Development of circular agricultural economy: potential sources of financing innovative projects

Authors

DOI:

https://doi.org/10.51599/are.2022.08.02.11

Keywords:

circular agricultural economy, circular projects, financial support, own sources of financing, investment profit

Abstract

Purpose. The purpose of this paper was to highlight the results of the study of potential sources of financing the circular economy in the agricultural sector and modeling the factors influencing the formation of financial support (with own resources) for the implementation of innovative circular projects of agricultural enterprises.

Methodology / approach. This study uses the following methods: bibliometric (to determine the state of the problem under study based on the Scopus and Web of Science databases); correlation analysis (to identify and assess the close relationship between the factors influencing the formation of financial support (with own resources) for the implementation of innovative projects of agricultural enterprises); econometric modeling (to build a mathematical model of the dependence of the investment profit of agricultural enterprises of the Kharkiv oblast on production costs per 1 ha of agricultural lands and their areas); graphical (for building three-dimensional graph and visual representation of the revealed dependencies); monographic and abstract-logical (for generalization of the research results). The empirical part of the study was performed on the example of data from 506 agricultural enterprises of Kharkiv oblast in 2019.

Results. European practices of financing circular projects are summarized. The results of a correlation analysis of the impact on the formation of financial support (with own resources) for the implementation of innovative projects of agrarian enterprises of the following factors are presented: staff motivation, concentration, intensity of land use, intensification, specialization, diversification, outsourcing. It is established that the fundamental basis for obtaining high indicators of income, marginal income, cash flow and investment profit is the formation of the appropriate amount of production costs per hectare. For example, an increase in the size of production costs by 1 thsd. UAH/ha of agricultural land contributed to an increase in the total amount of investment profit by 0.3199 mln UAH, an increase in the area of agricultural land per 1 ha – an increase in this profit by 0.0037 mln UAH.

Originality / scientific novelty. For the first time, one- and two-factor linear econometric models were developed, which made it possible to carry out quantitative assessment of the impact of the intensification of production and land concentration on the formation of the investment profit of agrarian enterprises as the main potential source of self-financing of innovative projects. The provision on the formation of financial support for the implementation of circular projects in the agricultural sector, was further developed.

Practical value / implications. The main results of the study can be used for (i) improving the policy of financial support for the implementation of circular projects in the agricultural sector; (ii) assessment and forecasting of the impact of factors on the investment profit of agricultural enterprises as a potential source of self-financing of innovation circular projects; (iii) management of identified factors from the standpoint of maximizing the formation of own cash flow as a potential source of self-financing of innovation circular projects.

References

Goovaerts L., Schempp C., Busato L., Smits A., Žutelija L., Piechocki R. Financing innovation and circular economy. Designing Sustainable Technologies, Products and Policies; eds. E. Benetto, K. Gericke, M. Guiton. Cham: Springer, 2018. Pp. 427–432. https://doi.org/10.1007/978-3-319-66981-6_47.

Кучер Л. Ю. Економічні засади управління інноваційними проєктами підприємств аграрного сектора: теорія та практика: моногр. Харків: Бровін О. В., 2021. 640 с.

Acsinte S., Verbeek A. Access-to-finance conditions for Projects supporting Circular Economy. Final Report. Luxembourg: European Investment Bank Advisory Services, 2015. 76 p. URL: https://www.eib.org/attachments/pj/access_to_finance_study_on_circular_economy_en.pdf.

Atstaja D., Uvarova I., Kambala D. K., Alberte V., Stokmane K., Gegere–Zetterstroma A. ... Zapletnuka G. Investments to develop business models and projects in the circular economy. IOP Conference. Series: Earth and Environmental Science. 2020. Vol. 578. 012029. https://doi.org/10.1088/1755-1315/578/1/012029.

Страпчук С. І. Бізнес-моделі циркулярної економіки в забезпеченні сталого розвитку сільськогосподарських підприємств України. Економіка, фінанси, менеджмент: актуальні питання науки і практики. 2022. № 1(59). C. 166–181. https://doi.org/10.37128/2411-4413-2022-1-12.

Bobrov Ye. A. Modern innovations in the context of the transition to circular economy. Science and Innovation. 2021. Vol. 17. No. 6. Pp. 13–23. https://doi.org/10.15407/scine17.06.013.

De Pascale S., De Pascale S., Rouphael Y., Cirillo V., Esposito M., Maggio A. Modular systems to foster circular economy in agriculture. Acta Horticulturae. 2021. Vol. 1320. Pp. 205–210. https://doi.org/10.17660/ActaHortic.2021.1320.26.

