Yana Ishchenko
Vinnytsia National Agrarian University, Ukraine
E-mail:
jana_2006@ukr.net
Olena Podolianchuk
Vinnytsia National Agrarian University, Ukraine
E-mail: podolianchuk_l@i.ua
Nataliya Struk
Ivan Franko National University of Lviv, Ukraine
E-mail:
nataliya.struk@lnu.edu.ua
Valentyna Yasyshena
Vinnytsia education and research institute of economy
of West Ukrainian National University, Ukraine
E-mail:
valentyna.yasyshena@gmail.com
Svitlana Stender
State Agrarian and Engineering University in Podilya, Ukraine
E-mail: stender1976@gmail.com
Submission:
8/25/2021
Accept: 9/25/2021
ABSTRACT
The purpose of the publication is to study the current state of the organization and methods of accounting for the costs of organic production from the point of view of environmental and economic accounting in Ukraine and recommendations for adapting accounting support for managing the costs of production of organic products to the requirements of the formation of integrated information of environmental and economic accounting. To determine the general trends in the development of accounting support for managing the costs of the production of organic products, the methods of induction and deduction were used. The economic and statistical method was used to analyse the state of production of organic products, and the observation method was used to study the state of accounting for the real costs of producing organic food. The state of development of organic production for the period from 2000 to 2019 in the world, Europe and Ukraine has been analysed. It has been determined that at the micro level, in the conditions of organic production, environmental and economic accounting is an information system that allows you to monitor compliance with the requirements of domestic and international legislation regarding the implementation of this type of activity, and, at the next stages, to form consistent and comparable statistical indicators to account for the relationship " links between the environment and the economy. In the absence of regulatory accounting in Ukraine in the conditions of organic production, the formation of internal regulatory accounting regulations is a prerequisite for the effective management of such production. The formed system of cost accounting objects, considering the specifics of technological processes of operators of organic production, will allow organizing a separate accounting of costs for the production of organic products, inorganic products, and products of the transition period. A nomenclature of cost accounting items in terms of production of organic production is proposed, the use of which will make it possible to distinguish in accounting the expenses allowed by legislation in terms of production of organic production from expenses for which there are certain restrictions. The features of the functions of primary documents reflecting the costs of organic production are determined and ways to improve the documentation of production processes are proposed. This will improve the information support for product quality control and will allow adapting the accounting support for managing the production costs of organic products to the requirements of the formation of integrated information on environmental and economic accounting.
Keywords: organic production; expenses; accounting; ecological and economic accounting; information; management
1.
INTRODUCTION
Accounting for income
and expenses, especially at the macro level, is far from accurate. It contains
a lot of approximations, assumptions and unaccounted for factors. We
practically do not take into account in the price of manufactured products the
costs and benefits that arise as a result of the impact of the activities of
economic entities on the eco-agri-food system, on the life of society as a
whole.
Eigenraam and Obst
(2020) call this an “external effect”. The authors interpret the external
effect as positive or negative consequences of the subject's activities that
affect others, without being reflected in the price of goods or services. In
terms of costs, these are those that will be incurred for the restoration of
soils, restoration of damaged ecological systems, the costs of end users of
substandard products for the maintenance and restoration of health, and so on.
The rapid development
of organic production in Ukraine and the world is a response to the desire and
growing opportunities of the population to consume healthy food and public
awareness of the real threat and harm of industrial agriculture due to negative
environmental, social and economic consequences.
Organic agriculture
itself is one of the key factors in solving global environmental and social
problems and in achieving the goals of sustainable development. Consequently, a
growing number of people are interested in obtaining information about the
state of development of organic production, its real costs and the cost of
organic products and so on.
2.
LITERATURE REVIEW
Hemmill-Herren, Baker
and Daniels (2021) note that behind all the food we eat is hidden a huge number
of unaccounted for negative consequences: shallowing of rivers; extraction of
nutrients from the soil; discharge of pollutants into the air and water; labour
exploitation; carbon dioxide emissions and so on. When we shed light on these
interactions, it becomes clear that a hamburger worth 99 cents costs us all
much more than the dollar that the consumer hands over to the cashier.
