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RELEVANCE AND PERSPECTIVE DIRECTIONS FOR DEVELOPMENT INFRASTRUCTURE OF PLANT GROWING BRANCH IN THE CONDITIONS OF THE SOUTH OF RUSSIA
Abstract
The relevance of the studied problem is caused by the ripened need for development of plant growing subsectors infrastructure in for modern conditions. The purpose of the research is the assessment of economic efficiency of investments into the perspective directions of development of plant growing at the agricultural organizations of the Russian South. The authors prove the expediency and economic efficiency of the organization of the isolated specialized production on cultivation vegetables of open and close soil. The materials of the research can be used by specialists of agricultural organizations and governmental bodies for making business plans of innovative development of agricultural producers and by potential investors in the branch.
Keywords
plant growing, infrastructure of branch, investment, economic efficiency, development, agriculture, Krasnodar Krai
AUTHORS
Olga A. Sukhareva
PhD, Associate Professor Kuban State Agrarian University. 13, Kalinina Str., Krasnodar, 350004, Russia.
E-mail: suhareva_olga.08@mail.ru
Vladlena S. Novikova
Student. Kuban State Agrarian University. 13, Kalinina Str., Krasnodar, 350004, Russia.
E-mail: vladlena-novikova@mail.ri
Introduction
1.1 Relevance of the research
Grocery embargo introduced in 2015 in the Russian Federation created new conditions for domestic producers - substitution of import agricultural production, and, therefore, increase in growth rates of agro-industrial complex on an intensive basis. At this conjuncture the actual is the question of quantitative and qualitative potential to increase production of agriculture and development of a fundamental element of production forces - effective production infrastructure of branches of agrarian-industrial complex.
Active studying of contents, organizational bases and principles for creation infrastructure of agricultural branches in domestic science began in 1940-ies upon transition to the collective principles of managing. The term "infrastructure" was understood as a system of the serving farms, institutions and productions promoting a rational expenditure of the resources providing optimum development and territorial organization of production forces, high standard of living and preservation of environment. The treatment of the studied category had not change substantially. Specifications where made to define infrastructure of agricultural production: it is the complex of productions engaged in preparation of agricultural raw materials, transportation, storage, advance and sale of agricultural production and goods of its processing, training agricultural staff, etc. (Slepneva L. R., 2012: Sokolova A. P., 2015; Trubilin A.I., 2016).
The infrastructure is a component of agro-industrial complex of Russia, acts as its subsystem and an element of system of production organization. The purpose of the organization and development of agricultural infrastructure is creation of necessary conditions for economic growth, security, continuity and balance of the main production. The infrastructure of branch acts as a necessary condition for labor productivity growth and increase of production efficiency.
Effective development of agricultural branches is possible in condition of the advancing rates of development of production infrastructure in relation to the main production. Thus the directions, rates and the end results of development of agrarian sector are defined by efficiency of development including infrastructure of agricultural subsectors. The modern infrastructure of Russian agriculture differs in backwardness, lack of integration communications between spheres and agricultural enterprises and low investment appeal. The relevance of the conducted research is defined by importance to develop agro-industrial complex infrastructure.
1.2 Characteristic of the research object
Nowadays residents of the developed countries allocate a big share of the budget for fresh vegetables and green, than 10-15 years ago. The observed tendency is caused by both growth of the general welfare of the population, and universal dissemination of culture of a healthy lifestyle. Russia is open to world common cultural values and promotion of a healthy lifestyle, but vegetables takes a smaller share than in other countries, their consumption has seasonal nature that is explained by features of the Russian climate. Not all vegetables from the traditional menu of Russians are subject to fresh and long storage. Even in the Southern region of the Russian Federation, optimum for vegetable growing, vegetables from open soil can be received within 4-5 months during the year; in less favorable regions - 2-3 months. As a result, average annual consumption of vegetables per capita of the country is twice lower than the level recommended by Institute of Food of the Russian Academy of Sciences.
Vegetable growing is one of priority branches for development agriculture in the Krasnodar Krai. In 2015, the region took the leading position on production of vegetables in the Southern Federal District, and the third place among the regions of the Russian Federation. Thus, in the region, favorable for cultivation of vegetables, internal consumption of vegetables exceeds their production for 22%. Missing volumes of production including taken out of the region are replaced by internal and external import. From October to April there is the lack of local fruits and vegetables and the expressed seasonality of its deliveries to the market.
Over the last ten years of fruit and vegetable production in kind grew by 3 times in the region import. According to the Southern customs office of the Federal Customs Service of Russia, the main foreign trade partners of the Krasnodar Krai delivering fruit
and vegetable products were Turkey (tomatoes, cucumbers, citrus), Israel (carrots, garden radish, turnip, beet), Egypt, Belgium, Serbia (apples, pears) and Ecuador (bananas). The considerable share is occupied by the products having local analogs -apples (13%), tomatoes (10%), potatoes (9%), onions (5%), carrots (4%) and cucumbers (2%) (Bershitsky Yu. I., 2015; Sukhareva O. A., 2014).
