Dairy subsidies: there are no plans, only intentions

Источник: The DairyNews
Why don’t dairy enterprises (excluding large holdings) often take into account the volume of state support in business plans, why do only few enterprises get the most important subsidies, and what can frequently changing "rules of the game" in obtaining state assistance funds provide to agricultural business? The participants and experts of the market were asked by The DairyNews.
As noted by Vladimir Surovtsev, head of Department of economic and organizational problems of development of agricultural branches, associate Professor of the Federal state budgetary scientific institution "North-West research Institute of Economics and organization of agriculture", heads and specialists of management bodies of agro-industrial complex and farms in the regions of the Russian Federation as the basic problems of "support 2017" note the following:

  1. The destruction of the principle of continuity. Too fundamental change has occurred "in fact" in the grant system compared to the current system in accordance with the state Program 2013-2020.
  2. Consolidation means of support at the individual recipients, which causes a feeling of "acute unfairness" of the majority of agricultural producers, who accumulate irritation "to the government in general" forming "the unjust system of distribution of grants". 
  3. The practical exception of regional agricultural administrative bodies of management from the process of distribution of grants on subsidized loans and capexes.
  4. The increasing differentiation in the allocation of support funds among the regions. 
  5. The overall decrease in support volume from the Federal budget.

In general we can say that the "A single subsidy" and preferential crediting didn’t meet all assigned good missions for the transfer of "control" of the money support into the hands of the regions and the provision of agricultural enterprises with affordable loans (due to constraint limits). The blurring of the state support, previously predicted by analysts, implemented itself. Meanwhile, The DairyNews survey showed, enterprises that are the most active in the dairy industry, either do not take into account subsidies in the development plan or treat them as a pleasant bonus, which may be available or not.

Not so long ago it became known about change of the rules of the subsidies "On increase of milk production", in particular not to comply with the requirement of ensuring the population of cows in the current financial year will be possible for those farmers who have submitted documents confirming the occurrence of force majeure.

This change is appreciated by the market participants as positive, stressing that in most cases, subsidies are a tool for efficiently running enterprises in difficult conditions.

"A few years ago at one of familiar farms there was decided to get rid of the leukemic animals. They built a new farm. In that period, while some animals went for slaughter, and other new, healthy arrived to the farm, there was a decline in the number of livestock. Accordingly, the company in its hard times, lost their subsidies," - said Vladimir Kalgin, Chairman of the Board of Directors of “Breeding factory “Oktyabrskiy”.

Daria Snitko, Head of the Center for economic forecasting of JSC "Gazprombank" notes that the evolution of support instruments should result in the subsidization of efficient production, and performance indicator is more complicated to measure than just livestock or milk production.

"In any case, the change of the rules seems reasonable, since the requirement of keeping the number of cattle in some cases can be a disincentive for the development of competitive production", - says Daria Snitko.

"Subsidies each year are reduced and not paid in full. If in 2013 the subsidy per liter of milk was 3.55 rubles, in 2017 it is 0.9 rubles. Preferential crediting is another story; we spent more than 6 months on credit processing, as a result, the Ministry of agriculture turned us down because Kaluga region was over the spending limit. We had to take a commercial loan, without the subsidies for % rate. While the price of milk is high, my attitude to the non-payment of subsidies is philosophic, we do not include them in the revenue part of the annual budget, and if they are paid, we are happy as children", - says the General Director of Agrofirm "Detchinskoye" Stanislav Goryanskiy.

The more often the forms of support change, the less possibilities agricultural producers have to consider support at planning, the smaller is the impact of support for the development of innovation and investment processes and increasing the investment attractiveness of the industry for most of the existing manufacturers and potential investors, analysts say.

In this situation only few with insider information benefit. They are those who knows how and when support will change.

"Therefore, the attractiveness to "participate" in changing support systems and regulations and to expend resources on "seeking political rent" is increasing. The largest holdings, of course, have much more such opportunities, than medium and small-sized manufacturers," says Vladimir Surovtsev.

In any case, under the conditions of the ever-changing “rules of the game”, plenty of enterprises operate without subsidies, developing and achieving goals. "Today, the problem is that we are not competitors, in terms of cost of milk. Therefore, extensive or intensive way is not so important when none of the methods gives a good cost. And, in turn, to get a good cost is possible by intensive method of development," suggests Taras Kozhanov, Deputy Director of CJSC "Sernurskiy cheese plant".

"I think it (the abolition of the requirements on preservation of population of cows for subsidies – ed.) is positive issue. If there is a positive trend in the production of the main product-milk, this enterprise should receive the support. Importantly, the manufacturer must not build a business only based on this factor. This approach dramatically increases business risks", - says Nikolay Perov, a specialist in the development of technological solutions for livestock.

The The DairyNews survey showed the majority of small and medium agricultural enterprises focus on maximum efficiency of production without taking into account the unstable state support. And the state seems to focus primarily on an intensive development of milk production, forming rules, giving the opportunity to support companies that are able to give the maximum gain.

Read full article in Russian on DairyNews.ru
30.01.2024
В России наметилась устойчивая тенденция сокращения поголовья коров: их количество снижается ежегодно, а в 2023 году достигло исторического минимума. The DairyNews обсудил с экспертами отрасли причины уменьшения молочного стада в России. Участники рынка поделились мнением о происходящем и рассказали, как избежать катастрофических последствий для производства молока, молочных продуктов и говядины.
Читать полностью