That is, scientists
point out that society consuming low-quality and cheap food does not take into
account the significant costs it incurs or will bear in the future. After all,
that “cheap” hamburger is extremely expensive for society. And these
unaccounted, “invisible” costs are not borne by the manufacturer, but by the
global community.
Domestic and
international practice provides cost accounting only in the “visible range” by
analogy with the tip of the iceberg. Using the current methodology, we cannot,
for example, really compare the costs and benefits of organic and inorganic
products, because accounting provides limited information. Schematically, this
can be depicted as follows (Figure 1).
The same, even more so,
can be said about statistics as an accounting system that provides information
at the macro level. All this makes it impossible to effectively manage the cost
of production and consumption of food and leads to the emergence and deepening
of global problems.
Attempts to take into
account the costs of interaction between economic activity and the
eco-agri-food system are constantly made in world practice. Thus, in 1993,
under the auspices of the Commission of the European Communities, the
International Monetary Fund, the Organization for Economic Cooperation and Development,
the United Nations, and the World Bank, “System of National Accounts” (1993)
was adopted, introducing integrated environmental and economic accounting.
Figure 1:
Distribution of food costs in terms of organic and inorganic production
Source: created by the authors
In 2012, the United
Nations Statistics Commission adopted the “Central Framework of the Natural and
Economic Accounting System” as an international statistical standard (2012).
The objective of this standard was to develop consistent and comparable
statistics to develop a holistic system for taking into account the
relationship between the environment and the economy. These documents are
statistical tools designed to provide information at the macro level for
research and policy making.
The accumulated world
experience in the formation of integrated information on environmental,
economic and social processes should be used in domestic practice to develop a
national system of integrated environmental and economic accounting. At the
same time, under the formation of indicators at the macro level, it is
necessary to adapt the system of primary monitoring and consolidated accounting
indicators.
The works of Ukrainian
researchers, in particular Kaletnik and Lutkovska (2021), are devoted to the
study of the problems of ecologically oriented activity of the agrarian sector
of the economy. The authors propose various forms of public and private
partnership to address pressing issues of environmental and economic security.
One such way is state support for organic production.
Theoretical and
methodological foundations of ecological and economic preconditions for the
development of organic agriculture were studied by Shkuratov, Chudovska and
Vdovychenko (2015). The influence of globalization processes on the development
of the market of organic products in Ukraine and the export potential of the
Ukrainian organic market is studied in the works of Mazur and Kovalchuk (2018), Honcharuk and Tomashuk
(2017) and Kuznetsova et al. (2020).
However, with regard to
the accounting of economic activity in the conditions of organic production, it
should be noted the lack of scientific developments of theoretical and
practical nature. Some issues of organization and methods of accounting are
studied in the works of Tsal-Tsalko (2018), Moroz (2019), Nushna et al. (2019)
and Semenyshena et al. (2020, 2021) and were considered by the authors of this
publication (Ishchenko, 2019; Podolianchuk, 2018).
The purpose of this
article is to study
the current state of organization and methods of accounting for organic
production costs in terms of environmental and economic accounting in Ukraine
and provide recommendations for adapting accounting support for organic
production costs management to the requirements of integrated environmental and
economic accounting.
2.1.
Research methodology
The methodological
basis of the research is general scientific and specific methods.
Among the general
scientific methods should be mentioned the system method. Systematic research
makes it possible to fully cover and track the process of organic production;
its qualitative characteristics; changes that occur at each stage of
development. The system approach makes it possible to analyze organic
production from the standpoint of integrity and interconnection of the main
elements, their impact on the environment.
The general dialectical
approach is crucial for the methodology of research of organic production. Its
application allows us to recognize the contradictions between industrial
agriculture and organic production, between traditional economic interests and
the environmental imperative.
The combination of
dialectical and systemic approaches to the knowledge of phenomena and processes
has made it possible to outline trends in the development of ecological and
economic accounting in the context of organic production.
Methods of induction
and deduction, monographic method, method of theoretical generalization and
comparison and method of concretization were used to reveal and deepen the essence
and identification of objects of accounting of organic production.
The methodological
principles of accounting were studied using a questionnaire, a graphical
method, and a method of causation. Methods of extrapolation and analogy served
to determine the directions of development of domestic accounting of organic
production, taking into account international experience.
