Organizational and economic mechanism of agriculture modernization

Source: Data of the Federal State Statistics Service. Available at:

Source: the author’s calculations. Data of the Federal State Statistics Service. Available at:

Source: the author’s calculations. Data of the Federal State Statistics Service. Available at:

Consequently, the measures of economic stabilization and development of the Russian agricultural sector have little impact on its condition and do not consider the peculiarities of modernization processes to the fullest extent.

As was rightly pointed out by the academician of the Russian Academy of Agricultural Sciences I.G. Ushachev, another disadvantage of the established mechanism is that it is not differentiated with respect to each group of producers, does not take into account natural and economic differences of regions, as well as industry specialization [5].

It should be added that the existing principles of budget funds allocation also require adjustments. In most cases, in order to determine agricultural entities that can be the recipients of subsidies (grants), the authorized executive body holds a contest for the inclusion of entities in a programme, as all the funds are allocated on a programme-oriented and goal-oriented basis. The decision is made based on such criterion parameters as the number of created jobs, the availability of production assets, livestock inventory, total area of land, no outstanding tax liability, payback period of the investment project. However, the indicators of agricultural producers’ susceptibility to use innovations are not sufficiently considered by the contest committee. Therefore, it is unclear, which of the applicants has more opportunities for production modernization. In this regard it is reasonable to expand the applied system of indicators and make the assessment by two criteria – resource and effective (tab. 2). The first criterion reflects the assets (financial) security for agricultural production, the possibility of intensification. The second criterion characterizes the effectiveness of assets (funds), i.e. their quality.

The generalization of the available scientific developments showed that the susceptibility of agrarians to the use of scientific and technological achievements is still estimated by applying range of partial indicators. As a result, it is impossible to get a comprehensive overview of processes existing in the agricultural economy and their causes. Moreover, it is difficult to typologize agricultural producers and to elaborate differentiated support measures. Due to these circumstances, the author finds it necessary to calculate the integral index value by the 4-stage methodology.

Stage I – the substantiation of the indicators structure. When selecting partial indicators, several important requirements are to be considered. Firstly, they should reflect all aspects of the study object and be compatible with the existing accounting and statics system. Secondly, the indicators should describe the region’s specialization in producing agricultural products. Thirdly, it is advisable

Table 2. Assessment criteria and indicators of susceptibility to the use of scientific and technological achievements in agriculture

Resource criterion

Effective criterion

1.    Value of fixed assets per 100 ha of arable land, thousand rubles 2.    Amount of power capacities, hp per 100 ha of arable land 3.    Electricity consumption per 100 ha of arable land, kWh 4.    Volume of mineral fertilizers per 1 ha, kg application rate 5.    Feed consumption for 1 metric centner of product, metric centner of fodder units 6.    Share of specialists with higher education in the total number of personnel, %

1.    Labour costs to produce 1 metric centner of product, man-hour 2.    Cost of agricultural output per unit of financial costs for production, rubles / rubles 3.    Crop yield increase per 1 ha, % 4.    Productivity increase per 1 head of cattle, % 5.    Loss reduction when growing and harvesting agricultural crops and livestock, % 6.    Improvement of product qualitative characteristics (for example, fat, protein content of milk), % 7.    Share of areas sowed with elite agricultural seeds, % 8.    Share of breeding animals in the total livestock number, % 9.    Number of cattle heads per 1 operator 10.    Comfort level of agricultural machinery, technological operations 11.    Humus average indicator, % 12.    Share of acid soils, %

to use the indicators that have crucial effect on the susceptibility of agribusiness subjects to the use of scientific and technological achievements. Partial indicators have been determined, taking into account the abovementioned requirements that can be applied to the regions, dominated by dairy breeding, and include the following:

• •    Amount of power capacities, hp per 100 ha of arable land;

• •    Volume of mineral fertilizers, kg application rate per 1 ha;

• •    Share of brood cows in the total livestock number, %;

• •    Number of cows per 1 operator, heads;

• •    Value of fixed assets, thousand rubles per 100 ha of arable land;

• •    Share of specialists with higher education in the total number of personnel, %;

• •    Cost of agricultural output per unit of financial costs for production, rubles / rubles.

Stage II – the calculation of partial indices in the form of normalized data by the method of multidimensional comparative analysis (by matching actual values with the best values in the sample). In case the impact of the indicator on the size of the partial index is positive (Ik), the actual value (Vact) is correlated with the maximum value (Vmах) considering its main characteristics, in case it is negative –the ratio between the minimum value (Vmіn) and actual value is determined:

т _ ^Vact

k max

v.

т _ _ min k act

Stage III – the calculation of integral index (I_i) as a sum of partial indices :

n

I i ^_ Z I k                 (2)

k _ 1

Stage IV – interpretation of an integrated assessment of agricultural producers within the margins of the integral index. In accordance with the Gaussian distribution, it is possible to determine five levels of susceptibility: low (I i < 1.4), below medium (1.4 <  I i < 2.8), medium (2.8 <  I i < 4.2), above medium (4.2 <  I i < 5.6), high (I i >  5.6).

