Reproduction aspects of the agro-industrial complex in the northern area

UDC 338.43(470.1)

Reproduction aspects of the agro-industrial complex in the Northern area

The article is devoted to the reproduction aspects of the agro-industrial complex in the Northern area. Its aim is to analyze the connection between the reproduction and the expansion of investment opportunities. The article can be used in the field of activity researches when studying the agriculture functioning conditions.

Agro-industrial complex reproduction, investments, borrowed funds, enterprises’ fixed capital stock, market, land relationship, ecological factors.

Aziz A.

MUSTAFAEV

Ph.D. in Economics, Senior scientific associate of

Laboratory on agrarian economy,

Institute of Socio-Economic and Energy Problems of the North

Komi SC of the Ural RAS department

Vasiliy I.

SPIRYAGIN

Ph.D. in Economics, Chief scientific associate,

Institute of Socio-Economic and Energy Problems of the North

Komi SC of the Ural RAS department

Irina S.

MALTSEVA

Ph.D. in Economics, Senior scientific associate of Laboratory on agrarian economy, Institute of Socio-Economic and Energy Problems of the North Komi SC of the Ural RAS department

The main goal of agribusiness investing in the Komi Republic is timely startup of the production facilities which are up-to-date and ready for operation (for production output and rendering of service) – i. e. to improve the reproduction performance of agro-industrial complex enterprises. The tangible and intangible assets start-up states the main aim and the funds to carry out some agro-industrial production. The startup time supposes an improvement of asset allocation mechanisms and efficient use which is getting more and more actual.

Agro-industrial complex investments and reproduction

We stress the fact that investments are connected with reproduction naturally and can ensure its efficient functioning as extended one. The unimpeded investment movement and the problems concerning the ensuring of extended agro-industrial complex reproduction are very complicated and multifaceted; they have their own peculiarity and a variety of interrelated systemic actions and some restrictions as well.

The major feature of the reproduction of economic relations in the agro-industrial complex is that some enterprises should work in terms of business accounting. Hence their economic relations present the whole set of relations connected with financing of these enterprises, producing and their sales of products, and also with income distribution and use, debts and their redemption, tax payment etc. The relations mentioned above are real if only there is full-grown economic potential and sustainable rate of reproduction – i. e. active movement of tangible and intangible assets.

On the one hand the latter of the above involves the economic relations between the different spheres and business plan partners, and on the other hand by way of production and market spheres it reflects the effectiveness of what is going on – i. e. capital growth again intended for renewal and expansion of production. According to their objective nature the investments must undergo all the stages of production and market circulation – from fundraising to loan payment and dividend payment, and thereby they can become a principal factor of extended reproduction ensuring.

The analysis shows that the technical and economic indices dynamics that exists in the most part of agricultural enterprises of the area can’t provide any normal conditions for the extended reproduction. The confirmation of it is decrease in the production and investing rate, increase in the payment discipline on the enterprises’ part, the growth of their bill payable and bill receivable. The denoted trends have manifested themselves clearly in the active deterioration of agricultural enterprises’ financial condition. Judging by the certain indices describing their paying capacity and financial sustainability, on the average for 1995 – 2007 the current liquidity ratio or current coverage ratio (calculated as the actual cost of circulating assets (which are available at the enterprises) divided by the most accrued liabilities expressed as short-term credits and loans) represented 107% (the standard restriction is 200%); the ratio of provision with the tangible circulating assets equity (the tangible circulating assets equity divided by the actual cost of all circulating enterprises’ assets) – minus 38% (the standard restriction is 60%); the equity ratio (characterizing the share of internal funds in the total amount of sources equity and defining the level of creditor independence) was 65% (the standard restriction is 50%).

It should be noted that the level of creditor independence (equity ratio) is higher than the standard restriction only because under the small total amount of equity from all sources the share of internal funds is the highest one. Meanwhile, the ratio of provision with the tangible circulating assets equity evidently reflects the low share of actual cost of all circulating enterprises’ assets and the present index of current liquidity (coverage) ratio has also negative divergence from the standard restriction and it confirms the debt liability growth.

It should be concluded that under the very low investment expenses level of agricultural enterprises there is no principle concerning the rational unity of socio-economic and scientific-and-technological strategies. The unstable dynamic development and disproportionate branch-wise investing of the agro-industrial complex of the area don’t satisfy the growing needs of innovation activity – i.e. investment dedicated to advanced technology, improvement of the range and quality of marketable products and their updating.

Therefore under the lack of large-scale investment measures it is impossible to realize the long-term target program on the agroindustrial complex development and to use the scientific and technical achievements as much as possible. Independent sources of finance prevent from the transition to progressive investment methods and effective mechanism of management, since the position has been lost not only at the goods market but also in the material and technical sources of the resources provision.

