Agri-Food Sector in Ukraine and Poland: A Comparative Analysis Using the Input–Output Model

Abstract

The war in Ukraine and the COVID-19 pandemic have shown that Ukraine is strongly integrated with global agricultural markets, is of great importance for the world’s food security, and can effectively compete with Poland in exporting to EU markets. Contrary to Poland, the agri-food sector in Ukraine has not yet been the subject of research using input–output tables. The input–output model has many advantages in studying the structures of individual sectors and their connections with other sectors of the economy and with foreign countries. Therefore, the current study fills the existing research gap. The aim of the article is a comparative analysis of the agri-food sectors in Ukraine and Poland in 2020 (during the COVID-19 pandemic) using the input–output model. The data source is the OECD TiVA database. The main conclusion is that Poland is further along the path of agricultural and food sector development than Ukraine. The study also reveals that in terms of value, the agri-food sector in Ukraine is significantly smaller than in Poland, but it is more important in the Ukrainian economy, with agriculture being its dominant link, while in Poland it is the food industry. The Polish agri-food sector is characterized by a higher import dependency of gross output. Exports play a significant role in the distribution of the gross output of Ukraine’s agriculture and Poland’s food industry. However, the export directions differed significantly. Poland exported mainly to the EU, while Ukraine exported to Asian and Middle Eastern countries.

1. Introduction

The Russia–Ukraine conflict has destabilized the already unstable due to the COVID-19 pandemic’s effects on the markets for agricultural and energy raw materials. This has resulted in increases in commodity prices to levels that have not been recorded for a long time [1]. In March 2022, the FAO Food Price Index reached a record high of 160.2 points [2]. This means that food was 60.2% more expensive than the average in 2014–2016. Compared to January 2021, the value of the index increased by as much as 46.7 points, i.e., by more than 40%. The market reaction resulted from the strong integration of the Ukrainian agri-food sector in global markets for agricultural raw materials [3,4]. Ukraine is the most important or one of the most important producers of certain agricultural products, including cereals and oilseeds. In 2020, Ukraine was the world’s largest exporter of sunflower oil, the second largest exporter of barley and rapeseed, the fourth largest exporter of corn, and the fifth largest exporter of wheat [5]. The closure of the Black Sea basin to shipping as a result of the hostilities meant Ukraine was cut off from foreign recipients of agricultural products. About 90% of agricultural products exported by Ukraine reach foreign markets through Black Sea ports [6]. The recipients are mainly countries in the Middle East, Africa, and Asia, for which Ukraine was the most important or one of the most important suppliers of basic agricultural products [7].

The issue of the production potential of Ukraine’s agri-food sector had already been the subject of analysis prior to the war. From comparisons of the production potentials between Ukraine and Poland, several conclusions emerged. Firstly, before the war, Ukraine had ranked sixth in the world in terms of agricultural land, having 43.4 million hectares (2.3% of the world’s agricultural land)—more than twice as much as Poland and the largest amount in Europe, not counting Russia. In the structure of Ukraine′s agricultural land, arable land holds the largest share (79.7%), which is slightly higher than in Poland (76.1%) [5]. Also the share of soils classified as the highest quality in the structure of Ukraine’s agricultural land is high [8]. About 50% of the territory of Ukraine is covered with chernozems [6]. Secondly, the structure and high soil quality of Ukraine′s agricultural land determine the specialization of Ukrainian agriculture, which focuses on the production of grains and oilseeds in large-scale agricultural enterprises. In 2020, the share of plant products in Ukraine′s agricultural production structure was 77%, compared to 51% in Poland. That year, Ukraine harvested 65 million tons of grain, while Poland’s harvest amounted to 35.7 million tons. The Russia–Ukraine conflict contributed to a decline in grain harvests in 2022, whereas in Poland, they remained unchanged. Thirdly, the second decade of the 21st century saw a decline in livestock production in Ukraine, with the exception of poultry production. In Poland, however, downward trends were observed only in pork production. Fourth, the costs of agricultural production, including fuel, plant protection products, fertilizers, and labor, were lower compared to Poland [3,9,10]. Furthermore, agricultural producers in Ukraine do not have to meet many of the standards regarding restrictions on the use of plant protection products that EU producers must meet. Finally, a strong agricultural industry based on crop production represents the greatest potential of Ukraine′s agri-food sector. In contrast, the potential of Poland’s sector is shaped not only by agriculture but also by a highly developed food industry that relies primarily on domestic raw materials [11].

The subject of the research also concerns the competitive position of Ukrainian food producers in world markets and, in particular, EU markets. Bułkowska and Bazhenova [5] showed that under war conditions, only some agri-food products imported from Ukraine were subjects of mutual Polish–Ukrainian competition in the EU market in 2021. This includes, among others, products such as wheat, poultry meat, bird eggs, and frozen fruit but also highly processed food products, including confectionery and pastry products. In addition, the impact of the EU–Ukraine Deep and Comprehensive Free Trade Area Agreement (DCFTA) on Ukraine′s trade with the EU, including Poland, was also studied [12]. Hamulczuk et al. [3] believe that one of the factors in the significant increase in Ukrainian grain exports over the first two decades of the century was Ukraine′s participation in trade liberalization processes, mainly accession to the World Trade Organization and the liberalization of mutual EU–Ukrainian trade under the DCFTA.