According to the Uniform information portal of monitoring of the prices in the Krasnodar Krai, the potential of growth of volumes of fruit and vegetable products cultivation (also transit) is estimated by regional agricultural producers only due to import replacement at 850 thousand tons or 1,5-1,7 times from the existing outputs. The analysis of growth rates of vegetables production in the region allows to conclude that the developed level is not enough for import substitution.
For years of market reforms in Russia, the created network of specialized vegerable-growing farms and branch infrastructure (seed-growing farms, processing complexes, specialized storages, etc.) was destroyed. The character of organizing a production system has also changed: production passed from large-scale hi-tech specialized production into country and farmer and personal subsidiary farms. In structure of vegetables production in the Krasnodar Krai, the share personal subsidiary farms makes more than 60%: 20% are the share of agricultural organizations, the rest - country (farmer) farms. The developed structure of vegetable production constrains development of the branch and does not promote widespread and effective introduction of innovative technologies in production.
Now subsectors of plant growing impose increased requirements to an infrastructure level of development in connection with accumulation of production rates, and consequently the need of maintenance of steady nature of production.
Researchers of economic processes in subsector note that the reasons slowing down development of vegetable production on open and close soil in the agricultural organizations are outdated technologies of cultivation, wear of the existing equipment of hothouse complexes, high investments into creation of new capacities, insufficiency of money and backwardness of infrastructure of vegetable production and sale (Belova I. V., 2015.; Kondratyeva O. V., 2015; Sokolova A. P., 2016.).
Domestic practice of cultivation vegetables on open and close soil was developed by the principle of a full cycle of production. The situation is characteristic for both the large agricultural organizations, and farmer and small (personal) subsidiary farms. In foreign practice the infrastructure of vegetable production is developed in a bigger measure. There are complexes on cultivation seedling, vegetables and specialized seed-growing farms. Such division allows to organize a system of production rationally, to provide producers with qualitative landing material in due time, to level production risks.
The most risk stage in the course of vegetable cultivation is cultivation of seeding material. Not complying the technology of cultivation, insufficient care, irrational light and thermal mode, low qualification of workers, the probability of loss of production is high. At the same time, an opportunity to receive one more crop is demand considerable investments. Besides for seedling cultivation, the areas of a hothouse complex, workers and financial resources are engaged from the main production, and results often do not justify an investment. The practice shows that seedling exit in specialized farms on seedling cultivation makes 90-95%, while the indicator for the enterprises engaged in cultivation of vegetables does not exceed 70%.
Nevertheless, the agricultural organizations specializing on cultivation of vegetable seedling were not widely adopted in the Krasnodar Krai.
Cultivation of vegetable seedling is highly profitable business, first of all at the expense of intensive system of production, opportunity to realize production during the long period, being guided by various segments of the market. However, it demands
considerable capital investments in creation of production and effective system of its organization.
We consider, the organization of production of vegetable seedling on open and close soil is the perspective direction for the plant growing branch in the agriculture of the South of Russia.
Methodological Framework
The business plan of a hothouse complex on cultivation of vegetable seedling on open and close soil in the conditions of model economy of plant growing branch in the Krasnodar Krai was developed for an economic justification of efficiency of the offered direction. The structure of the investment project and criteria for investments efficiency assessment correspond the technique offered by the United Nations on industrial development (UNIDO).
At a pre-investment stage, the offer in the market of vegetable seedling was studied in the region. The results showed that there are no specialized farms on seedling cultivation in the Krasnodar Krai. Large hothouse complexes and specialized vegerable-growing enterprises independently provide the main production with seedling and sell surplus to other farms. Production of these sellers is distinguished by the narrow grocery and high-quality range of seedling (as a rule, identical to the range of the vegetables made at the enterprise). The production is realized on the terms of 100% advance payment that is not favourable for small producers and agricultural organizations, which finance investments in working capital is made by the short-term credits. The objective of seedling cultivation at these enterprises is supply of own production, therefore in case of death of a bigger part of seedling, the seedling from the turn intended for realization can be attracted. There is a great number of country (farmer) farms and individual entrepreneurs in the market of vegetable seedling. They grow up seedling for both own needs, and sale.
