1All-Russian Institute of Selection and Technology of
Horticulture and Nursery, Moscow, Russia.
2Russian Academy of Sciences, Moscow, Russia.
3Department of Economics and Commerce, Michurinsk
State Agrarian University, Michurinsk, Russia.
Corresponding author email: firstname.lastname@example.org
Article Publishing History
Accepted After Revision: 25/08/2021
The purpose of the article is to analyze trends and prospects for the development of small forms of management in agriculture of the Russian Federation. Statistical and economic, monographic, computational, and constructive research methods were used in the course of the study, as well as an information base including data from the Federal State Statistics Service of the Russian Federation, the Ministry of Agriculture of the Russian Federation, articles in peer-reviewed Russian and foreign periodicals.
The paper analyses the current state and developmental trends of small forms of farming in the agricultural economy. There is a tendency in the Russian Federation to reduce their number, except for individual entrepreneurs, with an increase in the area of agricultural land in them. The size of agricultural production in small forms of farming varies sharply. Small agricultural enterprises are the largest, and households are the smallest. The production of labor-intensive products is mainly concentrated in small forms of management. They produce 83.4% of potatoes, 78.8% of vegetables, 81.8% of fruits and berries, 84.8% of wool, and almost 99% of honey.
The study identified the aspects, forms, and scope of government support of small forms of farming and determined its role in the development of agriculture. A typical description of small forms of farming in agriculture is small commodity production, moderate level of mechanization and high labor intensity, high quality (organic) production with minor use of mineral fertilizers and chemical pesticides, challenges in marketing the product, and low levels of government support. Priorities were substantiated in the development of small businesses, peasant (private) farms, and individual entrepreneurs.
Agriculture, Cooperation, Government Support Production size.
Kulikov I. M, Minakov I. A. Development of Small Forms of Farming In the Agricultural Sector: Trends and Outlook. Biosc.Biotech.Res.Comm. 2021;14(3).
Kulikov I. M, Minakov I. A. Development of Small Forms of Farming In the Agricultural Sector: Trends and Outlook. Biosc.Biotech.Res.Comm. 2021;14(3). Available from: <a href=”https://bit.ly/2XaLpJK“>https://bit.ly/2XaLpJK</a>
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One of the priorities of agricultural policies in the Russian Federation today is the development of small forms of farming, which make the basis of sustainable rural development (Ushachev et al., 2021). However, the core of agricultural production is made up of major agricultural organizations developing as agroindustrial structures involved in the production and deep processing of agricultural commodities and marketing finished products (Egorov et al. 2020).
Meanwhile, the role of small forms of farming is big in specific product types. Moreover, they help to address employment problems in rural regions, relieving tensions in the labor market. They also show improved adaptivity to changes in the external environment compared to bigger businesses (Sosenkov 2019). 18.5 thousand small agricultural businesses are operating in the Russian Federation, representing 67.3% of the total number.
Of those, 12.1 thousand, or 44.0% of the total, are micro-businesses. They consolidate 43.5 million ha of agricultural land, or 48.2% of the area operated by agricultural organizations, and employ 378.8 thousand people, which equals 27.3% of the workforce. Small businesses accommodate 2,923 thousand heads of cattle, or 34.0% of the total livestock of agricultural organizations, including 1,332 heads of cows (39.5%).
Between 2006 and 2016 (National agricultural census years), the number of small businesses declined by 1.9 thousand, or 9.3%, meanwhile, their respective area of agricultural land in operation grew by 19.8 million ha, or 83.5% (Laktionova & Samsonenko, 2019; Mandrova et al., 2020; Grishina et al., 2021). There are 18.8 million private subsistence farms and other individual operations supported by individuals engaged in agriculture operating on 12.2 million ha of agricultural land and counting 8,177 thousand heads of cattle, including 4,044 heads of cows.
Over the analyzed period, the number of such operations declined by 1.4 thousand, or 6.9%, while the respective agricultural land in use rose by 3.4 million ha, or 38.6%. Accordingly, small forms of farming include farms engaging in business operations (small agricultural businesses in various legal forms, peasant (private) farms and individual entrepreneurs) and non-business-related farms (private subsistence farms and other individual operations, non-profit gardening (horticulture) communities).
A distinction should be drawn between the notions of small forms of farming and small agribusiness, where the latter refers to businesses run for a profit. The small business segment in agriculture comprises small businesses, peasant (private) farms, and individual entrepreneurs.
