The Development of Agriculture in Present-Day Conditions

Contents:

1. Primary trends
2. Agricultural development program
3. Key directions
4. Industry-specific issues
5. What will 2022 be like?

Primary Trends

Agriculture is one of the most important sectors of the country's economy, which is slowly but steadily demonstrating the growth of economic indicators. While the 1990s did not show a very successful policy in this direction, the early 2000s changed the situation for the better. First of all, this was due to the state support of farmers, the establishment of crediting and agricultural insurance systems.

And even despite the skepticism of many, the industry remains quite profitable and capable of not only 100% satisfying the needs of Russians, but also exporting some of the products abroad. Tracking the perspectivity is easy by looking at the statistics for 2016-2019:

• due to the embargo, imports of food products decreased three times,
• exports of agricultural products increased by 6 times,
• grain harvest exceeded previous figures by 13.7%,
• due to the reduction of transportation and storage losses, the quality of products has increased significantly.

Such positive trends are observed from year to year, which confirms the possibility of successful development of agriculture in all regions.

The growth in the production of domestic agricultural products and the imposition of embargos against a number of countries made it possible to significantly reduce the import of food and agricultural raw materials.

One of today’s trends is the technology modernization in the industry, as well as subsidizing agricultural producers. The government actively supports the following areas:

• crop production. It is especially profitable in the south of Russia. For example, in Kuban, the profitability of growing crops reaches 100%;
• animal husbandry. Especially successful in northern regions, where the climate does not allow growing crops;
• grain growing. Today Russia is a world leading producer of barley, sugar beet, oats, rye, buckwheat and sunflower;
• potato growing. Yield grows annually. While 29.5 million tons were harvested right after 2010, today it has exceeded 35 million tons, which allowed Russia to take third place after China and India;
• beet growing. 37 million tons are enough to meet the public demand by 80%;
• vegetable growing. Vegetable production in greenhouses increased by 10%, largely due to the commissioning of more than 160 hectares of winter greenhouses. In this sphere, food self-sufficiency ratio has already reached 90%.

The intensive development of greenhouse vegetable growing was a consequence of the deteriorating relationship with Turkey. Nevertheless, demand in the domestic market is far from great – the average Russian annually consumes 11 kg of fresh out-of-season vegetables, which is 2 times lower than the norm.

In general, the industry is developing steadily, but one of the most important unresolved issues is the mismatch between supply and demand. The sharp decline in consumer demand is primarily caused by the deterioration of the population's paying capacity. And this can cause the overfilling of market and a decrease in prices for agricultural products. Therefore, the government has developed a whole program to solve this and similar problems.

Agricultural Development Program

Today, the priorities include:

• food security in Russia;
• further import substitution of dairy and meat products, potato seeds, fruits, berries and vegetables;
• increasing the competitiveness of domestic goods in the foreign and domestic markets;
• ensuring the financial stability of agribusiness enterprises;
• introduction of environmental science to production;
• efficient use of land resources;
• development of rural areas, formation of an innovative agro-industrial complex.

In addition, the production of exclusive agricultural products is a sphere to stake on. This includes the berry picking and medicinal herbs harvesting, as well as beekeeping. Already, our country is a leader in growing raspberries and currants, caviar production and fish (including the Baikal omul) conservation.

In the northern regions, the main growth vector is reindeer herding. Meat of these animals is a very popular delicacy. The northern category also includes Murmansk scallop and Baltic sea urchin, Rhopilema nomadica, Black Sea oysters, Arkhangelsk toothfish, European anchovy, and Magadan whelk.

Other unique products, which today receive special attention and whose production is strongly supported, include fir cones, honeysuckle, black truffle and birch bast, elk and reindeer milk, meat of the Dagestan tur and the Tuvan yak.

All this is forecasted to increase the share of Russian goods: grain up to 99.7%, beet sugar up to 93.2%, potatoes up to 98.7%, vegetable oil up to 87.8%, milk and dairy products up to 90.2 %, meat up to 91.5%.

The overall production growth should average 25% compared to the period between 2012 and 2019, with the expected increase in profitability about 10–12%. In addition, there are plans to expand the area of ​​perennial plantings, for which at least 65,000 hectares will be allotted.

Key Directions

• Import substitution

This trend was started back in 2014, when a number of European countries imposed sanctions on such products as pork, poultry meat, cheese, cottage cheese, fruits, nuts, and much more. Today, it continues to pick up the pace: at the moment, more than 80% of grocery shelves are filled with domestic food products. At the same time, while grain harvests are sufficient to cover the needs of the population, the production of meat, milk, fruits and berries needs an increase. According to experts, it is possible to achieve the required indicators within 3-7 years.

Today, the buyer wants to see the following imported products in stores: cheeses (Brie, Dorblu, Camembert), fish and seafood, nuts and dried fruits, sweets and peanut butter.

• More active state participation in the industry development

The new agricultural policy measures imply the active state participation in the financing of agriculture, distribution of money, seasonal and all-year lending, state insurance against the risks of crop or animal loss. Now more than 30 measures have been taken to support agricultural producers, including the per-hectare subsidy and partial interest rate subsidization on long-term loans.

Particular attention is paid to startup farmers. They are given grants for the creation of farms and various subsidies.

• Attracting investments

Despite the fact that the situation is generally favorable, many agricultural enterprises have low profitability, which does not allow them to hope for an inflow of investments. Therefore, they have been offered a number of subsidized loans, which may spark the interest of investors. First of all, this is seed breeding and pig breeding, and greenhouse vegetable growing. In addition, as an incentive, a decision was made to reimburse part of the costs, on average up to 20%, for construction of permanent facilities for vegetable production.

The payback period in the agro-industrial complex is at least 4–5 years.

• National research infrastructure.

The industry needs qualified personnel. Therefore, special emphasis is laid on the restoration of agricultural universities. Today, there are 54 educational institutions that annually graduate up to 25,000 specialists.

At present, national research in the field of feed production, veterinary medicine, genetic engineering and breeding is also important. This allows to get new high-productive varieties of plants and animals resistant to various diseases and pests.

• Farming.

Half of the 355,000 agricultural producers are small businesses and individual entrepreneurs. And according to the Association of Farms and Agricultural Cooperatives of Russia, more than 38% of Russians would like to start up their own farm. Today there is ample opportunity to do so.

Industry-Specific Issues

Despite positive trends, some issues remain unresolved. Among them are low profitability, insufficient modernization and renewal of technical facilities, the debt load of agricultural producers and predominantly high interest rates.

An ambiguous year 2021 has also brought problems. On the one hand, crop prices remained stable, but on the other hand, export duties negatively affected profitability. Meanwhile, outputs are still quite decent, even despite the weather conditions. This is in large part because of the use of modern agricultural technologies.

What Will 2022 Be Like?

In terms of harvest, the forecasts are good: the gross grain harvest may reach 127 million tons. Currently, 19 million hectares are sown with winter crops, of which only 3% is in poor condition compared to 20% a year earlier.

Growth is also expected for oilseeds. The increased crops of sugar beets can even lead to sugar overproduction, so a new regulatory tool, the sugar intervention fund, has been proposed.

However, the supply of agrochemicals and feed components from China will continue to affect the cost price. Because of this, the prices for active ingredients for, to name but a few, herbicides and fungicides will increase by 1.5–2 times.

For now, one thing is clear: 2022 will be similar to 2021 in many ways. The cost of all production components continues to grow, state influence on business remains unpredictable at some points, plus the possibility of a new pandemic and the associated quarantine restrictions, as well as a new package of sanctions from European countries. It is in such conditions that the agro-industrial complex sector will have to work all the next year.