Economic aspects of development of additional specializations at the farming enterprises in Uzbekistan

If we consider the agricultural production from the historical point of view, the natural economy required diversification from the production entities. For example, the production entity had to solve tasks of production and storage of meat, milk, grain, vegetables and fruits for the family. The family economy demands for food during the winter and spring months required processing the agricultural products. In particular, meat or vegetables were kept longer by drying based on the simple technology, and it made it possible to meet the consumptive demand of the family.

However, afterwards, as the science and the production became complex, and commodity exchange started taking place within the commodity-money relations, the production divided into different sectors, and the process of specialization deepened. The specialization is not only the result of sophistication of the production based on the scientific progress, but it is also an important system of economic relations that provide the increase of economic efficiency of production.

Deepening of the specialization process and equipping the labour with complex instruments and technology made conditions for training of specialists with deep knowledge and skills.

The specialization in the production creates the conditions for effective exploitation of the climatic advantages of any region (the natural fertility of the soil and its meliorative condition, the length of vegetative season, the natural soil moisture availability, annual effective temperature, and availability of water). Moreover, it makes possible to effectively use the farming cultures, experiences and production expertise of particular regions that have been formed and kept during the centuries.

The agricultural specialization process can be arbitrarily divided into the following groups (Figure 1):

• -    the specialization process formed, developed and deepened based on the climatic conditions of the region;

• -    the specialization process formed and deepened based on the consumption habits of the inhabitants of the region and connected with the market demand;

• -    the specialization formed and deepened based on the market demand and the advantage in economic effectiveness;

• -    the specialization process formed based on the main sector of the agricultural production in the region.

• -    • the specialization formed based on the regional infrastructure;

• -    • the specialization formed based on the various restrictions (preferences) in agricultural production in the country;

• -    • the specialization formed based on the demand for stable food supply to the population of the country;

Figure 1. The important conditions for development of specialization in the agriculture1

Considering the abovementioned cases, the following factors are considered to influence the agricultural specialization process:

1Source: developed by the author.

• -    climatic conditions and the amount of effective temperature necessary for the agricultural plants in the region;

• -    the amount of precipitation and natural moisture in the region;

• -    the availability of the irrigation water in the region;

• -    the fertility of the agricultural land;

• -    the restricting factors formed in connection with the geographic location of the economic entities. That is the location of the economic entities in relation to the main markets of purchase of production resources and sale of goods;

• -    the factors arising from the domestic market of the country or the needs of entering the foreign market.

However, the agricultural specialization process depends on several qualities. In other words, no pure specialization in one complete and specific direction exists in the agriculture. For example, industrial companies can produce one or several specific products, namely, a consumer goods factory can produce only T-shirts for children or shoes. In this regard, it is necessary to address the requirements of the Decree of the President of the Republic of Uzbekistan from October 22, 2012 on “On measures of further improving the organization of activities and development of farming in Uzbekistan”. This decree is meant “…to promote the increase in profitability and the level of farm mechanization by improvement of the economic independence and financial stability of farming enterprises, rational use of land and water by the farmers, implementation of modern technologies and processing the agricultural raw materials, and by the establishment and development of new productions and sectors in the agriculture” [1].

It means that the production at farming enterprises is required to be diversified. The activity of the farming enterprises as a multiple enterprise economic entity is usually called “creating added value” by the economists.

Usually the producers of agricultural products are naturally considered entities with relatively low profits. For this reason, it can be increased by several times by packing and storage of the agricultural products. If the products are processed, deeply processed, the profit of the farming enterprise can be increased by several or even ten times due to the specific product of certain amount.

The development of multiple enterprise farms is primarily aimed at maintenance of financial stability of the farming enterprises and this task is solved by rational use of available water and land resources, implementation of modern agricultural technology, investments in processing, storage and transportation of the agricultural products, and other services.

For this reason, nowadays, the strengthening of financial stability of the farming enterprises by the development of additional sectors is under the special focus in Uzbekistan.