Assessment of efficiency of the organic production development in Western Polissia regions

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Assessment of efficiency of the organic production development in Western Polissia regions

Purpose. The purpose of the article is to assess the socio-ecological and economic efficiency of the organic land-use through the economic substantiation of the organic production development in the Western Polissia regions and its impact on the population health.

Methodology / approach. We used general scientific and special research methods for the study. With methods of comparisons, extrapolations, correlations and the regression analysis, we could give an ecological and economical estimate for costs using for the organic land-use engineering and for the feasibility evaluation of the organic production development. The synthesis method was useful in determining the socio-economic efficiency of growing organic products. The State Statistics Service data, collections of health indicators and the activities of medical institutions in the Rivne region became the initial basis for the present study.

Results. We made the scientific rationale for the organic production development in the Western Polissia, namely, in Volyn, Rivne, Zhytomyr and Kyiv regions, determined the stabilizing costs for the quality condition of 1 hectare of agricultural land. Moreover, the absence of a direct and close relationship between the agro-ecological indicators of soils and the rate of land certification was proved. It was proposed to use the economic criteria for the agricultural land suitability relative to the organic production, as they are defined as informational rather than restrictive. Mathematical modeling helped to evidence the existence of a relationship between the volume of mineral fertilizers applied per hectare of sown area and the level of the population oncological morbidity exemplified by Rivne region, resulting in mathematical models obtained and applied for the predictive estimates of health problems among the population in Rivne region for the coming years.

Originality / scientific novelty. For the first time, the assessment of the socio-economic efficiency of the organic land use was carried out with the involvement of economic justification for the development of organic production in Western Polissia regions and its impact on the population health.

Practical value / implications. Key results of the study are primarily actionable for determining the ecological and economic substantiation of the development advisability of the organic production through the implementation of the ecological and economic appraisal of costs using for the organic land-use engineering. In addition to it, another key result is to set the level of reduction in the population morbidity due to a decrease in mineral fertilizers applicable per hectare of sown area.

Key words: agrarian nature management, costs, organic production, economic efficiency, organic production market.

Introduction and review of literature

Analyzing the organic product market for over the past two decades, we can prove that it has become the most dynamic market in the world and alternative to the consumption of traditional products. The production of rapidly developing organic products directly affects the economic, environmental and social development in the country. Therefore, the problem of the formation of the domestic organic market is extremely urgent.

Today, organic production is developing in almost all countries of the world and is promising for further development in Ukraine as well. Constantly growing consumer demands for organic products, as well as the global trends towards sustainable farming, allow Ukraine to be the active participant in the world organic market. The organization of the effective output of organic products in the management system of the agrarian nature remains relevant and is considered as one of the major ways of the agricultural production ecologization. To calculate the ecological and economic efficiency values and estimate the effective introduction and development of the organic production in the regions of Ukraine, the economic criteria, involving IT developments and geo-information technologies, are used besides traditionally-oriented ecological and agrochemical ones.

Foreign and domestic scientists conducted a comprehensive systematic scientific substantiation of the development of organic production in the agricultural sector of Ukraine. In particular, J. Rana, J. Paul, E. Meemken, M. Qaim, L. Pileliene, V. Tamuliene, O. Yatsenko et al., E. Gavaza, N. Andrusenko, L. Gorbach [1-7], studied the problems of market formation and promotion of organic products; T. Chaika, R. Bezus, V. Chudovska et al., A. Skrypnyk et al., O. Bazaluk et al. [812], studied the organizational, economic, environmental reasons and preconditions of the organic production at different stages of its development; A. Was et al., P. Skrypchuk et al., O. Shkuratov, P. Skrypchuk et al., O. Khodakivska, A. Kucher et al., A. Ickowitz et al. [13-19] consider the ways of the agriculture ecologization, environmental and food security. Developments made by V. Savchuk, V. Khyzhniak, V. Aranchiy et al., R. Redlichova et al., J. Rockstrom et al., W. Willett et al., R. Charles et al. [20-27] are aimed at improving the economic efficiency of organic production and sustainability assessment using a multi-criteria decision aid method (MCDA) and a framework based on the FAO Sustainability Assessment of Food and Agricultural Systems (SAFA) guidelines.

New research on organic land use consider the efficiency in terms of the cost of growing organic and traditional products in order to balance better the resources used and the yields (profits). The peculiarity of such studies is the balancing of demand for organic products, their yield and markup. Such comparisons are made for organic and intensive land use. However, some problematic issues, associated with the calculation of the organic land-use socio-economic profitability values remain unresolved. In particular, the further studies are required to assess the impact of organic production on the socio-economic development of the region and communities therein.

The purpose of the article is to assess the socio-ecological and economic efficiency of organic land use by economically justifying the development of organic production in Western Polissia regions and its impact on the population health.

To achieve the set goals, it is necessary to solve the following tasks: to carry out an ecological and economic assessment of costs for the organization of the organic land-use and output of products; to determine the impact of the production and consumption of organic products on the socio-economic development of the region; to calculate socio-economic impact from the implementation of organic land use.

socio-ecological organic land

Results and discussions

One of the promising ways to develop the market for environmentally friendly goods in Ukraine is to intensify the production and consumption of organic products. The global market for organic products, growing every year, is characterized by a tendency for the demand excess over supply. The output of organic products and raw materials for its manufacture is promising for Ukrainian farmers, since this allows expanding sales markets [28].