Elvanidi A., Reascos C.M.B., Gourzoulidou E. Kunze A., Max J. F. J., Katsoulas N. Implementation of the circular economy concept in greenhouse hydroponics for ultimate use of water and nutrients. Horticulturae. 2020. Vol. 6(4). 83. Pp. 1–16. https://doi.org/10.3390/horticulturae6040083.

Li J. S., Duan N., Guo S., Shao L., Lin C., Wang J. H., Hou J. … Han M. Y. Renewable resource for agricultural ecosystem in China: ecological benefit for biogas by-product for planting. Ecological Informatics. 2012. Vol. 12. Pp. 101–110. https://doi.org/10.1016/j.ecoinf.2012.05.004.

Nattassha R., Handayati Y., Simatupang T. M. Siallagan M. Understanding circular economy implementation in the agri-food supply chain: the case of an Indonesian organic fertiliser producer. Agriculture & Food Security. 2020. Vol. 9. 10. https://doi.org/10.1186/s40066-020-00264-8.

Yingqun M., Yanqing S., Yu L. Food waste to biofertilizer: a potential game changer of global circular agricultural economy. Journal of Agricultural and Food Chemistry. 2020. Vol. 68. Is. 18. Pp. 5021–5023. https://doi.org/10.1021/acs.jafc.0c02210.

Xia X., Ruan J. Analyzing barriers for developing a sustainable circular economy in agriculture in China Using Grey-DEMATEL approach. Sustainability. 2020. Vol. 12(16). 6358. https://doi.org/10.3390/su12166358.

Zarbà C., Chinnici G., Pecorino B., D'Amico M. Paradigm of the circular economy in agriculture: the case of vegetable seedlings for transplantation in nursery farms. International Multidisciplinary Scientific GeoConference Surveying Geology and Mining Ecology Management, SGEM. 2019. Vol. 19(4.2). Pp. 113–120. https://doi.org/10.5593/sgem2019V/4.2/S05.0163.

Austin A., Rahman I. U. A triple helix of market failures: Financing the 3Rs of the circular economy in European SMEs. Journal of Cleaner Production. 2022. Vol. 361. 132284. https://doi.org/10.1016/j.jclepro.2022.132284.

Ghisetti C., Montresor S. On the adoption of circular economy practices by small and medium-size enterprises (SMEs): does “financing-as-usual” still matter? Journal of Evolutionary Economics. 2020. Vol. 30. Is. 2. Pp. 559–586. https://doi.org/10.1007/s00191-019-00651-w.

Zeng G., Geng C. A game study on accounts receivable financing in energy conservation and environmental protection manufacturing supply chain under green development. Polish Journal of Environmental Studies. 2022. Vol. 31. No. 2. Pp. 1909–1922. https://doi.org/10.15244/pjoes/142219.

Scarpellini S. Gimeno J. Á., Portillo-Tarragona P., Llera-Sastresa E. Financial resources for the investments in renewable self-consumption in a circular economy framework. Sustainability. 2021. Vol. 13. No. 12. 6838. https://doi.org/10.3390/su13126838.

van Langen, S. K., Passaro, R. The Dutch Green Deals Policy and its applicability to circular economy policies. Sustainability 2021. Vol. 13. No. 21. 11683. https://doi.org/10.3390/su132111683.

de la Cuesta-González M., Morales-García M. Does finance as usual work for circular economy transition? A financiers and SMEs qualitative approach. Journal of Environmental Planning and Management. 2021. https://doi.org/10.1080/09640568.2021.1972798.

Ali Q., Parveen S., Yaacob H., Rani A. N., Zaini Z. Environmental beliefs and the adoption of circular economy among bank managers: Do gender, age and knowledge act as the moderators? Journal of Cleaner Production. 2022. Vol. 361. 132276. https://doi.org/10.1016/j.jclepro.2022.132276.

Ozili P. K. Circular economy and Central Bank Digital Currency. Circular Economy and Sustainability. 2022. Pp. 1–16. https://doi.org/10.1007/s43615-022-00170-0.

Страпчук С. І. Сталий розвиток аграрних підприємств на засадах циркулярної економіки: моногр. Харків: ДБТУ; Львів: Новий Світ – 2000, 2022. 380 с.

Кучер А. В., Кучер Л. Ю., Пащенко Ю. В. Циркулярна економіка в системі сталого розвитку аграрного сектора в умовах євроінтеграції. Економіка та суспільство. 2021. № 32. https://doi.org/10.32782/2524-0072/2021-32-24.