Induction and deduction
methods were used to determine the general trends in the development of
accounting for the costs of organic production. Methods of theoretical
generalization and comparison are used to reveal the nature and content of the
costs of organic production and organic products as economic categories and
objects of accounting. Economic and statistical methods were used to analyze
the state of organic production, and the method of observation - to study the
state of accounting support for cost management of organic agricultural
production.
The sources of the
study were the data of the official websites of the International Federation of
Organic Agricultural Movement (IFOAM), the Federation of Organic Movement of
Ukraine; legislative acts of Ukraine regulating the requirements for organic
production, circulation and labeling of organic products; information of the
United Nations Statistical Commission, economic literature on the research.
3.
RESULTS
According to the
International Federation of the Organic Agricultural Movement (IFOAM), organic
agriculture is a holistic production system that preserves soils, ecosystems,
food and nutrition. Such a system is designed to create conditions that support
environmentally, socially and economically feasible agricultural production
(International Federation of Organic Agriculture Movement. 2021).
In recent years, there
has been a positive global trend for all key indicators of organic production
(Table 1).
Table 1:
Organic production: key indicators and leading countries
Indicators |
World |
Leading countries |
|||
2018 |
2019 |
2018 |
2019 |
||
Number of countries with organic production |
186 |
187 |
х |
х |
|
Area of agricultural lands with organic status, million hectares |
71,5 |
72,3 |
Africa: 2 million hectares (Tunisia 306,467 hectares) Asia: 6.5 million hectares (China 3.1 million hectares) Europe: 15.6 million hectares (Spain 2.2 million hectares) Latin America: 8 million hectares (Argentina 3.6 million hectares) North America: 3.34 million hectares (US 2 million hectares) Oceania: 36.0 million hectares (Australia 35.7 million hectares) |
Australia (35.7 million hectares) Argentina (3.7 million hectares) Spain (2.4 million hectares) |
|
Share of organic lands in the total area of agricultural lands,% |
1,5 |
1,5 |
Africa: 3% (Sao Tome and Principe 22.5%) Asia: 0.4% (Timor-Leste 16.8%) Europe: 3.1% (Liechtenstein 38.5%) Latin America: 1.1% (Uruguay 14.9%) North America: 0.8% (Bermuda 2%) |
Liechtenstein (41.0%) Austria (26.1%) Sao Tome and Principe (24.9%) |
|
Number of operators of organic production |
2.8 million |
3.1 million |
Africa: 806000 (Uganda 210 352) Asia: 1.3 million (India 1 million) Europe: 418610 (Turkey 79563) Latin America: 227609 (Peru 103554) North America: 23,957 (United States 18,166) Oceania: 20,859 (Papua New Guinea 12,742) |
India (1366226) Uganda (210353) Ethiopia (203602) |
|
Organic market, billion euros |
96.7 |
106.4 |
USA (40.6) Germany (10.9) France (9.1) |
USA (44.7) Germany (12.0) France (11.3) |
|
Consumption per capita, euros |
12.8 |
14.0 |
Denmark (312) Switzerland (312) Sweden (231) |
Denmark (344) Switzerland (338) Luxembourg (265) |
|
Source: IFOAM Consolidated Annual Report, 2019, 2020.
The area of
agricultural land with organic status increased from 11 million hectares in
1999 to 72.3 million hectares in 2019. 200,000 operators of organic production
were registered worldwide in 1999. Their number was already more than three
million in 2019. The organic market grew from € 15.1 billion in 1999 to € 106.4
billion in 2019 (IFOAM Consolidated Annual Report, 2020).
According to IFOAM,
Europe has the largest share of countries where organic farming is cultivated
(Table 2). Ukraine is also among them.
Table 2:
Number and share of countries (by regions) that conducted organic production,
2019
Region |
Number of countries with organic farming |
Number of countries in the region |
Share of countries producing organic products,% |
Africa |
47 |
61 |
77 |
Asia |
42 |
51 |
82 |
Europe |
48 |
51 |
94 |
Latin America and the Caribbean |
33 |
48 |
69 |
North America |
3 |
4 |
75 |
Oceania |
14 |
24 |
54 |
World |
187 |
239 |
78 |
Source: The World of Organic Agriculture Statistics and Emerging Trends,
2020.
