AN INTEGRATED APPROACH TO IMPLEMENTING THE CIRCULAR ECONOMY MODEL IN AGRIBUSINESS

Abstract

The domestic agribusiness sector needs to transition from an export-oriented, raw-material-based model to the production of competitive, high-value-added finished products. Amid resource shortages, waste accumulation, and adverse geopolitical factors, implementing a circular economy model in agribusiness is of paramount importance. This article substantiates the theoretical and practical mechanisms for implementing this model to diversify the value chain of a traditional agricultural crop–potatoes. Based on the specific features of crop cultivation and the importance of vertical integration, a cluster approach to its implementation is proposed. Potato farming has significant potential for building a closed-loop production cycle based on circular principles: food products – by-products – feed/biogas – organic fertilizers – new crops. Realizing this potential is possible through a cluster organization that brings together farms, research institutions, and the public sector, exemplified by the “Volyn Smart Agro Cluster” initiative in the Volyn region. Methodologically, the study employs analysis and synthesis for the literature review; factor analysis to assess impacts on gross crop yields; and statistical analysis to process FAO data on potato production and trade volumes. Dynamic analysis tracks foreign trade balance trends, while systems and chain analyses examine the potato industry value chain from cultivation to deep processing. Finally, a cluster approach is used to design the organizational and economic structure of agribusiness based on a cluster model built on circular economy principles.