The disorientation in the processes of agroindustrial complex management in the area takes place, the sharp differentiation between the agricultural enterprises in their financial condition is observed, the “strong” ones increase their solvency, and the “weak” ones accumulate the debts and lose the production potential. The way out of the situation consists in focus on increase in the acquired borrowed funds, but their attracting is not an end in itself but the cure for the certain investment tasks. The extremely high deficit of money in the turnover between the sectors of the area agro-industrial complex sharply worsens the payment request of its enterprises. The lack of clear investment priorities and strategies and also the lack of play rules conditioned the following: the business plan selection criteria are indistinct to some extent and it is impossible to realize an area agro-industrial complex investing to the best advantage.

Proceeding from the stated above it can be observed that the extended agro-industrial complex reproduction proposes the working out of the following principles for attracting and using of the borrowed assets.

First: the lending must be an integral link of the investment agro-industrial complex system, and the local authorities should coordinate all the efforts for timely attracting of these funds. Meanwhile the control system functions are optimization of intersectorial provision of the agro-industrial complex with resources, determination of necessary proportion between short-, medium- and long-term financing, improvement of the acquired funds liquidity indices and ensuring of the required smooth process of loan funds repayment.

Second: the long-term agribusiness financing plans must become the most important part of the area budgetary process and investment commitments must stand as its components. It requires a measure package reflecting some estimated expenditure and income, the debt service cost and investment expenditures determined with regard for the given set of assumptions.

Third: the expenses for borrowed funds use and service should be correlated with real benefit gained as a result of completion of the projects having been financed with help of these funds, and it will serve as a reliable base for long-term development and restoration of the extended agro-industrial complex reproduction.

Fourth: in the first place the borrowed funds must be spent on priority directions financing, large investment programs and projects execution. The effectiveness of the executed tasks must create a set of prerequisites to strengthen the competitive positions of the local producers, to open new jobs and to increase the workers’ income.

Fifth: it is necessary to form a transparent system for controlling over the borrowed funds and it will show the regular borrowed funds repayment and the expected level of capital repayment. At the same time the financial planning system will identify all existing borrower's notes: interests, principals, time of payment etc. Such planning must be systematic and reasonable.

Sixth: the choice of investment projects which are specified in terms of the borrowed funds financing must be based on an objective appraisal of specified criteria. At the same time the executives should be delegated all necessary powers connected with the investment projects assessment and choice within the framework of accepted policy, and determining a set of criteria and assessment methods the policy itself must be approved by the legislatives.

Some deeper investigations of the problem lead to reproduction simulating, working out some guidelines on improvement of the agroindustrial complex internal structure relations, which is reflected in the following main activity aspects: organization composition and size; investment systems structure; internal planning and forecasting; material encouragement; production activity management; headcount of staff, property share and land share; profit markup and capital volumes.

The indicators above mentioned dictate the demands to compare the forecast with the fact for every division including such input data as the produce reproduction dynamics in kind and monetary terms, the tendency to change of production expenditure amount and specific structure of resources, outside division service and financial result of entities. The efficient comparison of the production-and-financial target indicators with the real ones affords to define a money overrun in proper time and remove its cause.

The main point of the research is that the problem relating to the restoration of the area agro-industrial complex reproduction is connected with an investing activation – achieving of some functional stability in the production string “science – production – market”. Here the important role belongs to the government finance support as well as the bank funds management, so that the huge bank money potential will be able to redirect to an active investing into vitally important sectors of agroindustrial complex and thereby to increase its resource base.

Certain peculiarities of agro-industrial complex resources reproduction

The analysis of many years' experience shows that the major goal of the restoration of the agro-industrial complex reproduction is to ensure an effective interaction of its different systems, to achieve their functional integrity, the abilities to be goal-oriented and to be realized. The practical importance of some agro-industrial complex systems is their efficient functioning and their ability to further the reproduction positive determinations. As “the same measures can have different consequences depending on what system includes them” [1, p. 15].

It should be noted that among all agroindustrial complex systems the key position is taken by the investment system. In view of functional actions it is always dynamic, hasn’t any distinguished boundaries and must be always renewed. The system constantly reacts to the reproduction, economic growth level, economic potential condition, external capital effect, and also influence of money-and-credit, tax, customs and other economic tooling. In this respect it can be rated among the multifunctional and complicated systems, because “any system has input and output, interacts with external environment and meets with certain restrictions” [2, p. 22].

An important quality of the investment system is its integrity – the ability to influence over the production and market circumstances. Reflecting the unity of system elements interaction the integrity ensures a close accord between the links of agro-industrial complex as integration. Such an attribute is a reliable guarantee of the extended reproduction and capital diversification of more efficient kinds of activity. Thereby the reproduction can be highly dynamic and efficient, and the stable subjects will be depended on specialized market and external funding sources a little.

