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Larysa Syvolap
CURRENT STATE OF THE ORGANIC PRODUCTS MARKET IN UKRAINE

Annotation. The article presents some terminological differences in the designation of environmentally friendly products (equivalents - organic, biological). An interpretation of the essence of the concept of "organic production" in accordance with current Ukrainian legislation is presented. The main stages of development of the market of organic products are revealed. The advantages of organic production are described. With the help of statistical analysis the world and domestic tendencies of development of the market of organic products are defined. Strategic directions and measures for further positive development of the market of organic products are presented.

Keywords: market, organic products, production, agriculture, consumers, strategic vector.                

Topicality. One of the problems of ecological nature both for Ukraine and for many countries of the world is anthropogenic load, which has a negative impact on the environment. This aspect is especially acute in the territories of agricultural production, because today the issue of environmental safety of agricultural products is becoming increasingly important. Increasingly, producers and consumers prefer environmentally friendly (organic) products in question. In the realities of today and the modern rhythm of life, many people profess a healthy lifestyle, which is expressed not only in the philosophy of active sports, but also in the philosophy of healthy eating. This is an important factor for the development of the market of organic products, because consumers have the requirements not only to grow products in environmentally friendly areas, but also without the use of inorganic fertilizers. Thus, research and monitoring of the market of organic products will identify its positive and negative components, as well as development trends.

                 The main text. In different countries there are some terminological differences in the designation of products of environmentally friendly (equivalents - organic, biological) production. Thus, in the EU and the US, the only officially accepted designation is the term "organic products". In other European and CIS countries, in addition to the above, the terms "environmentally friendly", "bioorganic" and "environmentally safe" products are also used. In EU countries, environmentally friendly (organic) products are only those that have been produced, processed and sold in accordance with organic standards of Commission Regulation (EC) № 889/2008 or standards of the International Federation of Organic Agriculture (IFOAM) [Federation of Organic Movement of Ukraine, 2010 ].

                 At the beginning of the XXI century. Ukrainian legislation in the direction of organic production was in the process of formation. However, on August 2, 2019, the Law of Ukraine “On Basic Principles and Requirements for Organic Production, Circulation and Labeling of Organic Products” of July 10, 2018 № 2496-VIII came into force, according to which organic production is a certified activity related to with the production of agricultural products (including all stages of the technological process, namely: primary production (including harvesting), preparation, processing, mixing and related procedures, filling, packaging, processing, recovery and other changes in the state of production), which is carried out in compliance with the requirements of the legislation in the field of organic production, circulation and labeling of organic products [Law of Ukraine № 2496-VIII of July 3, 2019; Minyailo O., Nesterets A., 2020].

The main stages of development of the market of organic products are [Granovska VG, 2017]:

1. The beginning of the emergence of ideas for organic production (60-70-ies of the twentieth century.). Caring for the environment and a healthy lifestyle. Formation of initiative groups that switched to the production and consumption of organic products grown without the use of chemical fertilizers.

2. Distribution of organic products and demand formation (80-90s of the XX century). Dissemination of environmental ideas among the population, which contributes to the formation of demand for organic products, increasing the number of producers of organic products.

3. Strengthening the development of the market of organic products and certification (90s of the XX century - the beginning of the XXI century). Governments consider the market for organic products to be promising, which in turn contributes to the establishment of a regulatory system and the creation of national standards and certification systems. The organic market increases its growth rate every year.

Ukraine is one of the most promising countries for the positive development of the market of ecological (organic) products, this is facilitated by the high quality of soils, favorable climate, the required amount of water resources and more. However, for the country itself there are three main advantages of organic production: economic, environmental, social. Consider these benefits in more detail.

                 1. Environmental benefits:

-        preserves the environment in the production process;

-        contributes to the conservation and restoration of biodiversity in agricultural landscapes;

-        contributes to the preservation and reproduction of soil fertility;

-        promotes the use of green fertilizers and methods of biological pest control;

-        protects water sources and air from pollution due to restrictions on the use of synthetic agrochemicals.

                 2. Economic advantages:

-        development of the domestic and foreign markets in Ukraine;

-        increasing the profitability of organic production and its competitiveness;

-        development of rural areas and rising living standards;

-        introduction of resource- and energy-saving technologies.

                 3. Social benefits:

-        creation of additional jobs in rural areas;

-        new prospects for small and medium-sized agricultural enterprises;

-        providing the consumer market with healthy and quality products;

-        positive impact on public health [Bagorka MO, 2017].   

