The level of agriculture development determines the well-being of a country's population. Food patterns, social living conditions, average income, consumption of goods and services depend on it. In this regard, the timely identification of risks and problems, finding solutions and the identification of growth points are top priorities of state policy in the agro-industrial sector.

Contents:

1. Growth dynamics of the agro-industrial complex in recent decades
2. The main problems of domestic agriculture
   1. 2.1 Land degradation
   2. 2.2 Slow pace of industry modernization
   3. 2.3 Poor development of rural areas and personnel shortage
   4. 2.4 Bad condition of market infrastructure
   5. 2.5 Financial imbalance of the industry
   6. 2.6 Failure of domestic production and import dependence
3. Promising ways to solve the problems of the agro-industrial complex

Dynamics of Development of the Agro-Industrial Complex in Recent Decades

The global geopolitical changes that took place in the second half of the 1990s caused a disruption in production and economic ties and a massive decline in the agro-industrial complex. The new country faced significant reduction in the number of livestock and in production throughput, degradation of fertile soils, just to name a few problems.

Starting from 1999, it was planned to increase the volume of production in agriculture. However, it still did not reach the level of 1990-1995. In addition to other negative factors, the slow pace of development of the agro-industrial complex was affected by increased inflation, an inefficient system of state funding, and higher credit costs. On top of it, the purchasing power of consumers of agricultural products decreased.

The next risk for the development of the agro-industrial complex was Russia's accession to the WTO in 2012. Foreign producers obtained access to the domestic market, which made local farms uncompetitive. To solve this problem, the country needed massive technological, financial and human resources.

The reverse process began when some countries introduced the anti-Russian sanctions. Measures aimed at import substitution have stimulated the growth of production of dairy products and other agricultural products.

In general, the agrarian policy of Russia has undergone positive changes in recent years. According to the Minister of Agriculture, growth is observed in the main sectors of the agro-industrial complex. The volumes of domestic and foreign investments have increased, funds are now used more efficiently. The social situation in the countryside has improved in some degree. At the moment, with all positive changes, it is impossible to achieve a high level of development of Russian agriculture without a proper modernization of technical equipment and sizeable state support for the industry.

The Main Problems of Domestic Agriculture

The low level of development of the Russian agricultural sector is associated with currently insurmountable problems in its structure. These are:

• land degradation and withdrawal of large areas from farming business;
• slow pace of technology modernization of the industry, e. g. bad equipment for cultivation and harvesting, as well as for processing, storage and transportation;
• underdeveloped social sphere in rural areas, resulting in personnel (mainly highly qualified) shortage;
• bad condition of market infrastructure development. It hinders the manufacturers’ access to money, informational and material resources;
• financial imbalance of the industry, manifested in a lack of support and investment;
• dependence on imports — mainly in relation to the means of production, not finished products.

Let's consider the specified problems in more detail.

Land Degradation

According to studies, in the Russian Federation, as of 2015, up to 0.5 million hectares of irrigated land (over 11% of the total area) and up to 1.8 million hectares of drained territories (about 37%) are degraded. At the same time, about 40 million hectares of agricultural land are not used, either permanently or temporarily.

The reasons for degradation include the decline of reclamation systems created in the Soviet era and soil acidification, slowed down drainage and irrigation, and the reduction in the use of mineral and organic fertilizers.

Slow Pace of Industry Modernization

As of 2014, the degree of depreciation of fixed assets of the agro-industrial complex was estimated at 36.6%. While livestock farms are modernized efficiently enough, the level of provision of enterprises with agricultural machinery continues to decline. In 4 years, losses in the number of tractors, plows, grain combine harvesters and forage harvesters amounted to 25%.

Poor Development of Rural Areas and Personnel Shortage

The unsatisfactory state of the social and domestic infrastructure in the rural areas leads to the continuous migration of high potential staff. The lack of educational and children's institutions, paramedical and midwifery stations, cultural and recreation facilities, combined with low wages and lack of Internet access, maintains social tension.

According to studies, no more than 40−45% of farms today are staffed with highly qualified agronomists, livestock engineers, mechanics, and economists. There is an acute shortage of subject matter experts and retraining programs.

Bad Condition of Market Infrastructure

Limited access to material, technical, financial and information resource markets hinders the activities of both small farms and big-scale producers. They experience difficulties with the purchase of seed, feed and raw materials, equipment, and with subsequent storage and marketing of finished products.

Financial Imbalance of the Industry

The investment attractiveness of the agro-industrial complex is naturally lower than that of other sectors of economy. This is associated with a high level of risk. According to studies conducted in 2010–2015, the inflow of resources into the industry amounted to only 3.5% of the total investment in the country’s basic capital.

In addition to the lack of investment, the industry suffers from accumulated decapitalization, poor occupational insurance, and instability in raw material, agricultural and food markets.

Failure of Domestic Production and Import Dependence

The most serious import dependence is observed in the technical facilities of farms, in the acquisition of means of production, seed material and pedigree stock, plant protection products, and forage amino acids. Increased costs of the purchase of raw materials, equipment and fertilizers from abroad reduce profitability and industry efficiency. Experts estimate the import ratio at 40–60%.

Promising Ways to Solve the Problems of the Agro-Industrial Complex

Intensive development of the agricultural complex is impossible without the modernization of the four main areas:

• industries that develop and create means of production,
• agriculture as it is,
• product processing,
• infrastructure as a whole.

Other critical measures are the improvement of working conditions for highly qualified personnel, the introduction of new technologies, and driving the investment inflow.

The development of a strategic model for the development of the agricultural sector at the industrial, territorial and federal levels will help solve the tasks and ensure positive changes in the agro-industrial complex.

In order to attract investors, it is necessary to provide favorable regulatory and legal conditions, extend their preferences and benefits. Experts consider the idea of ​​starting organic and animal farms in Russia to be promising. The development of this area will help to fill a vacant niche in the world market and improve the investment climate due to the influx of foreign funds.

In order to attract and retain young talents and highly qualified subject matter experts, it is necessary to improve rural infrastructure. The expansion of road networks and communications, modern residential development, new paramedical and midwifery stations, kindergartens, schools and cultural institutions are designed to improve life quality and bring it closer to the urban level. In addition to providing farms with competent personnel, it is advisable to develop a system of consulting institutions. According to analysts, the work of one highly qualified expert can cover 10-12 farms’ needs in competent specialists.

The demand for professional personnel is considerable in all areas: scientific institutes, design bureaus, in the farms of goods producers. Innovative activities and the introduction of R&D into production are designed to increase the efficiency and profitability of the industry.

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