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THE RUSSIAN AGRO-INDUSTRIAL COMPLEX TODAY AND TOMORROW

THE RUSSIAN AGRO-INDUSTRIAL COMPLEX TODAY AND TOMORROW. The Role of Agriculture in the Country Economy (2003 - 2004). 27% - percentage of rural population ( 38 . 4 mln people ); 11% - percentage of people employed in agriculture ; 5.4% - share in the Gross Domestic Product (GDP );

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THE RUSSIAN AGRO-INDUSTRIAL COMPLEX TODAY AND TOMORROW

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  1. THE RUSSIAN AGRO-INDUSTRIAL COMPLEXTODAY AND TOMORROW

  2. The Role of Agriculture in the Country Economy (2003 - 2004) • 27% - percentage of rural population (38.4 mln people); • 11% - percentage of people employed in agriculture; • 5.4% - share in the Gross Domestic Product (GDP); • 2.9% - investments in capital assets; • 18%- (agriculture + food industry) production share in the country economy. Second only to machine building.

  3. Role of Agriculture in Economy Agriculture is a catalyst of dynamic development in other spheres of the country economy. Growth of production volumes in agriculture by every1.000 Rubles is estimated to result in: • Growth in demand for machinery and equipment by 2.300 Rubles; • In other industries supplying resources – by almost 3.000 Rubles; • One person employed in agriculture can secure jobs to 6-7 people in other spheres of the country economy; • Agriculture is the principal kind of economic activity and employment in rural areas.

  4. THE STRUCTURE OF AGRICULTURAL BUSINESSES BY FORMS OF MANAGEMENT*(as on January 1. 2005)

  5. THE STRUCTURE OF AGRICULTURAL PRODUCTS BY CATEGORIES OF BUSINESSES( % of the total; at then current prices)

  6. Areas Under Crops

  7. Productivity and Gross Yield of Crops

  8. NUMBER OF CATTLE AND POULTRY Number of cattle and poultry, thousand 2001 2002 2003 2004 Cattle 27107 26524 24935 22988 Cows 12215 11754 11089 10252 Pigs 16048 17337 15980 13413 Sheep and goats 15327 16051 17037 17773 Poultry. mln 343 341 338 337

  9. Livestock Products

  10. Main Products of Food, Flour-and-Cereals, and Fodder Industries

  11. Results of Work for the Last 6 Years Positive results • Agricultural production has increased26%; • We put an end to the lingering crisis of the 90s.when the agricultural and food-industry gross product almost halved; • In 2003 - 2004 the amount of bad debts decreased 33.8%; • A share of unprofitable businesses reduced; • The industry, which was chronically unprofitable, began to make a profit, although the level of income is not high enough for extended reproduction in most of the businesses.

  12. Changes in Budgetary Policies and Taxation • Ineffective direct subsidies have been abolished.Subsidies to pay interest on credits are used instead,and the Federal budget reimburses 2/3 of the Central Bank rate; • Government-backed harvest insurance has been expanded to cover almost 25% of the harvest; • In 2002 the State company Rosagroleasing was set up, through which more and more machinery and cattle are supplied under leasing agreements; • A single agricultural tax is levied.

  13. Results of Work for the Last 6 Years Negative tendencies • Shrinking areas under cereal crops – 20 mln hectares less in the last 15 years, total area under crops shrank by 39 mln hectares; • Cutback of cattle and pig population. In the reform years, compared to the 90s, the figure is 33 mln, including 10 mln cows, 24 mln pigs, and 41 mln sheep; • Lower potential of agroindustrial enterprises.

  14. Agrobusiness Enterprises Classified by Their Financial Situation • Group 1 – 18.1%- financially sound enterprises.Most of them have no bad debts; • Group 2 – 27.3% - solvent enterprises.They have bad debts and no sufficient security to receive credits; • Group 3 – 31.4% - temporarily insolvent enterprises.They still have a possibility to restore their paying capacity; • Group 4 – 13.5% -unprofitable enterprises. Their debts are twice their sale proceeds. Most debts are bad. • Group 5 – 9.7% - enterprises, which financial and economic system is completely wrecked.

  15. Financial and Economic Characteristics of Agricultural Enterprises

  16. Profitability of Agricultural Product Sales. %

  17. Profitability of Production in Leading Enterprises (100 enterprises in every industry) and in Other Russian Enterprises (2002–2004)

  18. Financial and Economic Characteristics of Agricultural and Food-Industry Enterprises *

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