It is known that unlike the other spheres the agricultural sector has its specific character concerning the resourcing and use of resources, when the producers face not only the need to master an innovation proper the same one for all. But it often should be adapted to agro-climatic conditions and technological features. So at the agricultural enterprises the stable rate of reproduction can be uncertain. It is reflected clearly in the agro-industrial complex integration processes, which are contrary to the principles of some spheres’ share in property and acquisition of necessary income – one sector’s capital and income share in another’s capital and income. The strong departure of agricultural enterprises activity from the established order for equal participation in the project can’t become an obvious criterion for joint functioning.

Today owing to a great deal of negative factors the area agricultural sector is under the conditions of insufficient organization and controllabilit . Slow rates of the sector development have limited the production scope and product mix in other processing sectors. It has happened against the background of asymmetric integration behaviour of processing and agricultural spheres – the latter didn’t further the active development of the former.

The unimpeded agro-industrial complex resources movement is systematization of enterprises’ individual capital circulation and describes the reproduction processes more clearly. So when defining the enterprises’ activity it is necessary to bring out the whole set of different kinds of its effectiveness (production, social, ecological, marketing etc.), i.e. functional forms of individual capital and its circulation as a whole [3, p. 164].

Today at a large quantity of the area agricultural enterprises the investment process is peripheral; the enterprises are isolated not only from the sectorial science but also from their own innovative subsystem. Owing to the prolonged lack of finance the area agricultural enterprises can’t to come out of a deep recession. So for 2000 – 2007 the number of agricultural enterprises was decreased by 27%, average annual labour force was reduced 2.6 times, the area of agricultural lands was cut down by 34%. At the same time the total number of cattle was decreased 2.5 times (including cows – 2.2 times), of horses – 3.3 times, of deer – 1.2 times.

The regular short of agricultural enterprises financing led to significant deterioration of farmland features. On the average for 2004 – 2007 only 37% out of the 138 agricultural enterprises applied the organic fertilizers to the sown areas, and the mineral fertilizers were used by only 20%. For 1990 – 2007 all over the area agricultural sector the volume of applied organic and mineral fertilizers (per 100% of nutrients) was decreased dramatically 9.1 and 24.6 times respectively.

It is enough to say that lately the agricultural fleet of main kinds of machinery was in very poor condition. For 2000 – 2007 the number of tractors of all makes was decreased 2.5 times, the number of potato and feed harvesting combines was reduced to the critical point – respectively 5.6 and 3.8 times, machinery for applying the organic fertilizers – 4.1 times. In 1990 – 2007 the power capacity of agricultural enterprises went down very much – from 1507.9 to 310.1 thousand horsepower, i.e. nearly by 5 times.

It led to the fact that today the agricultural sector’s maintenance base is not at the due level, the fixed capital stock are much depleted, there is a lack of equity circulating capital. The negative processes in the field of investment formation were local at first, and then they happened on a mass scale, the capital supplies were reduced greatly, the opportunities to renew them went down, and it was expressed in reduction of production growth rates (fig. 1) .

The similar tendency is observed in food industry as well, where for 1995 – 2007 the index of production output was reduced from 120.6 to 92.4% or by 28.2%, and the profitability of products (works and services) sold – from 15.7 to 6.7%. The major causes of such drop are the following: great reduction of the investment expenses, drop in the area agricultural sector production, weakening of the food market control mechanisms and the business competition having been arisen from produce import. It’s enough to say that on the average for 1990 – 2007 the share of investments into food industry composed only 2% out of the total investments into republic economy.

Judging by the financial performance of the area agricultural enterprises, they suffered the greatest damage from cattle raising and the lowest damage from plant growing. On the average for 1995 – 2007 the cattle raising had the advantage of government grants and compensations (tabl. 1) . The objective reasons for

Figure 1. Average annual production increase (decrease) rates in agriculture of the Komi Republic, %

partly coverage of meat and diary production price were the overcoming of cattle-raising backwardness and the offering some necessary incentive to increase in the cattle head and productivity.

The performed analysis confirms that the regular short of agricultural sectors financing had a negative influence on the reproduction features behavior of fixed capital stock, which have a high wear level at 90% of the agricultural sector enterprises and at more than 75% of the food industry enterprises. While at the beginning of the reform the share of machinery and equipment per 10 years was more than 50% of the agro-industrial complex productive fleet, in 2007 – only 7% and per 20 – 25 years – more than 50% as well. On the average for 1995 – 2007 the fixed capital stock wear in food industry and agriculture was 65 – 70%, and the capacity factor – 30 – 35%.