The agri-food sector in Ukraine has not yet been the subject of research using input–output tables. The input–output model has many advantages in studying the structures of individual sectors. The greatest advantage is the ability to analyze the interconnections between a given sector and other sectors of the economy, as well as with foreign markets. These advantages have been utilized in studies on the agri-food sector in Poland and other countries. Mrówczyńska-Kamińska and Poczta [13] and Poczta and Mrówczyńska-Kamińska [14], as well as Ambroziak [15], studied material flows in the Polish agri-food sector and its interconnections with the national economy. Another subject of research has also been the role of agribusiness in Poland compared with other EU Member States [16,17,18,19,20]. The conclusions drawn from the above studies indicate that there are differences in the structures of the agri-food sectors between countries with high levels of economic development (such as the EU-15 countries, including Germany) and those with lower levels of economic development (such as the new EU Member States, including Poland). In the former group, the agricultural supply chain is significantly influenced by the sectors producing inputs and providing services, as well as food processing, while internal trade is at a low level. In contrast, in countries with lower levels of economic development, including Poland, agriculture is dominated by the production of raw materials within the sector itself, meaning that internal trade plays a dominant role.

Hence, the current study fills the existing research gap in the context of Ukraine. The aim of the article is a comparative analysis of the agri-food sector in Ukraine and Poland in 2020 (during COVID-19 pandemic) using the input–output model. The key research question is as follows: at which points along the development path of the agri-food sector, as outlined in the literature, do Ukraine and Poland currently stand?

The study assumed that the structures of the agri-food sectors in Ukraine and Poland would be compared (static approach). Therefore, comparisons of the directions and scales of changes occurring in the sectors of both countries were omitted. The analysis focused on the year 2020, as it was the most recent year for which input–output tables were available in the OECD Trade in Value Added database. Although 2020 was the first year of the COVID-19 pandemic, it did not significantly affect the structure of the agri-food sector in either country.

The structure of the article is as follows: The first part presents selected aspects related to the use of the input–output model in research on the structures of economies, as well as the research method and data sources. Then, the results of the study are presented on the importance of the agri-food sector in the economies of Ukraine and Poland, the balance of the creation and distribution of the sector’s gross output, and the sector′s connections with other sectors of the economy and abroad. The study ends with an attempt to assess the impact of military operations on the agri-food sector of Ukraine and to identify possible implications for the agri-food sector in Poland.

2. Theoretical Aspects of the Input–Output Model

The history of input–output tables dates back to the second half of the 18th century. The economic table (Tableau economique), by the French economist Francois Quesnay, was the first ever diagram of the functioning of the national economy. The table in the form used today and the basics of the method of its use were developed in the 1930s by Leontief [21,22]. The fundamental information used in an input–output analysis concerns the flows of products from each sector, considered as a producer, to each of the sectors, including itself and others, considered as consumers. Three parts of input–output tables are distinguished. Part one, labeled intermediate uses, contains interindustry exchanges of intermediate products [23]. Part two, labeled final demand, records the sales of each sector’s production to final markets, such as final consumption expenditures by households and the general government, gross fixed capital formation, and changes in inventories, such as acquisitions, less disposals of valuables, and exports. Part three, labeled value added, accounts for the other inputs to production, such as compensation for employees, net operating surplus, and mixed income, as well as other taxes less subsidies on production.

Product flows in the input–output table are classified according to the place of origin and destination [24]. The columns describe the composition of inputs required by a particular industry to produce its output. The rows of such a table describe the distribution of a producer’s output throughout the economy. Figure 1 shows a diagram of the table with the separation of imports (for an open economy), also called the input–output balance for domestic production [25].

Initially, input–output tables were intended as models of entire economies, but starting in the first half of the 1950s, they began to be used to study relationships in some regions of the world [26]. Attempts were also made to create a global input–output table covering most of the world′s countries. However, such boards appeared on a larger scale as late as at the beginning of the second decade of the 21st century. Examples include the World Input–Output Database (WIOD), released in May 2012, and the OECD Trade in Value Added (TiVA) database, released in January 2013.

A global input–output table (IOT) provides information on the process of product creation and distribution in the global economy, with particular emphasis on the relationships between production branches of individual economies and end users [27]. Columns in such a table contain information about production processes, i.e., how the gross output of a given sector of the economy and a given country is created (Figure 2). Gross output consists of domestic products produced in a given sector and in other sectors and foreign products produced in a given sector and other sectors, as well as gross value added [19]. The global IOT row provides information on how production is divided. It can be used both at home and abroad as an intermediate good for further processing and as a final good for domestic and foreign private and public consumption, as well as for investment expenses by domestic and foreign companies [27]. Similarly to the national IOT, the gross output of a given sector of the world economy (the total of all elements of a given column) is equal to the total of the products used and produced in a given sector of the world economy (the total of all elements of a given row).