The global market for organic products continues to grow steadily over the past 10 years; it has doubled (from 50.9 bln USD in 2010 to 101 bln USD at the beginning of 2019). Over the same period, the Ukrainian domestic market has grown tenfold (from 2.4 to 22 mln Euros). However, due to the low solvency of the demand and the lack of awareness of consumers, Ukrainians consume significantly less organic products (about 0.5 Euros/capita) than the EU residents (up to 300 Euros/capita) [29]. The organic production, for more than 10 years of its development in Ukraine, has proved not only its potential and investment attractiveness, but also its environmental and social significance. Currently, Ukraine ranks the 20th in the world and the 11th in Europe in terms of organic land areas, which is about 467 thsd hectares (about 1.1 % of the total area of agricultural lands). As of 2019, there are about 600 officially certified organic operators on the market (470 of them are agricultural producers) [30-32].

Within the framework of the draft Strategy for a Sustainable Development of Ukraine by 2030, the area of the organic agricultural lands is planned to increase to 3 mln hectares (i.e. from 1.1 % to 7 % of the area) and, starting from 2020, to ensure an annual increase at least 5 % in the production and sales of organic products [33]. The European Union intends to increase the organic farming area up to 25 % by 2030 (Now, this figure is 8 %). Simultaneously, at least 10 % of agricultural land should be converted into “living areas” with a high biological diversity [3 4].

Ukraine has implemented the method of determining the normative monetary valuation of the land [35], which does not disclose the mechanism for determining the value of the “capitalized rental income ratio”, which deprives stakeholders to verify the validity of decisions on organic land use. This methodological approach effectively undermines the authority of local governments to control the quality of grants in agribusiness and deprives them of the opportunity to influence community development with economic instruments. The importance of the objective price is conditioned by the binding to it of the payment of taxes for use or resale, the use of the plot as collateral in the bank.

H.M. Shpak has tested the proposed methodology for the ecological and economic assessment of agricultural lands suitable for the organic land-use. She implemented it studying Rivne region lands. Her methodology provides the use of not only traditional ecological and agro-chemical criteria, but also economic ones, in particular, the cost of the complex, implementing for the stabilization measures per 1 - hectare of agricultural land. The key task of such measures is to ensure that soils meet the requirements of the organic land- use, to stabilize (improve) their agro-ecological nature, to increase fertility, to eliminate the negative consequences of the previous land- use in order to reduce economic damage due to a decrease in crop yields during the transition period [36].

Using the methodology, determining the amount of costs to restore the soil fertility [37], we calculated such costs for the stabilization of the qualitative state of 1 hectare of agricultural land for Western Polissia, namely for Volyn, Rivne, Zhytomyr and Kyiv regions (Table 1). These costs include the cost for the soil deoxidation, optimal reclamation of the phosphorus and potassium minimum, and the humus content recovery. According to our calculations, taking into account the fertilization (bio- humus - 4 t/ha, granular phosphorites - 2 t/ha, potassium chloride - 0.2 t/ha) annual rates, the stabilization period will last for 3 -4 years.

Table 1. Measures planning to restore the soil fertility and costs distributing for their implementation in time, thsd UAH/ha

Figure 2. Dependence of the incidence of oncology on the volume of mineral fertilizers applied in the Rivne region in 2004-2021

Source', made by the authors based on their own calculations.

A visual outlier identification criterion allows identifying ejection as a data point that is significantly distant from the main dataset. The R² criterion allows us to consider some data elements as an outlier, if after its removal the value of the coefficient of determination R² significantly increases. When extracting outliers from a sample, remember that outliers should not exceed 25 % of the entire sample. A large number of outliers indicates a poor quality of statistical data or the independence of the considered parameters. Pursuant to the results of the correlation analysis, the correlation coefficient between the volume of mineral fertilization and oncology for the period 2004-2021 after extracting uncharacteristic data is r = 0.84 (Figure 3), which indicates a close relationship between these indicators.

Figure 3. Dependence of the incidence of oncology on the volume of mineral fertilizers applied (after removing non-characteristic data) in the Rivne region in 2004-2021

Source: made by the authors based on their own calculations.

Using the method of the regression analysis, the one-factor linear regression model of the dependence of oncology in Rivne region (factor y₁) on the mineral fertilization volume (factor x) is built, and has a general form:

y = a0 + aix, (1)

where ao is the free term of the equation; ai is the regression coefficient.

To estimate the parameters of the paired regression equation, the least squares method is used. It consists in determining the parameters ao, ai, at which the sum of the squares of the deviations of the actual values of the result (yi) is minimized from the theoretical ones. The paired linear regression coefficient ai characterizes the degree of the connection between the variations of the factorial and effective indicators. The regression coefficient shows how much, on average, the value of the effective indicator will change, when the factor is changed by one. Microsoft Excel software is used to build the regression model. As a result, we get a linear regression model that looks like this:

yi = 1.67х + 237.62 (2)

Hence, we can conclude that with a decrease in the fertilizer dressing per unit (x), the level of cancer incidence per 100 thsd population (yi) will decrease by an average of 1.67.

The significance of the linear correlation coefficient is based on the Student's t-criterion: the hypothesis of the absence of a relationship among the factorial and effective values is tested. To do this, it is necessary to compare the actual (calculated) value of the Student's criterion with the tabular value determined at a given significance level a and degrees of freedom k₁ = m and k₂ = n - m - 1.

Moreover, if the actual value of the F-criterion is greater than the tabular Ffact > Ftheor, then the model is significant in terms of parameters.

Table 2 shows the results of the parameters concerning an equal factor regression model of the morbidity dependence through oncology (yi) on the fertilizer dressing volume (x), made with Microsoft Excel functions.

Table 2 Parameters of the one-factor regression model of the dependence of the incidence of oncology (yi) on the volume of use of mineral fertilizers (x)