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INVESTMENT IN AGRICULTURE
Shpinev Iu.
PhD in Law, Senior Researcher in the Sector of Business and Corporate Law, Institute of State and Law of
the Russian Academy of Sciences, Moscow, Russian Federation
Abstract
This article discusses the issues of investment in agriculture during the period of its digitalization. The author justifies the importance of agriculture, as well as investment risks in this sector of the economy. The problems that should be solved during the transition of agriculture to the digital level are listed. In conclusion, it is concluded that due to the peculiarities of agriculture, the main financial burden will be borne by the state during the transition of the latter to the digital level.
Keywords: agriculture, agro-industrial holding, investments, investments in agriculture, digital agriculture, investment risks.
Agriculture, along with industry and transport, has always been one of the backbone sectors of the national economy of any state. First of all, this is due to the need to provide food to the population of their country. The issue of food security is particularly acute at the present time, when under various, mostly far-fetched pretexts, some countries are trying to solve their political and economic problems by imposing economic sanctions against other States. In order to prevent a possible future food embargo, the development of agriculture is one of Russia's top priorities.
Providing the highest quality and most affordable products contributes to improving the health of the population, increasing life expectancy, and as a result, improving the socio-economic situation in the country.
High-quality agriculture contributes to the development of other sectors of the national economy, which primarily include mechanical engineering, transport, chemical industry, wholesale and retail trade.
It is impossible to ignore the influence of agriculture on the uniformity of settlement of the country. In recent decades, there has been a negative practice, according to which young people leave the countryside and move permanently to large cities. The population of agricultural regions is increasingly trying to move closer to megacities, to Moscow and St. Petersburg. As a rule, this is most often due to low earnings, poor infrastructure and the lack of any hopes for improving the situation in the future. The development of agriculture, creation of decent living conditions in rural areas, high wage and confidence in the future will facilitate even distribution of the population in the country and stop unnecessary migration from agricultural regions closer to the cities.
Thus, agriculture is an economic sphere that affects almost all branches of the national economy.
However, despite the importance of this sector of the economy in almost all, including the most developed countries, the agro-industrial complex cannot exist without the full support of the state.
Thanks to state support, agriculture in Russia has adapted to the present realities and is even showing growth in certain areas. At the same time, the growth of the domestic agro-industrial complex significantly lags behind the leading agricultural countries, such as the United States, Canada, Brazil, and China.
The main reasons that hinder the development of agriculture include:
- lack of own funds of agricultural enterprises;
- high interest rates on commercial loans;
- insufficient direct state support, including the size, system of distribution and availability of subsidies;
- deterioration of automotive equipment;
- lack of investment [2].
The agro-industrial complex, as well as any branch of the economy, requires long-term and reliable investors for its further development. But attracting such investors is becoming an impossible task for the industry.
First, agriculture itself is one of the most vulnerable sectors of the economy to economic and political crises, and the volume of investment in such times decreases much more than in other areas [1].
Secondly, agriculture is one of the riskiest sectors of the national economy from the point of view of investment due to the special conduct of economic activities. This feature is primarily due to the fact that most of the economic indicators of the industry depend much more than in other industries on a variety of natural factors that a person cannot influence with all the development of science and technology [6]. Among all these
natural and economic factors, the following can be distinguished:
- the probability of epiphytotic (epidemic in plants) and epizootic (epidemic in animals), which can lead to a significant loss of crops or livestock in a certain area (avian flu, swine flu);
- risk of occurrence of natural phenomena that negatively affect agriculture and animal husbandry, which cannot be predicted and predicted in the medium term (drought, flood, hurricane, hail, heavy rains, etc.);
- the possibility of recognizing certain animals as capable of carrying any human diseases, which may result in an epidemic, may lead to the total destruction of a population within a certain territory (swine flu, destruction of Minks in European countries due to COVID 19);
- the emergence of a situation where getting a very large crop leads to a noticeable decrease in the value of this product on the stock exchange and instead of a good profit, agricultural enterprises receive significant losses.
Of course, many of these risks can be insured, but the cost of insurance would place an additional burden on the economy, and without requiring additional financing;
- insurance does not always cover all losses;
- the ability to insure risks does not in itself make agriculture more attractive to investors, since there are many other areas that have much less specific risks.
Thus the huge importance of agriculture to social well-being, economic development and political stability of any state on the one hand, and the presence of a complex of the reasons hindering the development of the industry, as well as a list of investment risks on the other, requires constant direct involvement of any state in the industry.
The digital economy is currently gaining momentum around the world. All branches of the national economy and spheres of human life are being actively digitized. Of course, this issue could not but affect agriculture. The Ministry of agriculture adopted the departmental project "Digital agriculture", according to which this term refers to agriculture based on innovative methods of agricultural production using digital technologies, including robotics, e-Commerce, analysis of large databases, the Internet of things, etc., which contribute to increasing labor productivity and reducing costs [4].
Among the prerequisites for the active use of the digital approach and artificial intelligence in the agro-industrial complex are the increase in the volume and quality of data on the production process in real time, the need to increase the efficiency of labor productivity and production, including due to the reduction of resources used, as well as the increasing complexity of production in General [5].