The dependencies resulting from the global input–output table can be expressed quantitatively. Summing the total column, the total gross output of sector j and country s is found using the following:

$$X_j^s={\mathrm{z}}_j^{domestic}+{z_j^{foreign}+VA}_j^s$$

(1)

where

• $X_j^s$—total gross output of sector j and country s;
• $z_j^{domestic}$—value of the flows of domestic products used in sector j and country s;
• $z_j^{foreign}$—value of the flows of foreign products used in sector j and country s;
• ${VA}_j^s—$gross value added created in sector j and country s.

Summing the total output row, the total gross output produced by sector i and country r is found with the following:

$$X_i^r={\mathrm{z}}_i^{domestic}+{\mathrm{z}}_i^{foreign}+{\sum }_{s=1}^c{f}_i^{rs}$$

(2)

where

• $X_i^r$—total gross output of sector i and country r;
• $z_i^{domestic}$—value of flows of products produced by sector i in country r and used domestically;
• $z_i^{foreign}$—value of the flows of products produced by sector i in country r and used abroad;
• $f_i^{rs}$—final demand in country s for products produced by sector i and country r.

By analogy, the input–output model for one economy can be applied to the world economy consisting of c countries whose economies consist of n sectors [28]. The basic balance equation of the global input–output table will be:

$$\mathit{X}=\mathbf{A}\mathit{X}+\mathit{f}$$

(3)

where

• X—vector (nc × 1) of the final output;
• A–matrix (nc × nc) of the technical coefficients, the so-called matrix of costs;
• f—vector (nc × 1) of the final demand.

Matrix A = ${\left[a_{ij}^{rs}\right]}_{i,j=1,\dots ,n}^{r,s=1,\dots ,c}$ contains the coefficients of the direct material intensity of production denoting the value of products (goods and services) originating from the i-th industry in country r and used by the j-th industry in country s to produce a unit of the value of the gross output in the j-th industry in country s [28,29].

When Equation (1) is transformed using the identity matrix I, an equation called the Leontief model is obtained, as follows:

$$(\mathbf{I}-\mathbf{A})\mathit{X}=\mathit{f}$$

(4)

where the I–A matrix is called the Leontief matrix, which transforms the gross output vector X into the final production vector f, and then the Equation is in the following form [23]:

$$\mathit{X}={(\mathbf{I}-\mathbf{A})}^{-1}\mathit{f}=\mathbf{L}\mathit{f}$$

(5)

where (I–A) ^–1 is the inverse Leontief matrix, L = ${\left[l_{ij}^{rs}\right]}_{i,j=1,\dots ,n}^{r,s=1,\dots ,c}$ of nc × nc, containing full material consumption coefficients. The elements of the matrix indicate how much gross output should be increased in the i-th industry in country r so that the production satisfying the demand for final goods of the j-th industry in country s increases by one unit. The transformed equation allows us to capture both direct and indirect connections in the world economy, consisting of c countries whose economies consist of n sectors.

Using the L matrix, a number of other coefficients describing production in the global economy can be calculated. To decompose gross exports according to the sources of value added, the value added flow matrix T was used, the general form of which for the world economy consisting of c countries and n sectors can be expressed as follows [28]:

$$\mathbf{T}=\mathit{v}\mathbf{L}\mathit{e}$$

(6)

where

• T—matrix (nc × nc) of the value added flows;
• v—vector (1 × nc) of the shares of value added in gross output;
• L—inverse Leontief matrix (nc × nc);
• e—vector (nc × 1) of the total exports of individual countries.

For three countries and one industry, Equation (6) is as follows:

$$\mathbf{T}=\left[\begin{array}{ccc}{v}^1& v^2& v^3\end{array}\right]\left[\begin{array}{ccc}{l}^{11}& l^{12}& l^{13}\\ l^{21}& l^{22}& l^{23}\\ l^{31}& l^{32}& l^{33}\end{array}\right]\left(\begin{array}{c}{e}^{1*}\\ e^{2*}\\ e^{3*}\end{array}\right)$$

(7)

and after transforming vectors v and e into diagonal square matrices, Equation (7) takes the following form:

$$\mathbf{T}=\left[\begin{array}{ccc}{v}^1& 0& 0\\ 0& v^2& 0\\ 0& 0& v^3\end{array}\right]\left[\begin{array}{ccc}{l}^{11}& l^{12}& l^{13}\\ l^{21}& l^{22}& l^{23}\\ l^{31}& l^{32}& l^{33}\end{array}\right]\left[\begin{array}{ccc}{e}^{1*}& 0& 0\\ 0& e^{2*}& 0\\ 0& 0& e^{3*}\end{array}\right]$$

(8)

Finally, the matrix of the value added flows T in the world economy consisting of three countries and one industry is as follows:

$$\mathbf{T}=\left[\begin{array}{ccc}{v^{1}l}^{11}{e}^{1*}& v^1{l}^{12}{e}^{2*}& {v^{1}l}^{13}{e}^{3*}\\ v^2{l}^{21}{e}^{1*}& v^2{l}^{22}{e}^{2*}& v^2{l}^{23}{e}^{3*}\\ v^3{l}^{31}{e}^{1*}& v^3{l}^{32}{e}^{2*}& v^3{l}^{33}{e}^{3*}\end{array}\right]$$

(9)

This matrix allows for assessing both the origin of value added contained in the exports of each country (and industry) and the distribution of the value added across countries. In order to determine the composition of exports by the country of origin of value added, one needs to look at the columns of the above matrix, whereas the directions of the distribution of the value added in the exports of destination countries are shown in the rows. Exports are composed of the domestic value added and foreign value added [30].