As of the end of 2019,
16.5 million hectares of agricultural land (about 3.3% of the total area) were
used for organic production in Europe, which is almost 6% higher than in 2018
(Figure 2), there were more than 430 thousand operators of organic production
(Figure 3).
Figure 2:
Areas of organic agricultural land in European countries
Source: Organic World.
Presentations “World of Organic Agriculture 2021”.
Part 3: Organic Agriculture in the Regions, 2021.
The largest areas under
European production in Europe are in Spain (2.35 million hectares), France
(2.24 million hectares), and Italy (1.99 million hectares). The top 3 European
countries in terms of the share of organic land are Liechtenstein (41.0%),
Austria (26.1%) and Estonia (22.3%). Sales of organic products by European
countries in 2019 amounted to 45 billion euros, which is 8% more than last
year. The leaders in retail sales of organic products among European countries
are Germany (12.0 billion euros), France (11.3 billion euros) and Italy (3.6
billion euros).
Figure 3: Dynamics of the number of
producers of organic products in Europe
Source: Organic
World. Presentations “World of Organic Agriculture 2021”.
Part 3: Organic Agriculture in
the Regions, 2021
And although Ukraine is
not one of the leading countries in terms of area or production of organic
products, in 2019 it took second place among European countries in terms of
growth rates of areas involved in organic production (Figure 4). According to
the growth of the market of organic products in 2019, Ukraine entered the top
10 European countries and took eighth place (Figure 5).
Figure 4: Leading countries with the highest growth of
organic agricultural land in 2019, ha
Source: Organic World.
Presentations “World of Organic Agriculture 2021”.
Part 3: Organic Agriculture in
the Regions, 2021.
Ukraine continues to
accelerate the development of organic production and according to experts is a
promising country for significant expansion of the organic market in Europe.
Figure 5: European countries with the highest growth of
the organic market in 2018-2019
Source: Organic World.
Presentations “World of Organic Agriculture 2021”.
Part 3: Organic Agriculture in
the Regions, 2021
Thus, organic
agricultural production in Ukraine is one of the priority areas of development
of the agricultural sector of the economy, in accordance with the adopted
National Economic Strategy for the period up to 2030. Accordingly, the priority
ways to achieve the strategic goals of the state for the development of the
agro-industrial sector are:
· implementation of programs to support
producers of organic products and implementation of measures aimed at raising
awareness of producers about the benefits of organic production;
· development of programs of financial
and advisory support for producers of organic products;
· attracting more producers to organic
production by improving government regulation in this area;
· ensuring the development of
sustainable production, where the task of the government is to encourage
sustainable agricultural production, protect the environment and animals,
spread the use of organic production methods and biotechnology,
“climate-friendly” agriculture and forestry with reduced greenhouse gas
emissions and adaptation to climate change, sustainable management of natural
resources and conservation and enhancement of biodiversity.
The key indicators that
characterize the development of organic production in Ukraine are presented in
Table 3.
Table 3: Dynamics of organic production
development in Ukraine
Indexes |
Years |
from 2019
to 2015, % |
||||
2015 |
2016 |
2017 |
2018 |
2019 |
||
Number of operators of organic
production, units |
210 |
360 |
375 |
510 |
617 |
294 |
Total area of agricultural land
with organic status and transition period, thousand hectares |
410.55 |
411.20 |
420.00 |
429.10 |
467.98 |
114 |
Volumes of the domestic consumer
market of organic products, million euro |
17.5 |
21.2 |
29.4 |
33.0 |
36.0 |
206 |
Source: Federation of Organic Movement in Ukraine. Organic in Ukraine,
2021
Organic production as a
holistic production system that contributes to environmental and food security,
reducing anthropogenic pressure on nature, rational use of natural resources,
environmental protection, creating sustainable systems of agricultural production
and food processing. This, in turn, minimizes society's costs associated with
food production and consumption and increases producer costs.
Thus, the main task of
accounting in organic production is the formation of an accounting system that
would provide information requests to stakeholders about the costs of organic
food producers. After all, at the micro level, in terms of organic production,
environmental and economic accounting is an information system that allows you
to monitor compliance with domestic and international legislation for this type
of activity, and, in the following stages, to form consistent and comparable
statistics to take into account relationships between the environment and the
economy.