The problem of the development of small forms of farming in the agriculture of the Russian Federation is devoted to numerous studies concerning various aspects of this problem: state support of agricultural small business (Dzhadan & Nevdakh, 2019; Mandrova, 2019; Kotranova & Dolgusheva 2019; Akhmetzhanova, 2019), various forms of financial support (Belousova,
Dorogoichenko, Goncharov, 2019; Alentieva, 2020), regional problems and prospects for the development of small business in the agrarian sector of the Russian economy (Bessarabova, 2020; Chistyakova & Shmidt, 2021), the development of small forms of management in agriculture in Russia in general (Laktionova & Samsonenko, 2019; Mandrova et al., 2020; Grishina et al., 2021), as well as problems and restrictions associated with this (Yakimenko, 2019; Fazliev, 2019; Mandrova et al., 2020; Grishina et al., 2021).
MATERIAL AND METHODS
Information and evidence for this paper were based on data from the Federal State Statistics Service and the Ministry of Agriculture of the Russian Federation and articles in Russian and foreign periodicals. Research methods included statistical and economic, monographic, calculation and design methods, etc.
The statistical and economic method served to provide a detailed description of the analyzed phenomenon based on mass digital data; therefore, it was used to analyze the state and developmental trends of small forms of farming (Grishina et al., 2021). The monographic method was used to review the operation of peasant (private) farms with outstanding economic performance (Bessarabova, 2020; Mandrova et al., 2020). The calculation and design method were used to substantiate the priorities in advancing small forms of farming for the future (Yakimenko, 2019).
RESULTS AND DISCUSSION
A typical description of small forms of farming in agriculture is small commodity production, moderate level of mechanization and high labor intensity, high quality (organic) production with minor use of mineral fertilizers and chemical pesticides, challenges in marketing the produce, low levels of government support and social orientation in countering rural unemployment by engaging local residents in productive processes (Guliaeva & Volobueva 2014; Oganian 2015; Ushachev 2011).
Small forms of farming largely consolidate the production of labor-intensive products. They produce 83.4% of potatoes, 78.8% of vegetables, 81.8% of fruit and berries, 84.8% of wool, and almost 99% of honey (Mandrova et al., 2020). The scale of agricultural production varies significantly among small forms of farming (Table 1). The biggest in scope are small agricultural businesses. On average per farm, the parameters are as follows: 1,791 ha of agricultural land, 416 heads of cattle, including 185 heads of cows, 2,363 heads of pigs, 39,575 heads of poultry, and 21 employees.
Table 1. Sizes of small forms of farming in the Russian Federation*
|Small agricultural businesses||Peasant (private) farms||Individual entrepreneurs||Private household farms|
|Number of farms, thousand||18.5||136.7||25.4||23,497|
|Area of agricultural land, thousand ha||43,486||35,047||4,531||12,898|
|Employees, thousand of people||378.8||301.2||76.2||40,723|
|Average per farm:|
|Agricultural land, ha||1,791||256||119||0.5|
*According to the National agricultural census of 2016.
Peasant (private) farms and individual entrepreneurs operate on a somewhat smaller scale. Specifically, the respective parameters on average per farm are 256 and 119 ha of agricultural land, 66 and 43 heads of cattle, including 34 and 21 heads of cows, 62 and 61 pigs, 952 and 1,075 heads of poultry, and three employees in each case. The smallest are private household farms: the area of agricultural land is 0.5 ha, livestock equals four heads of cattle and pigs, 26 heads of poultry. The size of farms depends on production objectives.
The objective of small agricultural businesses, peasant (private) farms and individual entrepreneurs is to make a profit. Private household farms are meant to supply the household’s food requirements from local onsite production with only excessive supplies sold in the market. Accordingly, the rate of commercial agricultural output is high (75-98%) for the former, but very low for the latter (15-30%) (Minakov & Nikitin 2019; Kulikov & Minakov 2020).
The State Programme of Agricultural Development and Regulation of Agricultural Products, Commodities, and Food Markets has contributed to the development of agriculture, although not all categories of farms have benefitted from the effects. Successful development in the sector is observed among big agricultural organizations, though production declines are registered in certain types of products among small businesses (Table 2). Over 2016-2019, production declined by 16.7% in sugar beet, 11.7% in livestock and poultry for slaughter (live weight), and 3.1% in grain. Meanwhile, the levels rose by 65.7% in eggs, 40.8% in oil crops, and 6.5% in milk.