The first column of matrix T includes elements describing the country of origin of the value added content of country 1′s exports. For example, v¹ l¹¹ e^1* denotes the value added created in country 1, which is subsequently exported by that country to foreign markets. In turn, v² l²¹ e^1* is the value added created in country 2 and contained in the exports of country 1. The first row of matrix T (with the exception of v¹ l¹¹ e^1*) shows which part of the value added exported by country 1 is re-exported by country 2 (v¹ l¹² e^2*) and country 3 (v¹ l¹³ e^3*) [30].

3. Research Method and Data Sources

The study was carried out using the relationships and equations presented in the previous section. In particular, they were the equation for the costs of gross output (1); the equation for the distribution of the gross output (2); the coefficients of direct product intensity of gross output (3); the coefficients of full product intensity of final production (5); the coefficients of direct import intensity of gross output (3); the coefficients of full import intensity of final production (5); and the matrix of flows of added value in trade (6).

The study used a database of global input–output tables published in November 2023 by the OECD. The database contains flow tables and a number of coefficients determined by using them for 75 countries of the world (and an aggregate called “the rest of the world”) and 45 sectors in each country for the years 1995–2020 [31]. The agri-food sector covers the following ISIC Rev. 4 divisions: 01 and 02 (agriculture, including hunting and forestry), 10, 11, and 12 (food products, beverages, and tobacco). The study used data for 2020. The study assumed that the structure of the agri-food sector in Ukraine and Poland would be compared (static approach). Therefore, comparisons of the directions and scales of changes occurring in the sectors of both countries were omitted. The analysis focused on the year 2020, as it was the most recent year for which input–output tables were available in the OECD Trade in Value Added database. Although 2020 was the first year of the COVID-19 pandemic, it did not significantly affect the structure of the agri-food sector in either country.

4. Research Results

4.1. Agri-Food Sector in Ukraine and Poland

Some conclusions resulted from the comparison of the agri-food sectors in Ukraine and Poland made on the basis of input–output tables. Firstly, in terms of value, the agri-food sector in Poland is clearly larger than in Ukraine. In 2020, the gross production value of the sector in Ukraine accounted for nearly 55% of the agri-food sector’s gross production in Poland. For the gross value added, the ratio was 64%, and for exports—66% (Figure 3). Secondly, the agri-food sector was clearly more important in the economy of Ukraine than that of Poland. In 2020, it was responsible for more than 19% of the gross production generated in the Ukrainian economy, created 15% of the gross value added, and generated nearly 30% of the revenues from the exports of goods and services in Ukraine. In Poland, the sector was responsible for 9.4% of the gross production, 5.9% of the gross value added, and 8.5% of the exports (Figure 4). Thirdly, the agri-food sector in Ukraine was dominated by agriculture, while in Poland it was the food industry.

Even though the value of the Ukrainian agricultural production was lower than that of agriculture in Poland, Ukraine was the largest or one of the largest global producers and exporters of some basic agricultural products. In 2021, it was the world′s largest exporter of sunflower oil, the third largest exporter of corn, barley, rapeseed cake, and sunflower meal, and the sixth largest exporter of wheat and poultry [7].

4.2. Balance of the Gross Output Creation

The analysis of the balance of gross agricultural production showed that the share of the costs of domestic materials (i.e., material supplies from other sectors of an economy) in agricultural production was slightly higher in Poland than in Ukraine and in 2020 amounted to 45.9% and 43.4%, respectively (Figure 5). Imported materials were more important in creating agricultural production in Poland—they accounted for 13.8% of production, compared to 12% in Ukraine. The share of the gross value added (the total of the wage costs, operating surplus, and taxes from producers less subsidies for producers) in the gross output is a derivative of the importance of the costs of domestic and imported materials. In 2020, it was higher for agriculture in Ukraine than in Poland and amounted to 44.6% and 40.3%, respectively. This means that each unit of the Ukrainian agriculture gross production generated 0.043 units of gross value added more than that of Polish agriculture.

In turn, the Ukrainian food industry used domestic materials to a greater extent. Their share in the gross output in 2020 was 69.6%, while in Poland it was 65.1% (Figure 5). The food industry in Poland, however, used materials from abroad to a greater extent (they accounted for 12.4% of the gross output, compared to 9.8% in Ukraine) and generated more added value. Each unit of gross output of the food industry in Poland generated 0.226 of a unit of gross value added, while in Ukraine it was 0.206 of a unit. The higher import dependency of Poland′s food industry can also be viewed in terms of benefits. Without the import of raw materials, several key branches of Poland’s food industry, such as the tobacco, fish, confectionery, and coffee and tea processing industries, would not have developed [11].