The approbation results of the proposed methodology on the materials of the Vologda Oblast show that the high-level group invariably comprised mainly agricultural enterprises of Vologdsky and Cherepovetsky districts, the group with above-medium level – agricultural enterprises of Sheksninsky and Gryazovetsky districts. These enterprises are also the main recipients of budget funds (tab. 3) .

Table 3. Allocation of subsidies provided to agricultural enterprises in 2012, in terms of the Vologda Oblast municipalities

District	District’s share in:
	Volume of subsidies		Number of agricultural enterprises		Volume of agricultural output
	Million rubles	As a percentage of total	Units	As a percentage of total	Million rubles,*	As a percentage of total
1. Vologdsky	203.0	25.7	29	12.4	125.6	35.3
2. Cherepovetsky	74.2	9.4	24	10.3	71.2	20.0
3. Sheksninsky	63.2	8.0	16	6.9	35.0	9.8
4. Gryazovetsky	122.3	15.5	11	4.7	33.9	9.5
Altogether (1–4)	462.6	58.6	80	34.3	265.7	74.6
Other districts	327.2	41.4	153	65.7	90.6	25.4
Total	789.8	100.0	233	100.0	356.2	100.0
* in comparable prices of 1994.

The enterprises of Syamzhensky, Nyuk-sensky, Babushkinsky and Vytegorsky districts are constant outsiders of the rating, where, for example, the capital-labour ratio was from 10 to 27 times lower than that of the leader, and the energy supply – from 3 to 7.5 times lower.

In accordance with obtained results, the author considers it appropriate to provide the principal amount of budget support (50–60% of funds) to 15% of the organizations that upon assessment achieved the highest values of the integral index, i.e. the enterprises that are the most susceptible to the use of innovations, and are concentration points of production. The main development potential of the industry is focused in them; therefore, there is high probability that the funds invested in the modernization will have significant effect. At present, the amount of budget support to the agricultural sector is diluted between producers. In 2011, for example, 55% of the funds were accumulated in 36% of organizations ( tab. 4 ). As a consequence, no significant positive changes are observed in the state of their material and technical base.

Organizations that are most susceptible to the use of innovations should have the right to receive additional subsidies for 5–7 years. At that, these enterprises will not be able to participate in the next selection in 2 years. The system of budget funds allocation, organized by the aforementioned principles, implies the possibility to annually support from 30% up to 45% of agricultural enterprises starting from the third contest.

The acceleration of the modernization of the agricultural sector requires not only changes in methodological approaches to the allocation of the funds of budget support. It is obvious that in order to accomplish the task, it is extremely important to rationalize price ratios in the inter-industry exchange, to improve the efficiency of tools regulating the market of agricultural products, raw products and food, to stimulate the development of consumer cooperation.

The standpoint of scientists [2, 6], who identify the development of innovation infrastructure as an essential prerequisite for the acceleration of the agricultural modernization, is beyond doubt, as well. The world and national experience proves that for example, in the regions with effectively operating agronomic parks, information and advise services, it is possible to unite the efforts concerning the organization of educational, research, innovation activities; to improve the quality of training specialists for the agro-industrial complex, as well as to ensure the transfer of innovations to production.

Undoubtedly, Russian agriculture cannot be transferred to the intensive way of development mainly on the basis of foreign equipment and technologies, considering that

Table 4. Allocation of subsidies in 2011, in accordance with the susceptibility level of agricultural producers to the use of scientific and technological achievements

Fact (2011) Forecast Share in the number of organizations receiving subsidies, % Share in the volume of the received budget funds, % I i values Share in the number of organizations receiving subsidies, % Share in the volume of the received budget funds, % 36.2 54.8 I i > 5.6 15 50–60 27.6 22.3 4.2 < I i < 5.6 20 15–20 17.7 16.5 2.8 < I i < 4.2 30 10–15 11.2 5.7 1.4 < I i < 2.8 20 6–9 7.3 0.8 I i < 1.4 15 4–7 domestic agricultural science came up with practical solutions for producers, corresponding to the 5th–6th waves of innovation. In this connection it is necessary to create favorable conditions for commercialization and mass distribution of the developments. The state should play the main part in this process. The RAS full member S.Yu. Glazyev points out, “under the conditions of maturing “knowledge-driven economy” the state cannot but assume the functions of the intellectual and information centre on the regulation and strategic planning of economic development, of maintaining the scientific and technological environment, including the fundamental knowledge and exploratory research base, institutes of applied research and experimental development, preproduction network and mechanisms for the implementation of new technologies” [1, p. 13].

The authorities have the tools of fiscal, monetary, price, antimonopoly and foreign economic policies for creating favourable macroeconomic conditions for Russia’s agricultural modernization. It is essential that each of them is appropriate for the tasks of the industry’s transfer to the intensive way of development.