                 For many years, the United States has been one of the leaders in organic production. The market for organic products in the United States is the largest in the world and reached almost 38.9 billion dollars. According to the results of 2016, the production of organic products is also an important priority in the countries of the European Union. The area on which organic products are grown in the European Union increased by 6.0% in 2017 and by 7.6% in 2018, exceeding 13.8 million hectares. In fact, in 2018, the area of ​​organic farming is about 7.5% of the area of ​​agricultural land used in the EU (in 2017 - 7.2 percent). 56% of the EU's organic production area is concentrated in four countries: Spain (16%), France (15%), Italy (14%) and Germany (11%) (Figure 1). These countries occupy leading positions in the number of organic farms: Italy (21%), France (13%), Spain (12%) and Germany (10%). In total, at the end of 2018, 325,306 organic farms were registered in the EU (their number increased by 4.9% compared to 2017) [Butenko VM, Toyunda AI, 2020].

                 The Reform Support Office at the Ministry of Economic Development, Trade and Agriculture of Ukraine has collected operational monitoring data on key indicators of organic agriculture from certification bodies that have certified organic production and trade in organic products in Ukraine (as of December 31, 2018) [Organic Market in Ukraine . Newsletter, 2020]:

                 1. The total area of ​​agricultural land with organic status and transition period (certified according to a standard equivalent to the EU Regulation on organic production) is 309,100 hectares, including the area of ​​agricultural land with organic status - 233,500 hectares.

                 2. The share of organic land in the total area of ​​agricultural land - 0.7%.

                 3. The total number of operators certified according to standards equivalent to EU and US organic legislation (NOP) - 635 (among them - 501 agricultural producers), including 628 operators certified according to standards equivalent to the EU Regulation on organic production and 52 operators - according to the US organic standard NOP (of which 7 operators are certified only according to NOP standards).

                 The largest number of organic farms in Ukraine is located in such regions as: Vinnytsia, Zhytomyr, Zakarpattia, Kyiv, Lviv, Odessa, Poltava, Kherson.

According to a report by the European Commission, in 2019 Ukraine ranked 2nd out of 123 countries exporting organic products to the EU, rising two places compared to the previous year (Fig. 1). In percentage terms, Ukraine accounts for 10% of all EU organic imports. Compared to 2018, Ukrainians in 2019 sold to the EU 27% more such products - 337.8 thousand tons in 2019, compared to 265.8 thousand tons in 2018 - the report says. For the most part, Ukraine exports grain to the EU. 76.9% of all cereals in the EU (except rice and wheat) are of Ukrainian origin. The share of wheat from Ukraine - 31.8%, oilseeds (except soybeans) - 18.2%. This is the second place after Turkey. Soybeans - 13% of imports from Ukraine and are 4th place, fruits - 11% and 3rd place. Ukraine is also one of the largest exporters of cake, fruit juices and vegetables [8]. 

Fig. 1 TOP-ten suppliers of organic products to EU countries in 2019, thousand tons [Lysenko G., 2021]. 

                 The price of organic products in retail chains today is significantly inflated. If abroad the markup averages 15-30%, maximum 50%, in Ukraine it can reach 200-300%. For example, organic beef costs 130-180 UAH / kg, chicken - 80-120 UAH / kg, chicken eggs - 30-38 UAH / 10 pcs., Cow's milk - 16-20 UAH / l, sour cream - 65-75 UAH / l, butter - 45-55 UAH / 200 g, honey - 130-200 UAH / l, potatoes, carrots - 20-30 UAH / kg, tomatoes, cucumbers - 40-45 UAH ./kg, flour - 15-18 UAH / kg [10].

                 The development of the market of organic products in Ukraine is constrained by a number of factors, among which [Dorozhkina KV, 2019]:

-        weak legal framework, which is mainly due to the early stage of development of the organic production industry;

-        low or almost no level of state support for organic production;

-        unfavorable economic situation in the country;

-        unstable political situation caused by hostilities in the east of the country;

-        lack of highly qualified personnel, which is due to the initial stage of development of the industry;

-        difficult transition to organic production and expensive certification services;

-        high credit rates;

-        low income of the population of Ukraine;

-        insufficient awareness of the population about the usefulness of the products of this sector of production;

-        distrust of domestic producers, caused by a significant share of pseudo-organic products in the market; public awareness of the level of harmful effects on the environment of intensive traditional production.

                 Thus, taking into account the advantages and trends of development, it should be noted that the development of the organic market in Ukraine should be of a strategic nature and enter into the overall strategic policy of the state.

                 Studies have shown that the implementation of strategic directions of development of the market of organic products in Ukraine should be carried out at the state and regional levels, as well as at the level of individual economic entities (Fig. 2) [Kazanji AV, 2018].