4.3. Balance of the Distribution of the Gross Output

A comparison of the balances of the distribution of gross agricultural production showed that in Ukraine it is much more dependent on exports. In 2020, more than 31% of the Ukrainian agriculture production was exported, while in Poland the share was less than 9.6%. The higher share of material consumption in Polish agriculture than in Ukraine indicates that agricultural products are used to a greater extent in the food industry. In 2020, more than 58% of the gross output of Polish agriculture was used for domestic intermediate consumption, while in Ukraine this share was 41.3% (Figure 6).

In the distributions of the food industry gross output, the situation was the opposite. As much as three-quarters of the gross output of the Ukrainian food industry satisfied the domestic final demand. Exports accounted for 17.3% of the gross output. In Poland, 27.3% of the gross output of the food industry was exported, while the share of domestic final demand was 40.6% (Figure 6). During Poland′s EU membership, exports have become the driving force behind the development of the country′s agri-food sector [15].

However, the export directions of agricultural products and food industry products from Ukraine and Poland were clearly different. In 2020, as much as half of Ukrainian exports of agricultural products and food industry products were directed to countries in Asia and the Middle East (Figure 7). The most important recipients in the group were China, Türkiye, Egypt, India, and the United Arab Emirates. At that time, just more than 25% of the goods reached the EU market. In turn, for Poland, the largest recipients of products from the agri-food sector were EU countries and Great Britain, where more than three-quartes of Polish exports from the sector went.

5. Comparison of the Product Intensity Structure of the Agribusiness Sector

5.1. Domestic Materials

The comparison of the direct domestic product intensity coefficients showed that agriculture in Ukraine and Poland primarily used products produced in the sector and in service sectors (including energy, water, and gas supplies). In 2020, an increase in Ukraine′s agriculture production by one unit (in value terms) required an increase in the sector’s gross output by 0.187 of a unit and an increase in the gross output of the service sector by 0.160 of a unit. Analogous coefficients for Poland were lower and amounted to 0.140 of a unit and 0.151 of a unit, respectively (Figure 8). In other words, agricultural production in Ukraine was more dependent on services than in Poland. Wholesale and retail trade and vehicle repair; professional, scientific, and technical services; road transport; storage; energy, gas, and water supplies; and real estate market services were clearly more important in Ukraine than in Poland. In Poland, however, financial and insurance services were more important than in Ukraine.

In turn, an increase in the agricultural production by one unit increased the demand for the gross output of other industrial sectors by 0.068 units in Ukraine and by 0.064 units in Poland (Figure 8). The most important items were chemicals and chemical products, as well as coke and refined petroleum products. Interestingly, in Ukraine, machines and equipment, as well as motor vehicles, were more important. Furthermore, 0.087 units of the gross output of the food industry was used to produce one unit of agricultural production in Poland.

Greater differences in the direct domestic product intensity coefficients concerned the food industry of the surveyed countries. In 2020, as much as 0.286 of a unit of the gross output of the service sector was needed to produce one unit of the gross output of the food industry of Ukraine (Figure 8). Among them, the most important were wholesale and retail trade and vehicle repair; energy, gas, and water supplies; professional, scientific, and technical services; real estate market services; land transport; construction services; and warehousing. In Poland, to produce one unit of the food industry’s gross output, 0.170 of a unit of the gross output of the service sector was needed, including wholesale and retail trade; vehicle repair and road transport; and, to a lesser extent, also the service sectors as in Ukraine. Thus, food industry production in Ukraine was more service-intensive than in Poland, meaning it leads to a greater increase in the gross output of services.

The structure of domestic materials used for the production of food products showed that the products delivered from this sector (so-called intra-sectoral cooperation) and agricultural products were dominant in Poland. In 2020, 0.168 of a unit of products from the food sector and 0.192 of a unit of agricultural products were needed to produce one unit of the food industry’s gross output (Figure 8). Agricultural products had similar significance in Poland in creating the Ukrainian food industry’s gross output. Food industry products, however, were clearly less important—only 0.066 of a unit of products from this sector was needed to produce one unit of gross output of the food sector. In other words, increasing food industry production in Poland by one unit requires a three-fold increase in production within that sector compared to Ukraine.

However, other industrial products were more important than in Poland in the Ukrainian food industry’s gross output—an increase in production by one unit required 0.119 of a unit of products from other sectors. The most important among them were paper and paper products, rubber and plastic products, and other non-metallic raw materials, wood and wood products, finished metal products, and machines and equipment. In Poland, however, 0.044 of a unit of other industrial products was needed to produce one unit of the food industry’s gross output, including paper and paper products, as well as rubber and plastic products.