The transition to a digital economy in agriculture will help solve many problems in the agro-industrial complex, including:
- significant increase in labor productivity in crop production due to optimization of work and electronic control over timely and correct planting, watering,
treatment with fertilizers and pesticides, as well as harvesting;
- multiple increases in rational water use due to more accurate weather forecasts due to the latest achievements in science and technology, as well as the use of innovative sensors that measure soil moisture;
- constantly receiving all the necessary information in real time, which will help you to respond as quickly as possible to an emergency change in the situation and make a decision;
- a significant reduction in operating costs due to the widespread introduction of automation and ro-botization throughout all cycles of industrial processes, which is designed, among other things, to reduce the risk of human error;
- a sharp increase in the quality of products due to the use of innovative technologies in the process of continuous monitoring of product quality;
- increasing the number of animals and improving the overall quality of animal husbandry, including through the use of modern gadgets that allow you to detect not only the location of animals, but also to remove and transmit data about their condition to the General electronic management system of the livestock complex;
- more accurate monitoring of agricultural land;
- continuous monitoring of equipment and systems operability, forecasting of malfunctions and their timely elimination [7].
The transition to digital agriculture will require a significant, if not complete, re-equipment of the industry.
First, to implement ambitious plans for digitaliza-tion of the agro-industrial complex, it is necessary to develop, produce and equip the industry with a large number of devices and complexes that were not previously used in the industry. These are unmanned aerial vehicles, digital platforms based on artificial intelligence for General management of the automated process, etc.
Secondly, it is necessary to completely re-equip the entire fleet of agricultural machinery and most of the structures to solve problems in the new digital reality. And if agricultural buildings and structures, for the most part, really have to be re-equipped and equipped with modern gadgets, then the Park of agricultural machinery will have to be changed almost completely.
As noted above, the widespread wear and tear of agricultural machinery is still the reason that hinders the development of the agricultural industry. Due to significant underfunding, many farms prefer to repair old equipment instead of purchasing new ones. The total volume of investment in the modernization of fixed assets has been declining in recent years, while the amount of investment in agricultural machinery has decreased the most [3].
Even modern equipment can be completely re-equipped to meet the requirements of digital agriculture, including driverless driving, constant interaction in real time with a digital platform for General farm management. The installation of modern, "smart" equipment on obsolete equipment, which is subject to
write-off yesterday, is in principle impossible, not that it is not cost-effective.
Thus, in the near future there should be a one-hundred-percent replacement of existing, mostly outdated automotive equipment with modern, innovative, digital, capable of performing the tasks assigned to it in a digital economy.
It is clear that it will not be possible to replace all the equipment at once, either for technological or economic reasons. The replacement will be gradual. But even in this case, the state will have to allocate huge funds for such a grandiose re-equipment, since this task is in principle unaffordable for agricultural enterprises themselves.
There are two main areas of state regulation of investment activities in agriculture:
- creating favorable conditions for agricultural investment;
- direct participation of the state in investment activities.
As the formation of favorable conditions for investment in agriculture, we can distinguish:
- development of a regulatory framework that meets modern conditions, which will help attract investment in the industry;
- providing subjects of investment activity in agriculture with additional benefits, subsidies and other preferences that can activate such activities in the industry;
- active application of Antimonopoly legislation to regulate, if necessary, prices for agricultural products and equipment in regional markets;
- creation of ubiquitous information and analytical centers based on the latest achievements of science and technology, allowing industry enterprises to get the necessary information in real time;
- optimization of the depreciation mechanism in order to encourage enterprises to invest by applying various options for the leasing procedure;
- promotion and comprehensive support of innovative and integration relations throughout the entire cycle of functioning of the agro-industrial complex, from preparatory work to the sale of finished products;
- comprehensive development of modern market infrastructure using the latest innovative technologies;
- implementation of preferential lending to agricultural enterprises, including through the provision of a subsidized credit rate;
- creation and development of guarantee and collateral funds in the regions;
- creating conditions for the emergence of agricultural enterprises with the participation of foreign capital, etc.
However, in any of these areas, the state will have to actively participate in the re-equipment of the agricultural sector. To do this, in the near future it is necessary to develop an order and a set of specific measures and steps to help the state to agricultural enterprises in replacing outdated equipment with «smart» ones.
There are many options for state aid, and with the development of the digital economy, new tools for such assistance are constantly emerging. Now I would like
to focus on the question of who should receive this assistance, and by what criteria a particular unit of agricultural machinery will be classified as modern, which gives enterprises the right to certain state preferences and subsidies. This issue is particularly important because, in any case, without the active financial participation of the state, it is impossible to provide digital agriculture with the equipment corresponding to its name.
To solve this problem, special technical regulations should be developed.
In these regulations, equipment should be divided into General areas of use (animal husbandry, agriculture), by type of work performed, by cultivated crops, etc.
For each type of technology needs to be prescribe what innovative solutions should be introduced on it to include it in the list of such «digital agricultural technology» (unmanned control, automatic processing, or robotvision harvest with Central management, organization of digital irrigation, etc.).
If all of these conditions must be drawn up a list of such «smart» or «digital agricultural technology», in manufacturers or purchasers which should extend the preferences.
It should also be noted that not just favorable conditions should be created, but «enticing» conditions for producers and, of course, agricultural enterprises that are switching to new equipment.
But this requires the development of technical regulations and the compilation of a list of such «digital agricultural equipment». And this should be done now.
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