Table 2. Development of agriculture in small businesses in the Russian Federation
|Cropped area, million ha||24.8||25.6||24.2||23.5|
|Livestock, thousand head:|
|Sheep and goats||3,198||2,884||1,777||1,691|
|Gross production, million tons|
|Oil crop produce||4.9||5.3||6.0||6.9|
|Production, thousand tons|
|Livestock and poultry production for slaughter (live weight)||754||915||775||666|
Source: calculated according to data from Rosstat
Over the analyzed period, small businesses saw a decline in their resource potential equivalent to 5.2% in terms of cropped areas, 10.6% in livestock of cattle, 12.3% in livestock of cows, 13.7% in pigs, and 47.1% in sheep and goats. The declines in cropped areas, livestock, and production volumes of certain types of commodities are due to the low levels of government support of small businesses.
Many would withdraw from the production of low-margin or loss-making animal farming products and switch to more profitable crop farming operations. Growing output in certain types of products is largely due to growing yields of crops and productivity of livestock and poultry (Kulikov & Minakov 2018; Solopon & Minakov 2018; Mandrova et al., 2020; Grishina et al., 2021).
The relative share of small businesses in the total output of many types of products declined as a result of slower production growth compared to that of bigger operations. The share of small businesses declined to 37.3% from 37.9% in the production of grain, to 11.8% from 15.1% in sugar beet, to 47.8% from 51.3% in potatoes, to 32.5% from 39.8% in vegetables, and to 26.7% from 27.9% in milk. Government support measures have contributed to the development of peasant (private) farms and individual entrepreneurs in the Russian Federation (Table 3).
Table 3. Development of peasant (private) farms and individual entrepreneurs in the Russian Federation
|Cropped area, million ha||22.0||23.1||23.6||24.3|
|Livestock, million head:|
|Sheep and goats||9.1||9.1||8.7||8.7|
|Gross production, million tons|
|Oil crop produce||4.5||4.7||5.7||7.0|
|Production, thousand tons|
|Livestock and poultry production for slaughter (live weight)||487||513||542||557|
|Wool (physical weight)||20.3||20.9||19.7||19.2|
Source: calculated according to data from Rosstat
Over 2016-2019, this segment saw an increase of production of oil crop produce by 55.6%, potatoes by 11.5%, vegetables by 16.7%, grain by 5.7%, livestock and poultry for slaughter (live weight) by 14.4%, and milk by 23.0%. Growing agricultural output in the segment of peasant (private) farms and individual entrepreneurs is due to growing cropped areas, livestock, yields of crops, and animal productivity. Over the discussed period, the cropped area grew by 2.3 million ha, or 10.5%, livestock of cattle – by 300 thousand heads, or 12.5%, including cows – by 200 thousand heads, or 16.7%. As a result of
production growth in the segment of peasant (private) farms and individual entrepreneurs, there was an increase in their relative share in the agricultural production structure. The production share of such farms rose to 29.2% from 27.7% in grain, to 30.8% from 27.4% in oil crop produce, to 13.1% from 11.8% in potatoes, to 19.9% from 18.1% in vegetables, to 3.4% from 3.0% in cattle and poultry for slaughter (carcass weight), to 8.5% from 7.3% in milk and to 38.2% from 36.2% in wool (physical weight) (Laktionova & Samsonenko, 2019; Grishina et al., 2021).
Over the past years, production growth achieved by peasant (private) farms has outpaced that of agricultural organizations. E. g., the 2019 agricultural production index for peasant (private) farms equaled 106.6% vs. 105.8% for agricultural organizations. Further agricultural production growth through the expansion of agricultural areas is almost impossible for peasant (private) farms, as land is scarce and fixed (Dubovitskii & Klimentova 2019).
Therefore, production growth can be only achieved through a transition to an innovation-driven method of agricultural development. Private household farms have observed a decline in agricultural production (Table 4). Over 2016-2019, production declined by 7.1% in potatoes, 5.2% in vegetables, 8.2% in livestock and poultry for slaughter (live weight), 7.0% in milk, 3.5% in eggs, 11.7% in wool and 7.8% in honey. Production decline in this category was due to the decrease of cropped areas and livestock.
The decrease in production narrowed the share of private household farms in the agricultural production structure. Despite this decline in the production share, they remain major suppliers in many product categories. In 2019, private household farms produced 65.9% of potatoes, 51.8% of vegetables, 65.7% of fruit and berries, 91.5% of honey, 46.7% of wool, and 37.4% of milk in the Russian Federation.
