AGRICULTURAL INDUSTRIES WITH INCREASING AND DECREASING COSTS AND THEIR STATE SUPPORT IN RUSSIA

DOI 10.32651/247-39

Issue № 7, 2024, article № 5, pages 39-49

Section: Problems of efficient management

Language: Russian

Original language title: ОТРАСЛИ СЕЛЬСКОГО ХОЗЯЙСТВА С ВОЗРАСТАЮЩИМИ И УБЫВАЮЩИМИ ИЗДЕРЖКАМИ И ИХ ГОСПОДДЕРЖКА В РОССИИ

Keywords: OUTPUT GROWTH RATE, PRICE ELASTICITY OF PRODUCTION, MARKET PRICE SUPPORT, BUDGET TRANSFERS, INDUSTRY 4.0

Abstract: The article considers two groups of agricultural industries in Russia, whose development scenarios in 2000-2023 are analysed through the theory of industries with decreasing or increasing costs. The estimated price elasticity of production is used as an indicator of industry type. It is quantitativelyconfirmed that dairy and beef cattle are among the industries with increasing costs, while pork, meat poultry and wheat production are among the industries with decreasing costs. Thus, the maximum elasticity, i.e. the reaction of production to price growth by 1%, was characteristic of meat poultry production – 1.59, the minimum – for dairy cattle – 0.13. In other words, a price increase of 0.6 per cent and 7.5 per cent respectively, all else being equal, was needed to increase production by 1 per cent. It is shown that industries with decreasing costs are driven mainly by market price support. Subsidies and transfers linked to a unit of output or resource accounted for a much larger share of support to industries with increasing costs. The role of industrial technologies of conveyor type in transferring pork and poultry production to the scenario of industries with decreasing costs was analysed. We discuss their limitations related to the threshold of economies of scale, growth of veterinary, phytosanitary and environmental risks, and limited opportunities to realise local competitive advantages. The transition to adaptive highly industrialised production is considered as one of the options to overcome these limitations. In conclusion, we propose adjustments to agricultural state support in order to maintain (and transition – in the case of dairy and beef cattle) the development trajectory according to the scenario of industries with decreasing costs and public welfare growth.

Authors: Nikulina IUliia Nikolaevna, Surovtsev Vladimir Nikolaevich