Financial support for the development of agriculture and forestry in Ukraine in the context of European integration

Introduction. The agricultural and forestry sectors play a vital role in Ukraine’s economy as key contributors to food security, export potential, and ecological balance. However, financing these sectors faces multiple challenges, including chronic underfunding, limited access to credit, institutional fragmentation, the impacts of war, and the high demands of European integration. Following Ukraine’s acquisition of EU candidate status, there is an urgent need to adapt financial mechanisms to the principles of the Common Agricultural Policy (CAP) and to integrate the forestry sector into a unified financial architecture. Purpose. The purpose of this study is to conduct a comprehensive analysis of the financial support system for agriculture and forestry in Ukraine within the framework of EU integration, evaluate the effectiveness of existing mechanisms, identify systemic imbalances, and propose strategic recommendations for improving financial support using EU member state experience. Methodology. The study employs a systemic approach to analysing sources of funding, the institutional environment, and tools for budgetary and extra-budgetary support. Methods include economic analysis, comparative legal studies, institutional modelling, policy analysis, and critical reviews of literature, legislation, and analytical reports from the World Bank, FAO, OECD, EBRD, and national sources. The study also compares Ukraine’s situation with Central and Eastern European countries (e.g., Poland, Romania, Lithuania) in their implementation of the CAP. Results. The current financial model of Ukraine’s agricultural sector is largely dependent on enterprises’ own funds, trade credit, and limited state support (~0.33% of GDP). Forestry is even more reliant on self-financing. Government programs (e.g., 5-7-9, partial guarantees) and international aid (e.g., EU4Business, FAO, World Bank) mitigate some risks but remain fragmented. The study evaluates the potential implementation of CAP instruments in Ukraine, including a paying agency, environmental incentives, young farmer support programs, and the development of agroforestry. Innovative financing mechanisms—such as agricultural receipts, carbon credits, and crowdfunding—are identified as promising alternatives. The paper proposes improvements to financial support based on the synergy of budgetary and market sources, development of institutional infrastructure, harmonization with CAP, and enhancement of financial inclusion for small producers and forestry enterprises.