Development Finance Impact Project – Digital Artifact FINANCING FOR DEVELOPMENT OF AGRIBUSINESS IN THE RUSSIAN FEDERATION

1. FINANCING FOR DEVELOPMENT OF AGRIBUSINESS
IN THE RUSSIAN FEDERATION
Development Finance Impact Project – Digital Artifact
Olga
Generalova –
Kutuzova
International
Investment
Center
www.uniic.ru.gg

2. 100-word summary
The food and agriculture sector offers key solutions for development, and is central for
hunger and poverty eradication.
The share of agriculture in Russian GDP is about 3.8%, together with food processing
industry – about 7%. Due to economic sanctions, implemented by Russian
government, substitution of imported food products by domestic production need to
be achieved.
Main problems:
1. Poor design and management of public programs
2. Lack of qualified workforce
3. High transportation and storage costs
The solutions are:
1) to raise efficiency of public spending
2) to mobilize additional private resources
3) to improve interregional cooperation

3. Table of contents
1. The role and size of agribusiness in the overall country economy
2. Government Support
• State Programme on Agriculture Development and regulation of
agricultural markets, raw materials and food supply for years of 2013 -
2020
3. New challenges against agribusinesses from new demands for
healthy and environment friendly products
4. FINANCING FOR DEVELOPMENT
Suggestions to Government and local authorities
5. FINANCING FOR DEVELOPMENT
Mobilizing of Additional Private Resources in the field of
agribusiness sector

4. The role and size of agribusiness in the
Russian economy
Agribusiness is the largest interdisciplinary complex in Russia, which includes
more than 10 industries, aimed at the production and processing of agricultural
raw materials. It affects the interests of almost all population and directly
influences 38.7 million citizens, living in rural areas; work of more than 18
million different agricultural organizations, enterprises, farmers and private
households in 155 thousands of settlements.
The share of agriculture in Russian GDP is about 3.8%, together with food
processing industry – about 7%.
In the agriculture and food industry in Russia are employed about 10 million.
people, accounting for 15% of total employment force. Additionally, at
individual/family farms are employed 23.5 million people.
Main advantages:
1. Large areas of agricultural land;
2. Possibility of production of environmentally friendly products;
3. Economic sanctions provided new opportunities for agribusinesses with the
market demand for import substitution
Main problems:
1. Poor design and management of public programs
2. Lack of qualified workforce in rural areas
3. High transportation and storage costs for raw products

5. State Programme on Agriculture Development
and regulation of agricultural markets, raw
materials and food supply for 2013 - 2020
• Budget allocation for the implementation of Program from the
federal budget of Russia is 2 126 219 899.6 million rubles
($35,436,998.3 million)
• Expected results of the Program (examples of indicators)
Increase the share of Russian food products in food resources by 2020:
- grain - up to 99.7 %;
- beet sugar - up to 93.2 %;
- vegetable oil - up to 87.7 %;
- potatoes – up to 98.7 %;
- meat and meat products - up to 91.5 %;
- milk and dairy products - up to 90.2%;
• increase agricultural production in all categories of farms by 2020
in comparison with 2012 on 24.8%,
- food products - by 32.5 percent;
- providing average annual growth rate of investment in fixed capital in
agriculture of 3.1 percent;
- increase in the average level of profitability of agricultural organizations
to not less than 10 - 15 % (including subsidies);
Source: Russian Ministry of Agriculture, http://www.mcx.ru/

6. New challenges against agribusinesses from
new demands for healthy and environment
friendly products
Production of organic food products opens up broad
perspectives:
• Expansion of product range;
• Ability to take a free market space;
• Access to the target audience with an income above average;
• More likely to attract foreign investment (due to the popularity
of this trend);
• High yield interesting retail product in the first place - networks;
• Create a favorable image of the company.
Problems:
- Fertilizers and protection of crops
- Storage and Retail
- Certification
- Lack of government support programs for organic producers

7. FINANCING FOR DEVELOPMENT
Suggestions to Government and Local Authorities
• WTO participation
- develops economies by enhancing trade and eliminating barriers;
- entails raising standards of living in the countryside;
- creates a competitive environment for a more intensive development of the
agricultural sector;
- contributes to the improvement of quality of food products by introducing high
standards and competitiveness in agribusiness;
- helps to preserve natural heritage due to widespread use of environmentally
sound technologies in agriculture.
• Suggestions:
- Raise Efficiency of Public Spending -
1) improving the design and management of public programs
2) working on a detailed calculation of all possible risks to agricultural sector;
- forecasting different variants of the situation in the agro industry;
- preparation of case studies of adequate measures to disseminate best practices
of the state activities to support the agricultural sector
- establishing an international Internet platform for information support of
financing, functioning and development of agro-industrial complex of the WTO
countries, revealing also the contribution of young people in the agricultural
development of rural areas.

8. FINANCING FOR DEVELOPMENT
Mobilizing of Additional Private Resources in the field of
agribusiness sector
- foreign direct investment (FDI)
- bank loans
- domestic financial markets
- private transfers (remittances)
- private philanthropy
Ways of Interregional Cooperation
• Exhibitions/Forums (marketing)
• Academic mobility of Universities (science and education)
• Cooperation via Chambers of Commerce and other business
associations (marketing and outsourcing)
• Cooperation in the field of seasonal labor migration in
agribusiness (outsourcing and remittances)

9. Thank you for attention
Olga Generalova-Kutuzova
International Investment Center
www.uniic.ru.gg