Диба М. І., Гернего Ю. О., Диба О. М. Теоретичні засади циркулярної економіки та європейські практики її фінансування. Фінанси України. 2019. № 10. C. 7–22. https://doi.org/10.33763/finukr2019.10.007.

Досвід країн Європи в переході до циркулярної економіки. URL: https://ecolog-ua.com/news/dosvid-krayin-yevropy-v-perehodi-do-cyrkulyarnoyi-ekonomiky.

Бородіна О. Базові тренди повоєнної трансформації економіки України: бюджетна децентралізація, індустрія 4.0, регіональний енергоменеджмент. Journal of Innovations and Sustainability. 2022. Vol. 6. No. 1. 04. https://doi.org/10.51599/is.2022.06.01.04.

Череватський Д. Ю., Солдак М. О., Лях О. В., Залознова Ю. С. та ін. Циркулярна смарт-спеціалізація старопромислових шахтарських регіонів України: моногр.; за заг. ред. О. І. Амоші. Київ: Ін-т економіки пром-сті, 2020. 196 с. URL: https://iie.org.ua/monografiyi/cirkuljarna-smart-specializacija-staropromislovih-shahtarskih-regioniv-ukraini.

References

Goovaerts, L., Schempp, C., Busato, L., Smits, A., Žutelija, L., & Piechocki, R. (2018). Financing innovation and circular economy. In E. Benetto, K. Gericke, M. Guiton (Eds.) Designing Sustainable Technologies, Products and Policies (pp. 427–432). Cham, Springer. https://doi.org/10.1007/978-3-319-66981-6_47.

Kucher, L. Yu. (2021). Ekonomichni zasady upravlinnya innovatsiynymy proyektamy pidpryyemstv ahrarnoho sektora: teoriya ta praktyka [Economic bases of management of innovative projects of enterprises of agrarian sector: theory and practice]. Kharkiv, Publisher Brovin.

Acsinte, S., & Verbeek, A. (2015). Access-to-finance conditions for Projects supporting Circular Economy. Final Report. Luxembourg, European Investment Bank Advisory Services. Available at: https://www.eib.org/attachments/pj/access_to_finance_study_on_circular_economy_en.pdf.

Atstaja, D., Uvarova, I., Kambala, D. K., Alberte, V., Stokmane, K., Gegere–Zetterstroma, A., ... & Zapletnuka, G. (2020). Investments to develop business models and projects in the circular economy. IOP Conference. Series: Earth and Environmental Science, 578, 012029. https://doi.org/10.1088/1755-1315/578/1/012029.

Strapchuk, S. I. (2022). Business models of circular economy in ensuring sustainable development of agricultural enterprises of Ukraine. Economy, finances, management: topical issues of science and practical activity, 1(59), 166–181. https://doi.org/10.37128/2411-4413-2022-1-12.

Bobrov, Ye. A. (2021). Modern innovations in the context of the transition to circular economy. Science and Innovation, 17(6), 13–23. https://doi.org/10.15407/scine17.06.013.

De Pascale, S., De Pascale, S., Rouphael, Y., Cirillo, V., Esposito, M., & Maggio, A. (2021). Modular systems to foster circular economy in agriculture. Acta Horticulturae, 1320, 205–210. https://doi.org/10.17660/ActaHortic.2021.1320.26.

Elvanidi, A., Reascos, C. M. B., Gourzoulidou, E., Kunze, A., Max, J. F. J., & Katsoulas, N. (2020). Implementation of the circular economy concept in greenhouse hydroponics for ultimate use of water and nutrients. Horticulturae, 6(4), 83, 1–16. https://doi.org/10.3390/horticulturae6040083.

Li, J. S., Duan, N., Guo, S., Shao, L., Lin, C., Wang, J. H., Hou, J., … & Han, M. Y. (2012). Renewable resource for agricultural ecosystem in China: ecological benefit for biogas by-product for planting. Ecological Informatics, 12, 101–110. https://doi.org/10.1016/j.ecoinf.2012.05.004.

Nattassha, R., Handayati, Y., & Simatupang, T. M., & Siallagan, M. (2020). Understanding circular economy implementation in the agri-food supply chain: the case of an Indonesian organic fertiliser producer. Agriculture & Food Security, 9, 10. https://doi.org/10.1186/s40066-020-00264-8.

Yingqun, M., Yanqing, S., & Yu, L. (2020). Food waste to biofertilizer: a potential game changer of global circular agricultural economy. Journal of Agricultural and Food Chemistry, 68(18), 5021–5023. https://doi.org/10.1021/acs.jafc.0c02210.

Xia, X., & Ruan, J. (2020). Analyzing barriers for developing a sustainable circular economy in agriculture in China Using Grey-DEMATEL approach. Sustainability, 12(16), 6358. https://doi.org/10.3390/su12166358.