Table 4. Development of agriculture in private household farms of the Russian Federation
|Cropped area, million ha||2.6||2.5||2.4||2.3|
|Livestock, million head:|
|Sheep and goats||11.4||11.3||10.7||10.4|
|Gross production, million tons|
|Fruit and berries||2.2||1.8||2.1||2.3|
|Production, thousand tons|
|Livestock and poultry production for slaughter (live weight)||3,246||3,135||3,050||2,981|
|Wool (physical weight)||26.5||26.8||25.8||23.4|
Source: calculated according to data from Rosstat
The development of agriculture in private household farms is dragged back by the lack of real government support, challenges in marketing the produce, inadequate agricultural consumer cooperation, low supply levels of animal feeds, spread of contagious animal diseases (such as African swine fever), and age profile of rural populations (Kulikov & Minakov 2019b).
Further development of agriculture in private household farms would be driven by the establishment of marketing and procurement, processing, and other consumer cooperatives handling procurement, processing, and marketing, which would help to considerably reduce losses and increase commercial output levels (Kulikov & Minakov 2019a).
An important requirement for the development of small forms of farming is the refinement and increase of government support. A predominant part of investment under the program (more than 90%) is assigned to big businesses (Palatkin & Afanaseva 2014; Bessarabova, 2020; Chistyakova & Shmidt, 2021).
The State Programme for Development of Agriculture and Regulation of Agricultural Commodity, Materials and Food Markets sets forth government support measures aimed at small forms of farming, such as Agrostartup grants for peasant (private) farms, support for startup farmers, for the development of a family farm and agricultural consumer cooperatives.
Under the federal project of the System of Farming Support and Rural Cooperation Development as part of the State Programme, funding was assigned in 2019 in the form of Agrostartup grants to support farmers, and subsidies were provided for advancing agricultural consumer cooperation. Spending on the project from the federal budget stood at 5.4 billion roubles. The average grant size equaled 2.42 million roubles, the average subsidy per cooperative was 2.4 million roubles (Kotranova & Dolgusheva, 2019; Alenteva, 2020).
In 2019, support of small forms of farming was also provided under the departmental project for the development of agricultural industries enabling accelerated import substitution of certain types of agricultural products, commodities, and food within the State Programme for Agricultural Development. Specifically, two types of grants were used to support startup farmers and animal farming and grant support of consumer cooperatives for building up resource and equipment capabilities.
Grants to support startup farmers are provided to co-fund the costs of setting up and running a peasant (private) farm and creating new permanent jobs in rural areas based on the calculations of 2 million roubles for two or more new permanent jobs or less than 2 million roubles for one permanent job. In 2019, the actual size of funding to support startup farmers from the budgets of the federal subjects of the Russian Federation stood at 659.2 million roubles. The average grant per farm of a startup farmer equaled 2.14 million roubles, which is 3.4% more than in 2018 (Dzhadan & Nevdakh, 2019; Alentieva, 2020).
Grants for the development of a family farm are provided for the development and creation of new permanent jobs in rural areas based on the calculation of at least three new permanent jobs per grant. With that, the projected breeding stock should not exceed 300 heads of cattle and 500 heads equivalent of sheep (goats). In 2019, the average size of grants provided to family farms in animal breeding equaled 8.33 billion roubles, which is 7.9% more than in 2018.
Spending on support for peasant (private) farms from the federal budget of the Russian Federation in 2019 equaled 7,959 million roubles, including 3,299 million roubles for startup farmers and 4,660 million roubles for the development of family farms in animal breeding. Within a year, grant support helped peasant (private) farms to create 5,826 new permanent jobs, while agricultural production growth reached 35.8% (The Order of the Government of the Russian Federation 2020; Mandrova, 2019; Alentieva, 2020).
Their development is contingent on the measures and size of support provided to peasant (private) farms under the State Programme for Development of Agriculture and Regulation of Agricultural Commodity, Materials, and Food Markets. E. g., the respective gross output, and new permanent job creation levels were the highest for the years with higher levels of government support.
That is why the refinement of government support of peasant (private) farms constitutes a principal reserve for consolidating agricultural output levels. Support is also provided to consumer cooperatives in the form of grants for building up resource and equipment capabilities and permanent job creation in rural areas based on the calculation of at least one permanent new job for each 3 million roubles of the grant amount, but not less than one job per grant (Mandrova, 2019; Mandrova et al., 2020).
In 2019, grant support of agricultural consumer cooperatives for building up resource and equipment capabilities from the federal budget equaled 2,341 million roubles. The average size of grants per cooperative equaled 16.08 million roubles. 1,138 new jobs were created; the increase of agricultural production volume marketed by cooperatives receiving grant support reached 26.3% (The order of the Government of the Russian Federation 2020).