5.2. Imported Materials

The greatest demand from agriculture in both countries for imported materials concerned other industrial products. To produce one unit of agricultural production in Ukraine and Poland, 0.76 and 0.67 of a unit of industrial products were needed, respectively (Figure 9). Among them, the most important were chemicals and chemical products, coke and refined petroleum products, and machinery and equipment, and in Ukraine also motor vehicles. Services were also of great importance in agricultural production. To produce one unit of agricultural production in Ukraine, 0.031 of a unit of the gross output of services was needed, and in Poland, it was 0.037 of a unit of such services. The most important were wholesale and retail trade and vehicle repair, as well as road transport and professional, scientific, and technical services. In Poland, to produce one unit of agricultural production, 0.019 of a unit of imported food industry products and 0.014 of a unit of imported agricultural products were also needed (Figure 9).

Ukraine′s demand for imported materials used in the food industry’s gross output focused on other industrial products and services. In 2020, 0.057 of a unit of industrial products and 0.030 of a unit of services were needed to produce one unit of food industry products in Ukraine (Figure 9). The first group included, among others, machinery and equipment, rubber and plastic products, chemical products, paper and paper products, and finished metal products. In the second group, the most important were wholesale and retail trade and vehicle repair, as well as road and rail transport and professional, scientific, and technical services. In Poland, however, 0.037 of a unit of imported services and 0.024 of a unit of imported industrial products were needed to produce one unit of the food industry’s gross output (Figure 9). Among services, the significance of professional, scientific, and technical services was much greater than in Ukraine. Moreover, imported agricultural and food industry products were of great importance in the production of food industry products in Poland. In 2020, 0.032 and 0.030 of a unit were needed to produce one unit of the gross output of the food industries in Ukraine and Poland, respectively (Figure 9).

The analysis of direct import intensity coefficients in geographical terms showed that the production of agricultural and food industry production in Ukraine primarily required materials from EU countries, post-Soviet countries, and Asian countries. In Poland, however, materials from EU countries and other European countries dominated (Figure 10).

5.3. Links with Other Sectors of the Economy

The consideration of both direct and indirect production inputs from various sectors provides a more comprehensive view of the cooperative linkages between the agri-food sector and other branches of the economy. To capture these interdependencies, the coefficients of the total input intensity of final production can be used. These coefficients indicate the value of materials from different industries consumed directly and indirectly throughout the national economy to produce the final output of a given industry (i.e., intended solely for final purposes, such as consumption, investment, or export) of unit value. In other words, these coefficients allow us to encompass the entire economic system and estimate the direct and indirect effects (through cooperative linkages) that an increase in the final production of a sector by one unit has on the whole economy.

For each part of the agri-food sector, the coefficients of total input intensity of the final domestic production of individual segments can be summed. The obtained value can be interpreted as changes in the gross output value in the whole economy as a result of an increase in the final production (final demand) in a given sector by a unit of value. Agriculture in Ukraine and Poland was to a similar extent related to other sectors of the economy. In 2020, an increase in the final demand by one unit in Ukrainian agriculture resulted in an increase in the whole economy’s gross output by 1.803 of a unit, while in Polish agriculture it increased by 1.828 of a unit (Figure 11). The difference resulted primarily from Ukraine’s stronger connections with other sectors of the economy—the full domestic material intensity coefficient of the sectors was 0.566, while in Poland it was 0.505. In the food industry, Ukraine had stronger connections with other sectors of the economy than Poland. In 2020, the increased final production of the food industry in Ukraine resulted in an increase in the whole economy’s gross output by 2.335 of a unit, while in Poland, it was by 2.200 of a unit. The reasons for the differences were Ukraine’s stronger connections with other sectors of the economy. The full domestic material intensity coefficient in this respect amounted to 1.007 in Ukraine and 0.685 in Poland. Poland, on the other hand, showed stronger intra-sectoral cooperation in the food industry, i.e., products from this sector were more important in Poland.

The input–output model also allows us to determine coefficients of the total (direct and indirect) import final production intensity. Coefficients were calculated for individual sections of the agri-food sector, which indicate how much the demand for imports in the whole economy will increase if the final production of a given section (meeting the final demand) increases by one unit. The calculated coefficients confirm the previously presented conclusions that the production of both agriculture and the food industry in Ukraine is less import-intensive than in Poland. Increased final demand for agricultural products in Ukraine by one unit resulted in an increase in imports of the whole economy by 0.509 of a unit, and in Poland by 0.065 of a unit more, i.e., by 0.574 of a unit (Figure 11). In turn, an increase in the final production of the food industry in Ukraine by one unit was associated with an increase in the demand for imports of the whole economy by 0.587 of a unit, and in Poland by 0.038 of a unit more, i.e., by 0.625 of a unit. Both in Ukraine and Poland, imported products from other sectors of the economy played a dominant role in supplying the agri-food sector. This means that final demand for agricultural and food industry products significantly contributes to increased import dependency in other sectors of the economy.

Estimations made using global input–output tables also allow for the decomposition of gross exports according to the origin of the gross value added contained in them. Both exports of agricultural products and food industry products in Ukraine were characterized by a higher share of domestic value added than exports of the agri-food sector in Poland. In 2020, the share of domestic value added in exports of agricultural products in Ukraine was 78.5%, while in Poland it was 75.2% (Figure 12). In the case of exports of food industry products, the corresponding coefficients were 75.1% and 72.9%. In other words, exports of products from the agri-food sectors of Ukraine and Poland with unit value were associated with the creation of approximately 0.75 units of value added in the countries.

