STRATEGY AND ECONOMIC EFFICIENCY OF REVIVING THE COTTON INDUSTRY IN UKRAINE

Abstract

Purpose. The research aims to evaluate the economic efficiency and strategic necessity of cotton cultivation in Ukraine within the context of national security and the transformation of the agricultural sector under martial law. The study focuses on creating a domestic raw material base for the defense industry to ensure technological sovereignty in ammunition production.
Methodology. The study employs a systematic approach, including a comparative analysis of global production models (USA, Turkey, Central Asia), dynamic analysis of legislative reforms in Ukraine, and structural modeling of production costs. Statistical methods were used to evaluate the impact of climate change on agro-ecological zones, while economic forecasting helped assess the effectiveness of state support programs.
Findings. The revival of Ukrainian cotton farming is primarily driven by the "gunpowder bottleneck" in Europe and the critical dependency of ammunition manufacturers on Chinese cotton linters. The 2024 legislative reform (Law No. 10427-1) removed significant bureaucratic barriers by simplifying the registration of varieties to just one month and allowing the use of specialized seeds for industrial purposes. Analysis shows that global warming has shifted the sum of active temperatures, moving suitable cotton-growing zones 100 km north, making Odesa, Mykolaiv, and Kherson regions optimal for industrial cultivation. A critical economic finding is the impact of the 2025 government subsidy (10,000 UAH/ha), which covers approximately 50% of direct production costs. In the face of increasing droughts, cotton demonstrates higher biological resilience than traditional crops like sunflower, which suffered significant yield losses in 2024. The proposed economic model aims to meet a domestic demand of 10,000 tons of cellulose annually, forming the basis for a closed-cycle nitrocellulose production cluster in synergy with international partners like Rheinmetall.
Practical Value. The research provides a comprehensive roadmap for establishing a vertical integrated "field-toshell" industry. It highlights the necessity of localized seed banks and gradual investment in ginning infrastructure. Building a modern primary processing plant is estimated at $2–7 million USD, while mobile ginning equipment costs range from $2–4 million USD. The study identifies that during the transition period, manual harvesting strategies are more economically viable due to the high cost of specialized machinery.
Originality. For the first time, a comprehensive economic model for a cotton-based defense cluster in Ukraine is justified, integrating military- strategic risks, new climate realities, and international defense cooperation. The study defines cotton not merely as a crop, but as a critical element of national energy and defense independence.