THE INVESTMENT ATTRACTIVENESS OF THE AGRICULTURAL SECTOR ESTIMATION PROCEDURE

A.B. Aidarova, Zh.N. Abeyeva

South Kazakhstan State University named after M.Auezov, Shymkent, Republic of Kazakhstan

Information about the level of investment attractiveness of a potential customer investment is very important for a potential investor in an unstable development of agricultural production, shortage of investment resources, investment high risk in agricultural production. In connection with this, research developments in this direction get particular importance and relevance. It should be mentioned from the methodological point of view that the investment attractiveness of the agricultural sector has a multi-level character. Potential investors may be interested in the following levels:

- The investment attractiveness of the agricultural sector in the area within the region (when the region has a large territorial extent includes areas with different climatic and resource potential, different specialization, etc.);

- The investment attractiveness of the agricultural enterprises within the area, region;

- The investment attractiveness of the various sub-sectors of agricultural production (within the region, the area, the company).

We propose for research a method of complex comparative rating of investment attractiveness of the agricultural sector. The purpose of such estimation is providing information to potential investors about the investment attractiveness of regions, companies, sub-sectors of the agricultural sector.

The estimation is proposed to be carried out in four blocks:

-          productive activity;

-          investment activity;

-          the efficiency of investment activity subjects;

-          social development level of investment activity subjects.

The constituent phases of the method of complex comparative rating of investment attractiveness are: selecting the objects of rating research; collection and analytical processing of source information for the estimated period of time; justification of the indicators used for the rating. During carrying out the rating the data from the annual reports of companies and consolidated annual region areas reports are used.

Depending on the stated objectives of the research and research levels scorecard on blocks can be varied.

For rating the agricultural sector of investment attractiveness areas, we propose a system of indicators, demonstrated in Figure 1, and for the rating of investment attractiveness industries of the region areas agricultural sector - a system of indicators is presented in Figure 2.

For each indicator, the objects of research are ranked with private ratings, for example:

1.     Rating by sales volume

2.     Rating by implementation growth rate

3.     Rating by agricultural concentration

4.     Rating by from investing activities received net cash.

5.     Rating by gross profit

6.     Rating by from the all levels budgets receiving subsidies

7.     Rating by the level of common enterprise  profitability

8.     Rating by per enterprise profits

9.     Rating by management efficiency (the share of profitable farms)

10. Social Rating (the level of the average wage, including welfare payment).

Figure 1 – Indicators system of the rating of agricultural sector areas’ investment attractiveness

 

              The value of its total rating for each analyzed object determined by the formula:

 

Ri =

 

Ri - ranking score for  i-th object;

õ1i, õ2i ,..., õni - private ranking score for  i-th object.

Figure 2 – The rating of investment attractiveness of the agricultural sector branches

 

         In calculating the composite rating, we proceeded from the assumption of the equality’s importance of each particular rating in the summary. In the composite ranking objects of research are ordered (ranked) in descending order of rating. The highest rating has an object with a minimum definitive estimate. The use of this technique in the analysis of investment appeal of economy objects, all the researching objects can be grouped into the following groups:

- Group A - objects with a high level of investment attractiveness;

- Group B - objects with an average level of investment attractiveness;

- Group C - objects with a low level of investment attractiveness.

The main advantages of the proposed method of investment attractiveness rating are: firstly, the proposed method is based on a comprehensive, multi-pronged approach to the assessment of such complex phenomena as investment attractiveness; secondly, the rating of investment attractiveness is based on data for public reporting company, area; thirdly, ranking score is comparative, it takes into account the real achievements of all competitors.

Our proposed method of rating can be used in the development of such a policy paper as “investment certificate”, which provides a comprehensive assessment and comprehensive information about the economic entity. Certification of investment activity allows carrying out an objective analysis, make medium and long-term investment decisions and give rating of regions according to their attractiveness. In addition, the certification allows in the pre-investment phase to make economically decisions, makes it possible to mitigate the undesirable economic and social consequences against natural investment flows. Investment certificate includes four sections:

1.       Production activity. It reflects the achieved level of material and technical base of economic area and the state of its use.

2.       Investment activity. In this section the volume of capital investments, their provided sources of financing, the degree of capital investments and the diversion of funds to construction in progress are shown.

3.       The effectiveness of investment activity is considered on two levels:

- effectiveness in the production phase, which provides the definition of indicators such as gross, marketable products and profit per unit of used resources;

- effectiveness business activities of the individual investor, to govern the financial condition of the subject of investment activity, his work with the assets and securities. The indicators of this level may include asset turnover and capital assets, the rate of profit, solvency, liquidity of the company. These criteria are important in developing investment strategies.

4.       Social infrastructure - its present and possible future. The inclusion of the fourth section caused by the fact that regional systems are territorially detached formations, which solve and will continue to solve questions of providing citizens with the full range of social services. And for solving these problems as own free funds so budgetary allocations can be used.

In order to organize the process of certification of investment and ensure the reliability of ratings in making long-term decisions in the Ministry of Economic Development and the Ministry of Agriculture is advisable to create information-analytical center of investment activity. Information-analytical center’s methodological basis work could be the proposed information-analytical system, which includes the following elements:

1.     Goal determination of the investment policy

2.     Justification of the priorities in agriculture.

3.     Development the assessment criteria of investment activities.

4.     Certification investment activity objects.

5.     Generalization, systematization of information to the rating investment attractiveness.

6.     Making of investment decisions according with the results.

Establishing such center will require minimal financial charges, as will be mainly connected with redistribution of functional responsibilities in existing organizational structures.

In general, we offered methodological and methodical approaches to the rating of the investment climate in the agricultural sector, allow to the potential investor, both internal and external, in conditions of shortage investment resources, make an objective decision about the location and concentration of investment resources, reduce management risks, and improve efficiency of investments.

 

Literature

 

1.            The program for the development of agriculture in the Republic of Kazakhstan for 2013-2020 "Agribusiness 2020". Astana. 18.02. 2013. 
2.            Economics of agricultural industries .-M.:Edited Minakova. 2004.
3.            L.L.Igonina. Investment. Proc. pos. Ed. Doctor of Economics, Professor V.A.Slepova-M.:Yurist.2002.
4.            Investment activity in the agricultural sector. L.Yu.Piterskaya.M. 2007.