id=419:agropromislovij-sektor-2&catid=8&Itemid=350

3.          Вовк В., Сертифікація органічного сільського господарства в Україні: сучасний стан, пер­спективи, стратегія на майбутнє доп. / «Органічні продукти харчування. Сучасні тенденції виробництва і маркетингу».:— Львів, 2004. — С. 3—7.

4.          Закон України «Про виробництво та обіг органічної сільськогосподарської продукції та сировини» (Відомості Верховної Ради (ВВР), 2014, № 20-21, ст.721){Із змінами, внесеними згідно із Законом № 191-VIII від 12.02.2015, ВВР, 2015, № 21, ст.133}

5.          Пасховер А., Чистое дело. Органические продукты завоевывают рынок Украины / Журнал «Новое время» [Електронний ресурс] / стаття –  Режим доступу:  http://nv.ua/publications/chistoe-delo-organicheskie-produkty-zavoevyvayut-rynok-ukrainy-41934.html

6.          Пенцак Є., Майбутнє українського агробізнесу забезпечить ефективний менеджмент, а не чорноземи [Електронний ресурс] / стаття –  Режим доступу:  http://businessviews.com.ua/ru/economy/id/majbutnje-ukrajinskogo-agrobiznesu-zabezpechit-efektivnij-menedzhment-a-ne-chornozemi-233/

7.          Органік в Україні / Федерація органічного руху України [Електронний ресурс] / стаття –  Режим доступу: http://organic.com.ua/en/homepage/2010-01-26-13-42-29

8.          Полякова Д., Органическое движение в мире и Украине [Електронний ресурс] / стаття –  Режим доступу: http://organic.com.ua/images/stories/files/presa_organic/8statja_organicheskoe_dvijenie_v_mire.pdf

9.          Сіренко Н. М. Управління стратегією інноваційного розвитку аграрного сектора економіки України : монографія — Миколаїв, 2010. — 416 с.

10.        Слива Ю., Як перейти на органічне землеробство? / Журнал «Агробізнес сьогодні» [Електронний ресурс] / стаття –  Режим доступу: http://www.agro-business.com.ua/ideii-i-trendy/5221-iak-pereity-na-organichne-zemlerobstvo.html

11.        Экоферма Агроэкология – пионер органического движения в Украине [Електронний ресурс] / стаття –  Режим доступу: http://rodovid.me/ecofarm/ekoferma-agroekologiya---pioner-organicheskogo-dvizheniya-v-ukraine.html

O. Chigrin, A. Treus