Zarbà, C., Chinnici, G., Pecorino, B., & D'Amico, M. (2019). Paradigm of the circular economy in agriculture: the case of vegetable seedlings for transplantation in nursery farms. International Multidisciplinary Scientific GeoConference Surveying Geology and Mining Ecology Management, SGEM. 19(4.2), 113–120. https://doi.org/10.5593/sgem2019V/4.2/S05.0163.

Austin, A., & Rahman, I. U. (2022). A triple helix of market failures: Financing the 3Rs of the circular economy in European SMEs. Journal of Cleaner Production, 361, 132284. https://doi.org/10.1016/j.jclepro.2022.132284.

Ghisetti, C., & Montresor, S. (2020). On the adoption of circular economy practices by small and medium-size enterprises (SMEs): does “financing-as-usual” still matter? Journal of Evolutionary Economics, 30(2), 559–586. https://doi.org/10.1007/s00191-019-00651-w.

Zeng, G., & Geng, C. (2022). A game study on accounts receivable financing in energy conservation and environmental protection manufacturing supply chain under green development. Polish Journal of Environmental Studies, 31(2), 1909–1922. https://doi.org/10.15244/pjoes/142219.

Scarpellini, S., Gimeno, J. Á., Portillo-Tarragona, P., & Llera-Sastresa, E. (2021). Financial resources for the investments in renewable self-consumption in a circular economy framework. Sustainability, 13(12), 6838. https://doi.org/10.3390/su13126838.

van Langen, S. K., & Passaro, R. (2021). The Dutch Green Deals Policy and its applicability to circular economy policies. Sustainability, 13(21), 11683. https://doi.org/10.3390/su132111683.

de la Cuesta-González, M., & Morales-García, M. (2021). Does finance as usual work for circular economy transition? A financiers and SMEs qualitative approach. Journal of Environmental Planning and Management. https://doi.org/10.1080/09640568.2021.1972798.

Ali, Q., Parveen, S., Yaacob, H., Rani, A. N., & Zaini, Z. (2022). Environmental beliefs and the adoption of circular economy among bank managers: Do gender, age and knowledge act as the moderators? Journal of Cleaner Production, 361, 132276. https://doi.org/10.1016/j.jclepro.2022.132276.

Ozili, P. K. (2022). Circular economy and Central Bank Digital Currency. Circular Economy and Sustainability, 1–16. https://doi.org/10.1007/s43615-022-00170-0.

Strapchuk, S. I. (2022). Stalyi rozvytok ahrarnykh pidpryiemstv na zasadakh tsyrkuliarnoi ekonomiky [Sustainable development of agricultural enterprises on the basis of circular economy]. Lviv, Novyi Svit – 2000.

Kucher A., Kucher L., & Pashchenko, Yu. (2021). Circular economy in the system of sustainable development of agrarian sector in the conditions of European integration. Economy and Society, 32. https://doi.org/10.32782/2524-0072/2021-32-24.

Dyba, M. I., Herneho, Yu. O., & Dyba, O. M. (2019). Theoretical framework of circular economy and European practices of its financing. Finance of Ukraine, 10, 7–22. https://doi.org/10.33763/finukr2019.10.007.

The experience of European countries in the transition to a circular economy (2021). Available at: https://ecolog-ua.com/news/dosvid-krayin-yevropy-v-perehodi-do-cyrkulyarnoyi-ekonomiky.

Borodina, O. (2022). Basic trends of postwar transformation of Ukraine’s economy: industry 4.0, budgetary decentralization, regional energy management. Journal of Innovations and Sustainability, 6(1), 04. https://doi.org/10.51599/is.2022.06.01.04.

Cherevatskyi, D. Yu., Soldak, M. O., Liakh, O. V., Zaloznova, Yu. S. et al. (2020). Circular smart specialization of old industrial mining regions of Ukraine, O. I. Amosha (Ed.), Institute of Industrial Economics, Kyiv. Available at: https://iie.org.ua/monografiyi/cirkuljarna-smart-specializacija-staropromislovih-shahtarskih-regioniv-ukraini.

Published

2022-06-20

How to Cite

Kucher, L., Kucher, A., Morozova, H., & Pashchenko, Y. (2022). Development of circular agricultural economy: potential sources of financing innovative projects. Agricultural and Resource Economics: International Scientific E-Journal, 8(2), 206–227. https://doi.org/10.51599/are.2022.08.02.11

Issue

Section

Articles

Most read articles by the same author(s)

1 2 > >>