Today in Ukraine there
is a lack of information to meet the needs and requests of stakeholders about
the state of development of organic production, the cost of production of
organic products, its cost, and so on. For effective management of such
production at both micro and macro levels, it is essential to provide reliable
and complete coverage in management, financial and statistical reporting of
information on the costs of production of organic products.
Ukrainian legislation
in the field of organic production is currently being formed. The basic
normative act that determines the legal, economic and social bases of organic
agricultural production in Ukraine is the Law of Ukraine “On production and
circulation of organic agricultural products and raw materials” from
03.09.2013, No. 425-VII. This Law defines the legal and economic basis for the
production and circulation of organic agricultural products and raw materials
and aims to ensure the proper functioning of the market of organic products and
raw materials, as well as to ensure consumer confidence in products and raw
materials labelled as organic (2013).
The law treats the
production of organic products (raw materials) as production activities of
individuals or legal entities (including cultivation and processing), where
such production excludes the use of chemical fertilizers, pesticides,
genetically modified organisms (GMOs), preservatives, etc., and all stages of
production (cultivation, processing) apply the methods, principles and rules
defined by law to obtain natural (environmentally friendly) products, as well
as conservation and restoration of natural resources.
The main requirements
for organic production are determined by the Law of Ukraine “On Basic
Principles and Requirements for Organic Production, Circulation and Labelling
of Organic Products” dated July 10, 2018 No. 2496-VIII. This normative act
defines organic production as a certified activity related to 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 legislation in the field of organic production,
circulation and labelling of organic products (2018).
The terms “organic crop
production”, “organic animal husbandry”, “organic aquaculture” are defined
separately in this Law (Table 4).
Table 4: The main categories
of organic agricultural production in accordance with the Law of Ukraine “On
basic principles and requirements for organic production, circulation and
labelling of organic products”
Terms |
Definition of the term |
Organic production |
certified activities related to 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
others 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 labelling of organic products. |
Organic crop production |
organic production related to the cultivation of
cultivated plants, as well as the procurement of flora in compliance with the
requirements of legislation in the field of organic production, circulation
and labelling of organic products. |
Organic animal husbandry |
organic production related to the keeping, breeding
(production) of farm animals (including poultry and insects) and products for
the production of products of animal origin. |
Organic aquaculture |
organic production related to artificial breeding,
maintenance and cultivation of aquaculture facilities in accordance with the
requirements of the legislation in the field of organic production,
circulation and labelling of organic products. |
Source: created by the author
based on Law of Ukraine, 2018
The general requirements
for organic production determine the need to separate in time or space the
production and storage of organic products, including accounting for such
products, from the production and storage of inorganic products and products of
the transition period (Law of Ukraine. 2018). That is, at the legislative
level, operators of organic production are required to organize separate
accounting of costs of production of organic, inorganic products and products
of the transition period, which must be taken into account when building a
system of cost accounting facilities.
The organization of
accounting for production costs is a complex process that includes determining
the list of items of production costs and their composition; cost accounting
objects and calculation objects; structure of sub-accounts and analytical
accounts of direct and indirect production costs; the order of reflection of
expenses on accounts and ways of inclusion of expenses in the prime cost of
each object of calculation; choice of methods of evaluation and accounting of
finished products (main, related, secondary), accounting for future expenses;
development of methods and techniques for accounting for production costs and
forms of internal reporting on costs and output. In addition, in terms of
organic production, accounting should be organized by its branches, which
include:
· organic crop production (including
seed production and nursery);
· organic livestock (including
poultry, beekeeping);
· organic mushroom growing (including
growing organic yeast);
· organic aquaculture;
· production of organic seaweed;
· production of organic food products
(including organic winemaking);
· production of organic feed;
· harvesting of organic objects of
flora (Law of Ukraine. 2018).
The
objects of cost accounting in agricultural production are traditionally crops
(groups of crops), species and groups of animals. However, due to the specifics
of technological processes of operators of organic production, the construction
of a system of cost accounting facilities for such entities will be somewhat
more difficult (Figure 6).