Besides, the State Programme of Agricultural Development and Regulation of Agricultural Products, Commodities and Food Markets provides for financial support of small forms of farming arranged as subsidies from the federal budget to partially compensate for interest costs on loans attracted:
- by individuals engaging in private subsistence farming under loan agreements entered into on or before December 31, 2016, for a term within five years, – for purchasing agricultural animals, animal farming equipment, and agricultural processing equipment or for repairs, reconstruction, and construction of premises for animal farming, acquiring gas equipment and connections given that the principal amount drawn for the year should not exceed 700 thousand roubles per farm (Dzhadan & Nevdakh, 2019);
- by peasant (private) farms under loan agreements entered into a) on or before December 31, 2012, for a term within 8 years, – for purchasing agricultural machinery or equipment for animal or poultry farming, feed production, machines, units, and devices of sprinkling, irrigation and pumping stations; b) on or before December 31, 2016, for a term within 8 years, – for storage and processing of agricultural products, purchasing of breeding materials, construction, reconstruction and modernization of storages for potatoes, vegetables, fruit, for greenhouse or animal farming complexes, animal farming facilities, feed production, and flax processing, construction, and reconstruction of bud complexes for perennial plantings, for planting perennial crops and vinery, given that the principal amount drawn for the year should not exceed 10 million roubles per farm (Dzhadan & Nevdakh, 2019).
- Agricultural consumer cooperatives under loan agreements entered into:
- on or before December 31, 2012, for a term within 8 years, – for purchasing machinery and equipment manufactured by Russian and foreign producers;
- on or before December 31, 2016, for a term within 8 years, – for purchasing special technology equipment, refrigeration equipment, agricultural animals, breeding materials, for construction, reconstruction, and modernization of storage and production facilities, storages for potatoes, vegetables, fruit, for greenhouse or animal farming complexes, feed production, and flax processing facilities, for construction and reconstruction of agricultural markets, marketplaces, points of the transaction, initial processing and storage of milk, meat, fruit and vegetable, and other agricultural products, for planting perennial crops and vinery given that the principal amount drawn for the year should not exceed 40 million roubles per cooperative (Kotranova & Dolgusheva, 2019).
Subsidies from the federal budget to partially compensate for interest costs are provided based on two-thirds of the key rate (official discount rate) of the Central Bank of the Russian Federation over the whole term of such loan agreements. In 2019, the size of such subsidies equaled 7.6 billion roubles, which is 2.6% less than in 2018 (Chernykh & Goncharenko 2020; 21). of all small forms of farming, peasant (private) farms, individual entrepreneurs, and small businesses are expected to show the biggest advance.
The best conditions are created for these forms of farming. Efficient operation of small forms of farming would require wider adoption of innovation and the most advanced agricultural production technology, development of agricultural cooperation (across marketing, servicing, procurement, processing, and other types), and integration with major agricultural organizations developing as agroindustrial structures to cut losses and preserve the quality of products in storage and processing.
Small business is a traditional and integral part of the agricultural economy. However, demonstrating a high sensitivity to the state of the business environment, dependence on the availability of credit resources, instability to long-term crisis phenomena, it needs systemic government support (Kotranova & Dolgusheva, 2019).
In this regard, the prospects for its development are associated with the support of sectoral priorities and an increase in the efficiency of state regulation mechanisms in two key areas: firstly, the solution of general sectoral problems (implementation of technical and technological modernization, the creation of modern social and industrial infrastructure, formation and improvement of staffing in the industry, stimulation of seed and pedigree breeding, which are basic for effective agriculture) (Akhmetzhanova, 2019); secondly, the creation of conditions for increasing the efficiency and sustainable development of small businesses (mainly through the development of cooperation.
which will contribute to the technical re-equipment of small businesses and provide reliable access to markets for agricultural products, and increasing the availability of short and long-term credit resources to fill the deficit of working capital and the possibility of capital investments) (Dzhadan & Nevdakh, 2019). Therewith, the development of small businesses in the agricultural sector is possible only if a set of measures is developed in each region and municipal formation aimed at creating a favorable investment climate for them that stimulates competition (Mandrova, 2019).
Small forms of farming constitute a major sector of the agricultural economy largely defining the state of national food security. Advancing small forms of farming contributes to the development of a multi-structural agricultural economy and revival of abandoned rural settlements, as well as provides the environment for competition between agricultural producers in the agrifood market and conditions for socio-economic progress in rural areas.
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