Doctor
of Economics, Kastornov N.P.
Michurinsk
State Agrarian University, Russia
Streamlining
of economic gear of dairy cattle breeding development in the Tambov region
The dairy cattle’s breeding possesses a number of
specific features which are absolutely differently represented within the
market conditions. Firstly, milk is made and realized in contrast to crop
products during the whole year. It gives the chance to receive monetary
proceeds from sales of milk not incidentally, but constantly. Therefore the
regularity of pace of receiving production should be considered in market
conditions as economic advantage in comparison with other branches of
agriculture.
Secondly, livestock products, including milk, belong
to essentials and in such a way irrespective of a developing political and
economic situation will always be in a great or smaller consumer demand which
as distinct from demand for other production can’t disappear absolutely.
Thirdly, the economy of
branches of animal husbandry is based on rather isolated constant expenses
which level doesn’t change depending on the volume of received production, and
on the variable expenses which are closely correlating with the production
scales.
Fourthly, in comparison with other branches of
agriculture the dairy cattle’s breeding has much bigger difficulties in renewal
of the suspended production. It means that reduction of a livestock of animals
conducts to irreversible consequences.
The analysis of a current
state of dairy cattle breeding shows that the branch was not prepared for a
sharp change of economic conditions as possessed low degree of stability and
excessive dependence on monopolism of the enterprises of other branches of
agrarian and industrial complex. In addition to other reasons it has led to
essential decrease in production of milk.
Reduction in production was promoted by the disparity
of prices, the destruction of governmental purchases’ system, the disorder of
breeding farms, the termination of specialized equipment delivery, unfairly
high rise in prices for energy carriers and the industrial output used in
agricultural production. Consequences of the developed condition of branch are
able to have an extremely negative character as on restoration of number and
quality of a livestock of dairy herd by available estimates not less than 20-25
years will leave.
Transition of national
economy to the market relations, reorganization of collective farms and state
farms, privatization pure and simple aren’t the guarantor of efficiency
increase if the necessary economic mechanism on the basis of the freedom of
economic activity, the interaction of supply and demand, state regulation
aren’t created. Development of animal husbandry demands the improvement of not
only biological factors of herd reproduction, but also economic conditions. To have
accumulation for additional investments, branches must have certain
profitability. The last depends not only on organizational factors, but also on
a price control practice which often doesn’t provide necessary profitability,
especially in dairy cattle breeding.
The end results, opportunity to make on unit
cumulative (live and substantiated) work the greatest number of finished
products have to become the main argument in a choice of this or that form of
ownership and a form of managing corresponding to it. Therefore in each region
that structure of the organization forms of production which will provide not
only situational stabilization in branches, but also further building of output
within agricultural production and increase of its economic efficiency has to
be developed. However these arguments weren’t considered when forming
economical multistructure in agrarian sector. In the period of an agrarian
reform and development of the market relations the preference was given to
formation of private form of ownership and formation of country (agrarian)
farms.
The Tambov region untill 1993 was the taking-out
region as production of milk in 1985-1992 per capita fluctuated from 610 to 475
kg. Since 1994 according to milk production the area becomes being self-provided,
and its per capita production made in 2011 only 193 kg. In ensuring requirement
of area in whole milk, and processing industry in raw materials both the
agricultural enterprises, and personal subsidiary farms of the population, and
also country (farmer) farms take part. The fall of 18.8% to the share of the
agricultural enterprises made in the field of milk, farms of the population and
country (agrarian) farms, respectively, 76.3 and 4.9%. In personal subsidiary farms of the milk
population it is made 3.7 times more than in the agricultural organizations.
On account of the fact that the dairy cattle breeding
is the most difficult branch of agricultural production and demands system
approach, in the Tambov region very few country (agrarian) farms are engaged in
this kind of branch. The number of cattle made for the end of 2011 only 9.0
thousand heads, including milch herd of cows of 3.7 thousand heads, or 6.2 and
7.4% to total on area.
The special alarm is caused by elimination of dairy
herd. And, if in the first years of reforming of agrarian economy reduction of
a livestock was characteristic mainly for the agricultural enterprises, in
recent years it is intensively reduced and in personal subsidiary farms of the
population. For years of agrarian transformations the number of cattle in the
agricultural organizations was reduced by 21.7 times, including milch herd of
cows – by 20.5 times. In personal subsidiary farms of the population the number
of cattle in comparison with level of 1995 decreased by 45.7 thousand heads,
including cows – on 50.6 thousand heads or in 1.4 and 2.5 times respectively.