Table 1. Financial performance of agricultural enterprises’ principal activity in the Komi Republic for the period of 1995 – 2007, mln. rubles

Financial result of sales of produce by agricultural enterprises	Out of it
	Sales income (loss)	Including		Subsidies and allowance from budget	Including
		in plant growing	in cattle raising		in plant growing	in cattle raising
1995
-48.8	-81.8	-1.2	-80.5	33.0	2.5	30.5
2000
3.6	-210.6	-5.8	-204.8	214.2	13.5	200.7
2002
-106.6	-278.8	-23.1	-301.8	172.1	19.0	153.1
2003
-27.1	-259.2	16.1	-275.3	232.1	32.8	199.3
2004
-20.7	-217.2	-0.4	-216.8	196.5	10.3	186.2
2005
64.2	-128.8	-0.3	-128.5	193.0	10.6	182.4
2006
210.3	-10.1	0.4	-10.5	220.4	10.3	210.2
2007
227.9	-42.6	-6.5	-36.1	270.5	22.0	248.5
Source: [4, p. 187].

The tendency to increase the expenses for the resources major and minor repairs had a great negative influence on the fixed capital stock reproduction. So for 1995 – 2007 the expenses for all repairs altogether in food industry and agriculture were on average nearly 25% of the investments into the basic capital, and it is explained by the high wear level of stock and the low provision of machinery and equipment with investments for their renewal. As a result when the investments into the basic capital were growing at a little rate, the stock volumes in the production were being decreasing, and that is not typical of the extended reproduction processes and the active enterprises’ participation in the financial market, goods market and other markets (fig. 2) .

It is necessary to make a special emphasis on the fact that for a long time in the area agricultural sector much of investments into the basic capital weren’t directed at purpose, they were spent on keeping up of the enterprises’ balance of payments, on reconditioning of old but still working machinery and equipment, on purchasing of the circulating capital and partly on salary payment to the prejudice of renewal and recovery of the retired stock. It was reflected in the anticipatory growth of retirement rate compared with the renewal rates (for 2000 – 2007 average 1.5 times as much), and in the degradation of enterprises’ material and technical potential to on a mass scale as well.

The estimated analysis shows that for 1995 – 2007 at the republic agricultural enterprises the fixed capital stock reproduction factor – i. e. the ratio of the cost of liquidated (written-off) stock to the cost of newly introduced (by average prices) fixed capital stock – is characterized by considerable decrease – from 0.87 to 0,55% or 1.6 times. Hence it follows that under the long disinvesting conditions (new investments are less than the basic capital wear and retirement) it is impossible to solve strategic problems and to intensify the area agricultural enterprises’ economic activity.

If we pay attention to the population changing we can observe some decrease in the intensity of migratory movement because for 2000 – 2007 the migration turnover (the number of migrants arriving and leaving) was reduced from 57.4 to 35.4 thousand people, and the migration turnover per 1000 inhabitants (2000 as against 2007) was decreased by 28.6%. Though for the period under consideration the negative migration balances index per 1,000 inhabitants in the rural area was less than the same index in the urban area, the number of engaged in agriculture was reduced more than half. In this sector the manpower resources reduction is connected with the deterioration

Figure 2. Indexes of principal indicators of the agro-industrial complex investing in the Komi Republic

I—I Investments into the basic capital in agriculture

I—I Investments into the basic capital in food industry

Fixed capital stock for agricultural purposes

Fixed capital stock for food industry

of both economy activity and social life. The poor social base of rural areas couldn’t make for business activity concentration and employee retention.

Today personnel removability is typical of the area agricultural sector – during the year the number of quitting staff is more than half of the average labour force on pay-roll. Every year nearly 2 – 2.5 thousand workers give up the agricultural enterprises in the republic – it’s more than the number of people who go to work for these enterprises (tabl. 2) .

The principal cause of the workers’ quit from the agricultural sector is that agriculture is one of low-paid sector of economy in the area. Although for 1995 – 2007 the wages in agriculture have increased nearly 6 times, its level is still very low as compared with the level of wages in other sectors, it is 35% out of the average index in industry in the republic, 46% out of the wages in economy in whole and 128% with respect to the living wage calculated on the working population in the republic.

As it follows from the average annual utilization of capacity at the major food industry enterprises of some production output with the exception of meat, sausage goods, meat products and combined feed, the expected results haven’t been obtained in this sector. For 2000 – 2007 the output of whole-milk products (in terms of milk) was decreased by 11.2%, of bread and bakery goods – by 20.1%, of confectionery – by 51.4%, of macaroni foods – by 75.4%, of soft drinks – by 25.7%.

The business activity growth of food industry enterprises in the area depends much on the improvement of local agricultural condition, especially on the increase in livestock population and the growth of its yield. As for the improvement of cattle raising condition the major goal here is to change the provender milling condition. At the same time it is necessary to keep in mind that the livestock yield depends not only on the amount of provender but also on its quality, composition, correspondence with the physiological need of animals and efficiency. Today in the area agriculture the real livestock yield is reached by using the provender in different ways and by different genetic potential of livestock, and it doesn’t bring to the same results and doesn’t reduce the expenses per a product unit.