Figure 6:
System of objects of accounting of expenses of organic production
Source: created by the authors
Accounting is designed
to ensure the proper functioning of organic production and consumer confidence
in products and raw materials positioned as organic. This is possible provided
that all organic production processes are properly documented. The lack of
developed standard documents for cost accounting and yield of organic products
necessitates the independent formation of a package of primary documents by
business entities. This should take into account the standards of organic
production, the requirements of current legislation on the production,
circulation and labelling of organic products, production technology of
products.
When modelling business
processes of organic production and the formation of their regulations should
take into account the use of cost information. Regarding the accounting support
of all levels of management, the primary documents on the costs of organic
production should contain information on the following areas of further use:
· operational analysis, internal
control and management;
· external control (state control in
the field of organic production, circulation and labelling of organic products
by operators, control of certification bodies, control of buyers, etc.);
· formation of information for the
purposes of financial reporting according to national and international
standards;
· formation of information for tax and
statistical reporting.
Therefore, each
document must be well thought out and modelled. In a complex with definition of
the list of documents it is necessary to form a substantial part of each
document which is realized by definition of the necessary information for
maintenance of all directions of its use. Under such a comprehensive approach,
the primary document will perform control and information functions (Figure 7).
Figure 7:
Functions of primary documents in the management of organic production
Source: authors' development
Implementation of the
internal control function is ensured by initiating the operation, its
resolution, setting the task, monitoring its implementation and recording the
fact of the operation and the results of the task. The functions of external
control in the field of organics in Ukraine are entrusted to certification
bodies (during the certification and inspection of production) and the State
Service of Ukraine for Food Safety and Consumer Protection (State Food and
Consumer Service), which is responsible for state control (supervision)
subjects of the market of organic products legislation in the field of organic
production, circulation and labelling of organic products.
According to Article 4
of the Law of Ukraine “On Basic Principles and Requirements for Organic
Production, Circulation and Labelling of Organic Products”, organic production
operators are required to certify their activities annually to confirm
compliance with legislation on organic production, circulation and labelling of
organic products.
To this end, producers
of organic products must cooperate with certification bodies and ensure
unimpeded access of organic production inspectors to their facilities and
sampling, as well as provide, upon request of certification bodies, documents
required for certification of organic production, including access to financial
documents (Law of Ukraine. 2018). Accordingly, certification bodies have the
right to require from the operator documents confirming compliance with the
provisions of the legislation on organic production. Such evidence is the
primary documents reflecting the cost of production.
The implementation of
the information function is ensured by the inclusion in the content of the document
of all the necessary information with the selection of its features in the
areas of further use. The selection of features of information by areas of use
makes it possible to group information for different levels of government, in
different sections for the formation of reporting and analytical forms.
In the process of
organic production, it is allowed to use only legally defined substances
(ingredients, components) and in the maximum allowable quantities. The use of
agrochemicals, pesticides, antibiotics for preventive purposes, hormonal drugs,
animal growth stimulants, etc. is prohibited (Figures 8 and 9).
Figure 8:
Requirements for the production of organic crop products
Source: generated by the author based on Law of Ukraine, 2018
Figure 9:
Requirements for the production of organic livestock products
Source: generated by the author based on Law of Ukraine. 2018
These requirements and
prohibitions necessitate the creation of specialized forms of primary
accounting for the costs of seeds, planting material, plant and animal
protection products, fertilizers to ensure effective control over the
production process of organic products. It should take into account the
organizational and technological features and specifics of control during the
transition period, in terms of “pure” organic production and in terms of
parallel production of organic and inorganic products.
During the transition
period and in the conditions of parallel production of organic and inorganic
products, enterprises need to organize separate storage of stocks for each of
the types of production. Incoming accompanying documents should be marked, for
example, “organic composition” and “inorganic composition”.
In the case of parallel
production, the operator is obliged to provide the certification body with
documentary evidence of compliance with the provisions of Article 26 of Law No.
2496-VIII and ensure:
· taking appropriate measures for the
permanent separation of organic and inorganic products, the separation of organic
and inorganic animals;
· separation of manure and feed;
· proper cleaning of production
equipment for technological operations with organic products;
· submission to the certification body
of information on the quantity of produced organic products and products of the
transition period, inorganic products;
· submission to the certification body
of information on harvesting not later than two working days before the
beginning of harvesting;
· submission to the certification body
of information on any movement or sale of animals, livestock products;
· submission of information to the
certification body on the harvest, livestock and livestock products and
measures taken to separate organic and inorganic products (Law of Ukraine.