The reduction could be justified if it was carried out
for optimization of the size and improvement of qualitative structure of herd
(rejection of sick, old and unproductive animals), and also increase of
efficiency of feeding and increase in production of dairy production. However
efficiency of cattle still remains at insufficiently high level. In their turn,
the processing enterprises in the course of the activity should face the wide
list of risks which, depending on extent of their manifestation, have an
essential impact on the efficiency of milk processing. It is possible to
allocate the following types of risks for stages of milk processing and dairy production
realization:
- low security with
raw materials leads to decrease in load of capacities because of what release
of finished goods is reduced and its prime cost increases;
- import of finished goods
from other regions, often cheaper, affects its decrease in demand on a sales
market;
- moral and physical wear
of processing equipment leads to release of noncompetitive production, increase
in expenses at its production;
- low purchasing power of the population reduces demand for products of
processing and has impact on financial stability of the enterprises.
At the same time it should be noted that functioning
of a dairy subcomplex in many respects depends on the efficiency of milk
processing, the security level of capacities of the processing enterprises raw
material resources. In modern conditions the question of loading of the
processing enterprises raw materials gained still great sharpness in connection
with sharp reduction of milk outputs, shortage of specialized motor transport
for its delivery and high costs of means of transportation.
Years of reforming and the economy liberalization,
full non-interference of the state to affairs of agriculture and processing
industry predetermined decline in production. Decrease in outputs limits
possibility of the receipt of funds in the budget of various levels and
financing of the agrarian and industrial complexes enterprises at the expense
of own means, reduces the employment sphere of workers both in agriculture, and
in allied industries of economy.
The critical financial position of the enterprises of
a dairy subcomplex of the Tambov region deprived the majority of them
opportunity to carry out a normal production activity, to provide payment of
their work corresponding to a real contribution of workers. Low level of
salaries, lack of material stimulation system for achievement more good results
of work created conditions under which the efficiency of a manpower usage is at
the lowest level.
Total absence of market infrastructure without which
objective establishment of the equilibrium prices is impossible, the rigid
competition from suppliers of cheaper dairy products, insufficient solvent
demand of the population aggravated the crisis provision of a dairy subcomplex.
Deficiency of own credit
resources demanded attraction of the bank credits, however, the operating
credit policy of the state didn’t promote receiving financial means in
necessary terms and the demanded sizes.
In this regard, in the
agrarian sphere there was an urgent need of the state support. In the western
countries, at a bigger capital-labor ratio of farmers, the state allocates
considerable funds for agricultural support. For the development of dairy
cattle breeding of the Tambov region during the last three years from the state
budget it is allocated subsidies for the sum of 138.7 million rubles that makes
in volume of the realized milk and dairy production only 10.5%. The size of the
received subsidies in 2011 made 21.9 million rubles of budgets of all levels,
against 84.0 million rubles – in 2009.
In modern conditions the increase of economic
efficiency of milk and dairy products efficiency is substantially defined by
operating economic mechanism of managing, in particular its basic elements:
financially – a credit and tax policy of the state.
Crediting of the
enterprises of the areal dairy subcomplex is carried out centrally now; however
the rate of refinancing is established above reasonable opportunities of the
credit recipients that resulted in huge debt load of agricultural producers.
For the end of 2011 the accounts payable exceeds debit
by 4.4 times, including the debt on the long-term credits and loans reached
27197.6 million rubles. Total amount of accounts payable made 41188.8 million rubles
and exceeded proceeds from sales of production of 2011 by 2.2 times. Even in
ideal conditions if to the enterprises pay all debts; they won’t be able to pay
off with the creditors.
The improvement of credit
system is a state prerogative. At the same time, the credit policy operating
now doesn’t allow to resolve the issues connected with reconstruction and
modernization of dairy plants, radical improvement of food supply and selection
work in dairy cattle breeding, development of highly effective technologies,
etc.
Now the support of producers can be carried out at the
expense of timely allocation of the centralized preferential resources for
long-term and short-term crediting at their ratio of not less than three to
one. The target centralized long-term
credit for acquisition of raw materials and fixed assets has to be provided for
the term of not less than 10 years.
The imperfection of the
crediting mechanism is aggravated now with operating system of the taxation
which is constructed on withdrawal of means regardless of real sources of the
income in the conditions of huge debt load of rural producers and processing
industry. Stimulation of production development has to be the main function of
system of the taxation, besides formation of revenues of the budget of all
levels.
The problem of state regulation for the purpose of
normal development of a dairy subcomplex has to consist of improvement and
decrease in taxes on all chain of production, processing and realization of
dairy production, creation of the mechanism increasing interest of a producer
in expansion of the range and increase in production of dairy products and, at
the same time with it providing purchasing power of the population.