Summing up it should be noted that to reach some stable agro-industrial complex reproduction in the republic it is necessary to ensure the proper unity of processes which are joined technologically and combine the scientific-and-technical, production and market spheres with the sequential and purposeful financial provision. On the basis of aggregate target features the typical chain of reproduction assumes a system character and is able to remedy any deficiencies of economic turnover, to speed up the processes of drastic alterations in the agro-industrial complex and to extend the range of intellectual progresses in its different coordinates.

Table 2. Number of people engaged in agriculture of the Komi Republic and their dynamics [4, p. 123]

Indicator	2000	2001	2002	2003	2004	2005	2006	2007
Average annual number of people engaged in agriculture, thousand people	24.0	23.7	20.9	18.5	15.6	14.2	12.4	12.0
% out of the number of all people engaged in economy	4.8	4.7	4.1	3.6	3.3	3.0	2.7	2.6
Average annual number of agricultural enterprise workers, thousand people	19.8	17.7	15.8	13.8	10.2	8.6	7.5	7.3
% out of the number of all people engaged in agriculture	82.5	74.7	75.6	74.6	65.4	60.5	60.4	60.1
The number of agricultural enterprise workers employed during the year, thousand people	9.0	9.3	8.1	8.1	5.6	5.1	5.0	5.0
% out of the average payroll	45.4	52.5	51.2	59.0	54.9	59.3	66.6	66.6
The number of agricultural enterprise workers who left their job during the year, thousand people	11.1	11.0	9.4	9.7	7.5	6.8	6.4	6.1
% out of the average payroll	56.0	62.1	59.5	70.3	73.5	79.1	85.3	84.8

Market as a factor of the agro-industrial complex reproduction

The strategic task on the agro-industrial complex development is defined by not only the production level but also the expenditure for development of new produce under the conditions of intense competition. Some positive results of this thing are shown up clearly in the following directions: the satisfaction of enterprises’ customer demand to required quantity and quality of resources; the entities’ tendency for participation in a market in the first place and the receipt of some additional income as an intellectual rent; the creation of new and improved commodity which exceeds the present analog in its consumer properties greatly; the periodical development of human capital and the qualitative improvement of cultivated land.

It should be emphasized that the motivational options shown up in the entrepreneurship development are usually directed to the bottlenecks of economical activity to obtain the yield. While the sponsored scientific developments become an initial point for the development of the agro-industrial complex sectors, the entrepreneurship initiates them from within the enterprises that are interested in the innovations and intimate contacts with the market. At the same time “transformation to the market should be regarded as a special state and not just as an underdeveloped market”, since under the transition conditions the variability and uncertainty level of organizational-and-economical environment is much higher than under the developed market conditions [5, p. 93].

Therefore the sharp disintegration direction of the area agro-industrial complex led to the difficulties of production distribution and the most part of the enterprises have lost their contacts with the market. The unbalance situation of phase model in the innovation activity “working out – development – production distribution” finished by falling off in the reproduction characteristic of the enterprises’ fixed stock, there were “anti-modernization” tendencies encouraging the using of old machinery and technology to the prejudice of their renewal.

Such paradoxical situation was doublefaced: on the one hand since the privatization the scientific organizations couldn’t have received regular orders and haven’t decided on the sales of their own innovation products, on the other hand having got independence the new detached agricultural organizations haven’t defined their main kinds of activity more exactly in due course and haven’t been interested in the implementation of innovative results. The long privatization and the uncertainty of pattern of ownership over a long period of time became the principal deterrents of large-scale investments. As a result the majority of goods at the local area market were import foodstuffs. The rapid-growing segments of the local food market didn’t match the agroindustrial complex innovating in the republic.

For a variety of objective and subjective reasons the mechanisms and methods of market transition and adaptation of the area retail trade enterprises weren’t found to be efficient enough. The gap between the sectoral interests has reached such heights that the values of their coordination have lost nearly all elements of financial, production and market patterns. At the same time the competitive struggle between the sectors and enterprises has assumed a peculiar character – the struggle for neither market nor consumers, but for crediting and economic managing on some easy terms and for increase in the budgetary subsidies and grants.

Today the weakest point of agriculture in the area is the sales of products, it is connected with a great deal of social-and-economic and organizational shortcomings including the remoteness of the consumers from the producers. The effective market system formation determines to a large extent the development of the food market infrastructure as well and the access of the producers to the network systems of cash-and-carry and retail trade.