6. Discussion

As mentioned earlier, although 2020 was the first year of the COVID-19 pandemic, it did not significantly affect the structures of the agri-food sectors in the analyzed countries. The gross output and value added (denoted in input–output tables in current basic prices) of the Ukrainian agriculture and food industry in 2020 were higher than in 2019. However, caution should be exercised when determining the future direction of Ukraine′s agri-food sector. The war in Ukraine has caused significant disruptions in the sector, manifested by a decline in gross output, value added, and exports in 2022. According to the State Statistics Service of Ukraine, the value added in agriculture (at the 2021 constant prices) was 25.2% lower than in 2021 [32]. In 2023, an increase of 7.6% was recorded, but the value added of agriculture was still nearly 20% lower than in 2021.

Taking the above limitations into account, the analysis revealed that the agri-food sector of Ukraine is in the initial stage of the agribusiness development path formulated in the literature on the subject [14,15,33,34]. The study raises several issues. Firstly, the agri-food sector is of great importance in the Ukrainian economy. In 2020, it was responsible for nearly 15% of the gross added value generated in the economy. Secondly, agriculture is dominant in Ukraine′s agri-food sector, accounting for 10.8% of the country′s gross domestic product. It has a relatively low import intensity (weak links back in the value chain) and a relatively high share of gross value added in gross output, as well as a high share of exports in the distribution of gross output. Thirdly, Ukraine′s food industry is relatively underdeveloped. It is evidenced by the sector′s weak connections with foreign countries—relatively low import intensity of output, the dominant importance of domestic demand in the allocation of gross output, and the minor importance of exports. Many authors have also highlighted the dominant role of agriculture in Ukraine′s agri-food sector [3,5,6]. Cherevko [35] is noted that during the war, the production of certain branches of the food industry, such as poultry production, visibly increased. By comparison, Poland is further along the path of agricultural and food sector development than Ukraine. The leading component of this sector is the food industry. Szajner and Szczepaniak [36] note that this reflects the restructuring and modernization that have been occurring in the industry since the early 1990s, initially due to economic transformation and later as a result of preparations for EU membership, actual membership, and the inflow of foreign direct investment. Ambroziak [15] indicates that a significant factor behind the changes and the dominant role of the food industry is the increasing foreign demand for Polish agri-food products. Pawlak [37] and Poczta [38], as well as Pawlak and Poczta [39], emphasize that in recent years, the most important factor stimulating foreign demand for Polish food has been Poland’s membership in the European Union.

The study also revealed that the actual significance of agri-food sector for the national economy is greater than what is indicated by data on the value added directly produced within the sector. Because of inter-sectoral cooperation, the agri-food sector also contributes indirectly to the creation of value added in other areas of material production and services. This applies to both the agri-food sectors in Ukraine and Poland. Similar conclusions regarding Poland’s agri-food sector have been drawn by other researchers [15,16,18,20,40,41].

The post-war reconstruction of Ukraine and the process of its integration with the single European market will favor changes in the agri-food sector of Ukraine, aimed at making the sector similar to the agri-food sector in Poland or other highly developed countries [15,40]. The scale of the changes taking place will depend primarily on the inflow of foreign direct investment into the agri-food sector. However, the activity of foreign investors will depend on the improvement in the investment climate in Ukraine, in particular, the legal and institutional stability of the business environment and the reduction in corruption. Agriculture will continue to have a strong position in the agri-food sector, but its importance in the sector and the entire economy may decrease. In turn, we should expect the development of the food industry, based primarily on domestic raw materials. Despite the growing importance of imported materials, domestic materials still play a dominant role in Poland’s food processing industry [36].

According to the literature [15,18,20,40], changes in the structure of gross output of the Ukrainian food industry may take the following directions. In the distribution of gross output, the significance of domestic final demand should decrease in favor of increasing the share of material intermediate consumption and exports. This direction of change was particularly evident in Poland’s food industry, which benefited from participation in the Single European Market [41]. In the Ukrainian food industry, intra-sectoral cooperation will also develop. It means that the share of products in the food industry and used in the sector for further processing will increase. It may be accompanied by a decline in the importance of agricultural products in the material supply of the food industry and an increase in the importance of other industrial products. As compared to Poland, the share of the latter is already high. This indicates a higher level of technological advancement in the food industry in Poland than in Ukraine. The development of Ukraine’s food industry may be also accompanied by an increasing import dependence of its gross output. Baer-Nawrocka and Mrówczyńska-Kamińska highlight the possible mutual interdependencies [19]. However, the development path of the agri-food sector in Ukraine may be disrupted because of the impact of the war on agricultural production and exports of Ukraine. It means that some structural changes may take more time.