                 Given the feasibility and the need for strategic development of the market of organic products, many scientists and experts consider the current areas and measures that will create a positive dynamics of the market of organic products. So in his scientific work VM Butenko, AI Toyunda presented measures to improve the development of the organic market. Some of these measures coincide with the directions indicated above in Fig. 2. This confirms the importance and potential effectiveness of these measures.

Thus, we support the opinion of VM Butenko, AI Toyunda on measures to develop the market for organic products in Ukraine. Such measures include:

1. Public procurement of organic products of domestic producers for the needs of schools, kindergartens and other social facilities.

2. Subsidizing the purchase of environmentally friendly organic products by the poor (for example, a system of targeted vouchers for the purchase of organic products).

3. Increasing consumer interest in natural products by conducting a targeted PR campaign in the media, aimed at informing about the benefits of organic products, explaining the link between health and healthy eating, promoting a healthy lifestyle. One of the ways to raise public awareness can be educational programs for consumers aimed at promoting the national logo of organic products.

4. Strengthening the role of united territorial communities in the development of the regional market of organic products. In particular, it focuses on strengthening trust in local regional products. If the products of local producers are popular in the region, it is easier for an organic farm to establish sales through established communications (short distances, known origin of goods, personal contacts, decent reputation, etc.).

5. Conducting seminars, conferences, as well as developing infographics and other materials on organic products can be an effective tool for informing consumers about the benefits of organic food, as well as help explain why these products should be preferred.

6. To increase the demand for organic products, it is advisable for producers to present their products at fairs, exhibitions (with the possibility of tasting), apply discounts and loyalty programs for consumers, expand the range of products, attract more qualified staff, ensure more rational placement of outlets and new sales channels (for example, via the Internet). Also as a tool for promoting organic products on the Ukrainian market, we offer the creation of an organic zone in the restaurant restaurant, which will help attract additional customers [Butenko VM, Toyunda AI, 2020].

Fig. 2. Strategic vectors of development of the market of organic products in Ukraine 

Conclusions. Examining global and domestic trends in the market of organic products, we can say about the growing interest of consumers in environmentally friendly products. Thus, organic production is a strategically important type of production that will increase the economic potential of the country and strengthen or gain competitive advantage in the world. However, despite the positive trends in the development of the domestic market of organic products, there are certain problems and obstacles that do not allow this type of market to develop more dynamically and efficiently. Therefore, it is necessary to implement strategic measures at the state level, regional level and at the enterprise level, which would contribute to the maximum realization of the potential of production and sale of organic products. 

References:

1. Organic in Ukraine. Federation of Organic Movement of Ukraine. URL: http://organic.com.ua/uk/homepage/2010-01-26-13-42-29

2. On the basic principles and requirements for organic production, circulation and labeling of organic products: Law of Ukraine № 2496-VIII of July 3, 2019. URL: https://zakon.rada.gov.ua/laws/show/2496-19#Text

3. Minyailo O., Nesterets A. (2020). Competitive environment in the market of organic products in the context of globalization. J .: European Integration of Ukraine and Economic Security of the State, № 2 (25). sor. 191-203.

4. Granovskaya VG (2017). Prospects for the development of the market of organic products in Ukraine. J .: Economics of agro-industrial complex, № 4, p. 31-40.

5. Bagorka М.О. (2017). Status and problems of development of the organic products market in Ukraine. Black Sea Economic Studies, Vol. 14, p. 29-33.

6. Butenko VM, Toyunda AI (2020). Trends in the development of the organic culture market. J .: AgroTerra, № 2 (9), p. 20-26.

7. Organic market in Ukraine. Information bulletin from 12.02.2020 URL: https://organicinfo.ua/wp-content/uploads/2020/02/UAOrganic_fact_sheet_2020-UA-1.pdf

8. Ukraine is among the leaders in the export of organic products to the EU. URL: https://eu-ua.kmu.gov.ua/istorii-uspikhu/ukrayina-sered-lideriv-iz-eksportu-organichnoyi-produkciyi-do-yes

9. Lysenko G. (2021). Development of the organic market of Ukraine: after the crisis, the rise always begins - "Organic Standard". J .: APK-Inform: RESULTS, №1 (79)). URL: https://www.apk-inform.com/en/exclusive/opinion/1517386

10. Lutsenko Yu.O. Formation of supply and demand in the market of organic products. URL: http://ir.znau.edu.ua/jspui/bitstream/123456789/689/1/Organic_20132_3-9.pdf

11. Dorozhkina KV (2019). The current state of the organic market in Ukraine: advantages and disadvantages. J .: Balanced nature management, № 2, p. 88-96.

12. Kazanji AV (2018). Strategic vectors of development of the market of organic products of Ukraine. J.: Intellect XXI, №1, p. 72-76.