It should be emphasized that to ensure the stable consumer potential of the agro-industrial complex in the area it is necessary to make some optimal correlations between its own products and import. The analysis shows that for 1990 – 2007 in the food resources of the area the specific weight of local area production of meat

Table 3. Principal indices of the social-and-economic development of the Komi Republic and the major items of production (program/fact)

Indices	2000 (estimate)	2001	2002	2003	2004	2005
Gross regional product, mln. rubles	72225.8	86300.3	99566.3	112144.3	126000.0	137000.0
Volume of gross regional product, % against the previous year	108.0	102.3	101.5	101.5	102.2	100.7
Volume of industrial production,	50745.7	59678.1	70496.5	82550.7	96700.0	107400.0
	50745.7	62947.0	62358.0	711156.0	81538.8	87493.0
mln. rubles	106.3	105.3	103.4	102.8	106.5	102.9
% against the previous year	106.3	107.4	98.3	102.8	105.3	104.1
Agricultural produce in all categories	2624.1	4210.9	4796.7	5297.9	5860.0	6370.0
of households,	2624.1	3328.0	3577.0	4095.0	4317.0	4553.0
mln. rubles	104.2	104.0	102.7	102.6	102.5	102.6
% against the previous year	110.7	102.9	90.4	96.9	99.2	94.9

was reduced from 38% to 22%, of milk – from 38% to 29%, of eggs – from 93% to 64%. At the same time the share of local production of vegetables and potatoes was increased from 14 to 40% and from 52 to 58% respectively. In recent years the share of local production in the food resources of the area hasn’t an active upward trend and it varies between 22.6 and 59.5% by certain kinds of products.

If we pay attention to the food resources movement we can notice that when the production rate reducing the specific weight of both industrial consumption and public consumption in the food resources structure was decreased. When the people’s active income in the republic slumped, their nutrition level dropped. It was accompanied by the marked outflow of population from the republic. To make stable market relations in the agro-industrial complex of the area it is necessary to increase the local production volumes as well as to flatten out the produce bringing of other areas. There is a need for increase in the inhabitants’ active income, for the foodstuffs affordability was disturbed because of the sharp decline in living standards.

Current situation in agriculture

Many causes of lower reproduction rate in the agro-industrial complex of the area were connected with the poor development of the market relations and the lack of proper marketing service at the agro-industrial complex enterprises. So the key stand in reproduction must have been taken by the issues on the enhancement of the enterprises’ competitive ability and paying capacity and the market entry on the basis of pricing policy by product list and range. It was expressed clearly in the relative stability and uneven development of the social-and-economic system of the area agroindustrial complex. For its estimation the only (till 2005 y.) method obtainable was applied. The method helps to reveal the coincidences and discrepancies between the predictive (budgetary) and actual indices (tabl. 3).

The sown area proceeds with its reduction, the share of annual and perennial grass crops in the cropping mix is increasing, the share of row crops is decreasing. The potato production meets the republic’s requirement in food and seed potatoes completely, but only 10% are grown by the agricultural enterprises. The local production supplies 28 – 30% of the vegetables need. 30 – 50% of the livestock yield potential available in the majority of enterprises is used. The milk yield per a cow is 2,110 kg milk per annum when the productive potential is 4,000 – 5,000 kg.

In recent years the milk and meat product bringing from other areas has increased. The local processing enterprises’ produce is less competitive because of insufficient integration of the agricultural commodity producers with the processers. The agricultural enterprises have to sale their product on their own and to make their own processing units. For the lack of raw materials at the processing enterprises the generating capacities are not loaded completely, it leads to more expensive processing and less competitive produce at the food market. The material and technical bases of quite a few processors are obsolete. The republic provides itself partly with necessary foodstuffs at the expense of its own production (table 4). For uninter-ruptable supply the part of agricultural produce and foodstuffs is brought from other areas.

It should be stressed that agricultural production is a complicated economic mechanism determining not only food production but also the way of rural life. The republic target program of the agro-industrial complex development has been approved, it stipulates the following tasks: to accumulate the resource potential in agriculture and processing sectors; to proceed with agrarian and land reforms in order to form some efficient economic structures; to proceed with structural change of the agro-industrial complex at the expense of the increasing investments into the high-technology and competitive productions; to create favourable economic conditions for production and entrepreneurship development in the agro-industrial complex; to make an efficient mechanism of government assistance to commodity producers in the agro-industrial complex; to further the development of peasants’ (farmers’) households, personal subsidiary households, garden and vegetable households; to further the development of agricultural produce purchasing system relating to the peasants’ (farmers’) and personal subsidiary households; to develop the social infrastructure in the rural area.

It is necessary to notice that the priority direction of the republic agriculture development is livestock farming. To increase the livestock yield the following things are suggested: production intensification on the basis of organizational and process innovations in the system of cattle keeping, breeding and feeding; maximum utilization of local labour force and raw material resources to increase the output of products and to upgrade the latter; increase in the production of livestock products in the population’s subsidiary households by means of economical incentive and satisfaction of population’s households needs for young cattle, pigs and poultry to raise and fattening up; allocation of agricultural lands for laying-in of fodder; provision with transport and concentrated food; organization of livestock produce purchasing; re-organization and update of feed mill industry; making of material and technical basis and reserve stock of raw materials for combined feed and fodder additive production.