At the same time, we should expect progressive integration with the Single European Market, which will be reflected in the growing importance of the EU as a market for Ukrainian products from the agri-food sector [42]. It will contribute to intensifying competition on the EU market, which accounts for nearly three-quarters of Polish agri-food exports. Ukrainian products have been competing with Polish ones in the EU market since 2014, and the full liberalization of import duties to the EU from Ukraine in June 2022 has significantly increased mutual competition [12]. This issue is highlighted by Bułkowska and Bazhenova, who assessed the mutual competitiveness of Ukrainian and Polish food producers in the EU market [5]. Their analysis shows that only part of agri-food products exported by Ukraine shows a very high level of mutual Polish–Ukrainian competitiveness on the EU market. Between 2019 and 2021, the products accounted for an average of 36.6% of Polish agri-food exports and 31.4% of Ukrainian exports. This concerned products such as wheat, poultry meat, birds’ eggs, and frozen fruit but also highly processed food products, including confectionery and pastry. High mutual competition between Poland and Ukraine in the EU market is also present, among others, in the field of rapeseed, maize, natural honey, and chocolate [5].

In order to prepare to meet the growing competition from Ukrainian producers, Polish food processors should respond immediately. They should leverage the strengths and assets of the domestic agri-food sector. This includes the high technological level of the food industry, achieved through restructuring, modernization, and completed investments [36]. Another important factor is that food produced in Poland meets the stringent standards of the single European market and enjoys the trust of foreign consumers [37,38,41]. However, further investments are needed to increase the potential of food processing, particularly in the development of high-quality food production, as well as building strong, globally recognized brands. These efforts are linked to the opportunity of creating greater added value and moving up in global supply chains. Polish producers should primarily seek sources of competitive advantages that will differentiate them from cheaper suppliers from Ukraine. This should be supported by a consistently developed strategy of competing through quality in foreign markets.

In summary, the great difference between Ukraine and Poland now is that the Russia–Ukraine conflict had a relatively limited impact on the Polish agri-food sector. This impact was confined to an excessive import of certain basic agricultural products (e.g., corn and wheat) into Poland in 2022 and early 2023, as well as an increase in the prices of raw agricultural materials and agricultural production inputs. In contrast, in Ukraine, agricultural production decreased because of reduced crop areas, destruction of agricultural machinery and infrastructure, and shortages of labor [5]. Thus, the development path of the agri-food sector defined in the literature may be disrupted in the case of Ukraine.

7. Conclusions

Several conclusions emerged from the comparative analysis of the agri-food sector in Ukraine and Poland. Firstly, in terms of value, the agri-food sector in Ukraine is clearly smaller than in Poland. However, it is of greater importance for the Ukrainian economy. In 2020, it was responsible more than 19% of the gross output generated in the economy, created 15% of gross value added, and generated nearly 30% of revenues from the exports of goods and services in Ukraine. The agri-food sector in Ukraine was dominated by agriculture, while in Poland it was the food industry.

Secondly, the Polish agri-food sector is characterized by higher import intensity of gross output. This means that more materials from abroad are required to produce one unit of gross output from the sector in Poland than in Ukraine. It is evidenced by the direct and total (direct and indirect) import intensity coefficients of the final production of the agri-food sector in Ukraine and Poland. As a result, each subsequent unit of gross exports of the Polish agri-food sector generates less domestic value added than in Ukraine. However, the higher import dependency of Poland′s agri-food sector should not be viewed negatively. Without the import of raw materials, many branches of the food industry, such as tobacco, fish, confectionery, or coffee and tea processing, would not have developed.

Thirdly, exports play important roles in the distribution of agricultural production in Ukraine and the production of Poland′s food industry. Such dynamic development in Poland′s food industry during its EU membership would not have been possible without exports. However, export directions differed significantly. The vast majority of food sold abroad by Polish producers went to the markets of EU countries and non-EU countries, including Great Britain. Before the war, Ukraine exported most of its agri-food products to countries in Asia, the Middle East, and, to a lesser extent, to the EU.

Fourthly, the comparison of the direct domestic material intensity coefficients of the food industries in Ukraine and Poland shows contradictory conclusions. On the one hand, intra-sectoral supply in the production of food industry products in Ukraine was relatively small, which indicates the initial stage of development of the sector. On the other hand, products from other industrial sectors and services were relatively important. These characteristics usually belong to food industries in highly developed countries around the world.

The main limitation of the conducted study is the availability of up-to-date input–output tables. The most recent tables available are for 2020, which is prior to the war. However, production and trade data indicate significant changes in Ukraine’s agri-food sector, including a decline in the production of basic agricultural goods and a reorientation of export destinations. The actual scale of changes in Ukraine′s agri-food sector caused by the war will be possible to assess only in a few years, when input–output tables for the period appear. A feature of such tables is that they appear with a delay of several years.

There is no doubt that further comparative research on the agri-food sector in Ukraine and Poland using input–output tables is needed. These studies should also address a comparison of the changes (dynamic approach) occurring and expected to occur in the agri-food sector of both countries. In contrast to Ukraine, Poland′s agri-food sector suffered a limited impact from the Russia–Ukraine conflict. The excessive import of certain basic agricultural products from Ukraine lasted, at most, a few months. The war led to changes in the prices of raw agricultural materials and production inputs, which resulted in higher prices for food industry output in Poland. The food industry, as a leading component of the entire agri-food sector, contributes to its systematic development.