2018).
To provide documentary evidence of
these measures to the standard and specialized agricultural forms of primary
documents, it is necessary to enter additional details. It is advisable to form
additional forms of documents that are necessary to confirm compliance with the
law, but are not in the list of already developed forms.
Legislative
restrictions on organic production stipulate a particularly detailed
organization of accounting for the costs of seeds, planting material, plant and
animal protection products, fertilizers to ensure effective control over the
production process. This can be achieved by grouping and accounting for costs
by costing items.
Accordingly,
enterprises-operators of organic production should form an expanded
nomenclature of cost items related to the use of these tangible assets (Table
5).
Table 5: Comparison of the
nomenclature of items of accounting for the costs of traditional and organic
agricultural production
Cost accounting items |
|
Traditional production (approximate list according to Methodical
recommendations No. 132 from 18.05.2001.) |
Organic production
(suggested by the author) |
1 |
2 |
Salary expenses |
Salary expenses |
Seeds and planting material |
Seeds and planting material: - purchased organic; - grown in the transition period; - grown in organic production; - others |
Fuel and lubricants |
Fuel and lubricants |
Fertilizers |
Fertilizers: - fertilizers, ameliorants, microbiological, plant
or animal origin; - other substances used to increase soil fertility
and yield of biodegradable crops; - fertilizers and substances for soil improvement
that can be used in the process of organic production in the maximum
allowable quantities; - others. |
Plant and animal protection products |
Plant and
animal protection products: - organic plant and animal protection products; - inorganic plant and animal protection products, growth regulators
are included in the List of substances (ingredients, components) that can be
used in the process of organic production; -
others. |
Feed |
Feed: -
made from organic feed materials using mainly biological, mechanical
and physical production methods; -
the content in the feed of not more than one ingredient of
agricultural origin produced during the transition period; -
purchased (meeting the requirements of organic production); -
others. |
Raw materials |
Raw
materials: - raw
materials and materials that can be used in the process of organic
production; - raw
materials and materials that can be used in the process of organic production
in the maximum allowable quantities; -
others . |
Works and services |
Works and services |
Repair costs of non-current
assets |
Repair costs of non-current assets |
Other expenses for the maintenance of fixed assets |
Other expenses for the maintenance of fixed assets |
Other expenses |
Other expenses |
Non-productive costs (accounting) |
Non-productive costs (accounting) |
Total production expenditures |
Total production expenditures |
Source: formed by the author based on Law of Ukraine. 2018, Methodical recommendations.2001
The proposed system of
itemized accounting will make it possible to differentiate the costs allowed by
law to be carried out in organic agricultural production and the costs of which
there are certain restrictions. This, in turn, will improve the information
support of the control function of organic production management and provide an
opportunity to reasonably calculate the cost of production.
4.
CONCLUSIONS
In the absence of
normative regulation of accounting in Ukraine in terms of organic production,
the formation of internal regulatory accounting regulations is a necessary
condition for effective management of such production.
The application of the
proposed system of cost accounting facilities in the accounting practice of
organic producers, taking into account the specifics of technological processes
of organic production operators, will allow to organize separate accounting of
costs for organic production, inorganic products and transition products.
The introduction of the
developed nomenclature of cost accounting items will make it possible to
differentiate in accounting the costs allowed by law in terms of organic
production from the costs of which there are certain restrictions. This will
improve the information support of product quality control and will allow to
adapt the accounting support of cost management of organic products to the
requirements of the formation of integrated information of environmental and
economic accounting.
We believe that
promising areas of further research on this issue is the development of methods
for cost accounting and costing of organic agricultural products; methods of
accounting and distribution of indirect production costs; reflection of
relevant information in financial, management and statistical reporting. Given
the strategic prospects for the development of organic agricultural production
in Ukraine, as part of the concept of sustainable development, it is necessary
to develop a unified system of informatization of society to assess the state
of organic production, form a strategy for its development and ensure effective
management of these processes.
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