The key areas of processing industry development are: development of cooperation and integration of the agricultural commodity producers with the processors; maintenance and strengthening of the material and technical basis; construction of new production units in the places where there are some raw material resources available and hardly any processing capacities; technical and technological extension of operating processors for the purposes of their attainment of qualitatively new level; output of some profitable products parceled up in the small packages from up-to-date container packaging material; organization of milk purchasing from the individual entrepreneurs.

It is planned to keep the annual forming of republican fund of agricultural produce, raw material and foodstuffs, the government order for delivery and deliveries of staple foods to the areas with the limited term of delivery, the practice of annual republican wholesale fairs connected with the conclusion of supply contracts with the local commodity producers

Table 4. Specific weight of home production in the food resources of the Komi Republic

Indices	2000	2001	2002	2003	2004	2005	2006	2007
Potatoes	65.5	66.6	59.1	55.6	57.3	58.1	57.9	63.3
Vegetables and watermelons	35.0	40.8	34.7	40.5	35.8	37.4	38.8	36.9
Meat and meat products	25.4	25.0	23.1	20.9	22.0	21.1	22.3	26.7
Milk and dairy products	43.8	42.2	37.1	36.1	32.2	33.4	33.5	40.8
Eggs and egg products	58.8	58.4	54.8	49.4	60.2	60.8	61.4	56.8
Source: [4, p. 204]. The data for 2007 – reference data .

and as well as the practice of sales – i. e. fairs in the towns and in the district municipal centers of the republic. To provide the population with affordable foodstuffs the commodity producers plan to open some wholesale stores in the industrial towns and in the large district municipal centers for the sales of their own products. It is planned to continue the gradual transition from the established system of government support for the agro-industrial complex (such system is oriented in general to subsidization of production and compensation of production costs) to the program-targeted selective support for the commodity producers.

Thus the implementation of the objectives will make it possible to stabilize the agricultural production in the republic with the help of the efficient government support and to increase its efficiency. It is provided for an increase in the agricultural produce by 15% in all categories of households and an increase in the gross agricultural output by 17% per a worker in the agricultural enterprises.

Land relationship development

The republic has huge land resources for agricultural purposes; the most part of them is used poorly. The major agricultural lands are concentrated in the southern and central parts, as well as in Udorsk, Izhemsk and Ust-Tsylem municipalities, while the major consumers are situated in the large towns and in the north of republic.

The low land development and the inequality of zone and municipal district distribution of agricultural production are explained by the unfavourable climatic conditions for agriculture and the intensive development of mining industries which form some local product markets near the sites of hydrocarbons extraction and their transportation. On average in the republic the volume of tilled agricultural lands is little (about a forth of land against more than half on average in the Russian Federation). In the northern areas (the town of Vorkuta, Izhemsk and Ust-Tsylem municipal districts) and in Sysolsk and Troitsk-Pechorsk municipal districts the agricultural lands are neglected to the largest extent, it is connected with hard financial state, bankruptcy and closing down of certain agricultural enterprises in these areas. The same situation is observed in the case of land use by the peasants’ (farmers’) households.

The most of agricultural lands are natural hayfields and pastures – 3 ha is the share of meadows per one ha of arable lands. The sown area is 51.5% of the arable land. About 71.1% of the sown area are under feed crops, in general permanent and annual grasses. The share of grain crops is 1% of the sown area, of potato – 26%, of vegetables in the open ground – about 2%.

In crop production there is deterioration of agrochemical and water-physical soil properties, increase in the areas of swamp and bush lands in connection with the damage of land reclamation stock and the reduction of reclamation works. At present 11 kg reactant of mineral fertilizers and 3.5 t of organic fertilizers are introduced in the fields, it is relatively 18 and 17% of the need which is required to maintain the soil productive capacity.

For arable farming within the framework of the republican target program on keeping and increasing of soil productive capacity, it is planned to work out and to implement in every household scientifically grounded power saving systems adapted to soil-climatic conditions of the area, to develop two types of crop rotation in the households, to increase the volumes of organic and mineral fertilizer application, of lime treatment and of phosphorite application in the acid soil. For 1990 – 2007 the land areas of agricultural purposes are reduced from 353 to 233.6 thous. ha, the sown areas – from 100.5 to 53 thous. ha, the stock of land redistribution is reached 66 thousand ha (15.8% of the agricultural lands) and is hardly used. It is intended to restore partly the sown areas to the point of 80 thous. ha. Potato planting will be increased by 29.5%, crops planting – by 2.4 times, fodder root crops planting – by 2 times. The area under permanent grasses will be increased by 9 thous. ha.

There are two forms of land ownership in the republic: state form of property and private form of property (of enterprises, citizens, collectives: joint ownership and share ownership). In the course of land relations development there was free land redistribution in favour of citizens. More than 100 thousand citizens became land plot owners for keeping of personal subsidiary household and individual housing; more than 90 thousand families received plots of land for fruit growing; every year the plots of land are given to 41.5 thousand families for collective vegetable gardens. As a result of reforming 6.5 thousand people became owners of land shares. There is pay land use when the forms of payment are land tax, rent and land price when purchasing it. One of the problems is still weak normative legal basis of land relations.

On the whole over the Republic of Komi the agricultural enterprises use only a little more than half of agricultural lands (51.5%), the peasants’ (farmers’) households and individual entrepreneurs – 59.1%. The lands hasn’t been divided into the lands in the federal property, in the Komi Republic property and in the municipal property. The owners of land shares don’t exercise their right of disposal of land, the works connected with the land estimation and area zoning have just started up in fact. The farmers’ and individual entrepreneurs’ lands have proved to be derelict the most in the town of Usinsk and in Izhemsk, Ust-Kulom and Syktyvdinsk municipal districts. The owners of the personal subsidiary households use their agricultural lands almost fully.

The aim of land relations development is an increase in land use efficiency and making the conditions for both growing of social, investing and productive potentials of lands and their change into separate factor of economic growth. The principal tasks will be the following: working out and improving the normative legal basis which regulates the land legal relationship; making the mechanism which regulates the rights of the owners of land shares; development of land turnover in towns and in rural communities; division of the lands into the lands in the federal property, in the Komi Republic government property and in the mu- nicipal property; making the infrastructure of land market; enactment of the government land cadastre; improvement of land payment system; cartographic, geodetic and land-utilization maintenance of land reform; land monitoring; putting into practice update geographic and information technologies.

The fulfillment of the objectives will be able to regulate the land relationship of property, to secure the constitutional land rights of citizens, to develop the land market and real estate market, to gain some economic effect owing to the following: land transfer into the ownership, differentiation of land pay rates, estimating on a mass scale and improvement of land payment system.

Ecological factors of the agro-industrial complex reproduction

The market development in the agriculture of Russia is connected with the change of climatic conditions and anthropogenic affect on the soil. The industrial growth was accompanied with the increase in the output of agricultural machinery. But the import of fertilizers didn’t cover the deficit of nutrients carryover from the soil and this fact and the change of climate together led to the five-year vibration dynamics of agricultural production in the Russia's European territory.

In connection with the shortage of nutrients in the soil the development followed the extensive way, the lack of lands was compensated for by the forest resources and virgin lands. The government commission observed more than once a shocking quick deforestation, which influenced on the climate and caused the change of rivers, gardens and some field crops. These facts apply to the territory of the Southern Russia for the most part. The production volumes per capita could increase by 1.5 – 5 times there. But in the northern and western regions they remained practically invariable, and in the North-West region the volumes were even reduced (by 26%). The deviations from ecological equilibrium were found out -temperature upward bias from its equilibrium values in the south and reverse tendency in the north. Because of water-heat balance interrelations and correlations the rise of temperature in the south involved the change of climate in the north (the decrease of temperature and the increase in rainfall). Consequently there was falling off in the possibilities to keep the grain farming in the regions. It is confirmed by the information on the crop yield and average yield of grain per capita. At best the indices remained steady, though in some regions they were going down. The economical statistics data say that after reforms the ploughing up of the lands went up, and it resulted in the great increase in the area of arable land in the black-earth zone and reduction of them in the non-black soil.

The climatic “swings” resulted in the ecological positives in some areas combined with the negatives in the other areas and vice versa. If one takes into account that the agricultural raw material was the basis for economic development of industry in the regions, it becomes obvious that strong and long-term breaches of climatic balance led to two contrary trends in these regions, different specializations in their industrial and agricultural development. The breach of climatic balance resulted in the crop failures. While there was excess of moisture in the north of Russia, there was lack of it and frequent droughts in the south. The latter had an impact on both the evenness and the economic process in the regions. They divided into the producing regions and consuming ones. Such specialization and the land developing itself affected the cattle raising.

As a result of failing to take into account some ecological and economical aspects of development the long crisis of agriculture and industry has arisen, and it was explained by the general shortcomings of “economic organization” of Russia and the mistakes resulting from for the most part the desire for giving some artificial development to our industry even to the detriment of agriculture. Many tendencies continue to this day.

In summary we have drawn the following conclusions. The stable reproduction o the agro-industrial complex is closely connected with the expansion of investment facilities and the market improvement of its key link – agriculture. It is accounted for by the following: 1) taking up the starting position for the development of processing industries this sector is both a raw source and their reliable production-and-market partner; 2) in view of macroeconomic importance evaluation the agriculture meets the challenges of strategic character, and possessing a unique productive peculiarity it serves as both a sector of economy and an important component of society’s life; 3) for a great number of natural and economic factors this sector has a complicated structure of production, the functioning of which can hardly be conceived out of priority investment policy of government support; 4) to solve the problem of food safety of the region the agricultural expansion combining the leverage of government power with the leverage of market power is absolutely essential.