Such organizations as 'The garden North-Caucasian center of zone research institute of gardening and wine growing" (Krasnodar), "Realize hothouse combine Belorechensky" (the Belorechensky district), JSC "Ovoshchi of the Krasnodar krai", PAO "Hothouse Agrocombine", JSC "Hothouse Combine 'Progress'" make vegetable seedling lin the Central district Krasnodar Krai. From the presented producers "The garden North-Caucasian center of zone research institute of gardening and wine growing" is engaged in production of vegetable seedling. Other producers grow up vegetables and realize surplus of seedling. "The garden center" is the experimental North-Caucasian base of zone research institute of gardening and wine growing, therefore their production differs in high quality and modern technologies.
Thus a lack of "The garden North-Caucasian center of zone research institute of gardening and wine growing" is the narrow product range. At the moment, the organization realizes seedling of tomato (five sorts) and eggplant (two sorts). The main activity of the Garden center is realization of saplings of long-term plantings, grapes and berries.
Production of seedling is not primary activity for "Hothouse Agrocombine" and "Hothouse combine 'Progress"". The enterprises realize the surplus of seedling, which is grown up for own needs that explains the narrow grocery and quality range (as a rule, identical to the range of the vegetables presented at the enterprise), traditional technologies, average marketing activity.
Production of country (farmer) farms, as a rule, has changeable character. It is difficult to establish the long-term relations with the predicted deliveries with them. Farmers use outdated technologies, violate recommendations and norms, as a result, seedlings have poor quality. Their advantages are the wide product range and low prices, as farmers seek to realize production in the shortest possible time.
The range and sales plan of the organized hothouse complex production were developed taking into account the preferences of the main groups of consumers. The analysis of the vegetable growing subsector in the Krasnodar Krai and the market of fresh vegetables showed that the seedling of cucumber, tomato, cabbage, eggplant, pepper, salad and marrow are in the greatest demand among agricultural producers. In the structure of products, the main share is under seedling of early vegetables and vegetables on open soil (more than 60%), the rest is under seedling of vegetables on close soil (more than 30%). In the general product range, the seedling of tomatoes (40%) and cucumbers (34%) prevails. Other cultures occupy 26% of the planned complex space.
While selecting high-quality structure of seedling, important condition is the rational organization of high-quality structure, lack of regrading, as it is favourable to establish trade relations with agricultural producers on a long-term outloo. The buyer has to be confident in quality of seedling. While selecting sorts, it is necessary to adhere to recommendations about its cultivation in specific climatic conditions of the region and the direction of production - vegetables of open or close soil.
Studying the market of vegetables and system of agricultural producers of the region allowed to assume that optimum size of a hothouse complex is 10000 sq. m. It is offered to apply one of the most progressive technologies - intensive energy saving environmentally friendly technology of cultivation of seedlings, vegetable seedlings, herbs and green cultures by the method of a many-tier narrow-lack hydroponics. The equipment of the greenhouse includes engineering systems of ventilation, power supply, lighting, preparation and giving mineral food and water, control and management.
Requirements of NTP 10-95 "Norms of technological design of greenhouses and hothouse combines for cultivation vegetables and seedling", production schedules of cultivation of seedlings and recommendations of the research organizations, the practical experience of the similar domestic and foreign enterprises were the basis for technological decisions for organization the production.
Results
Proceeding from the accepted cultivation, terms of seedling landing, area of crops and norm of seedling exit from one square meter of the greenhouse, the annual output and product sales were planned. According to calculations, 10 000 sq. m greenhouse would give more than 2,5 million saplings.
Accounting of production costs was made proceeding from standard and planned indicators of need for material resources and planned outputs. In a year joint costs of production will make more than 48 million rubles, thus the sum of costs changes within a year depending on the production program. So average prime cost of seedling of the first (spring and summer) turn makes 15 rub for a sapling, the second (winter) turn - 21 rub.
It is planned to realize seedling to the agricultural organizations, country (farmer) farms and personal (subsidiary) farms specializing on production of vegetables on close and open ground. The marketing strategy of entry into the market is undifferentiated marketing, in conditions of which the firm neglects distinctions of segments and addresses to all market with the same offer and conditions of purchase. The price of goods consists of prime cost of a production unit and norm of a value added, but does not exceed the average market prices of vegetable seedling during the corresponding season.
The expected annual proceeds from sales of seedling according to calculations will make more than 70,0 million rubles. More than 60% of it is seedling of early vegetables and vegetables of open soil, the rest - seedling of vegetables of open soil. The calculation shows that full capacity of the enterprise would give 29 million rubles net profit annually.
The assessment of investments efficiency, according to UNIDO technique, assumes application of the methodical approach recommended in "Methodical recommendations about assessment of investment projects efficiency" (approved by the Ministry of Economics of the Russian Federation, the Ministry of Finance of the Russian Federation, the State committee of the Russian Federation on construction, architectural and housing policy on 21.06.1999 N BK477).
The investment project is carried out step by step that allows to trace a situation at each stage of its realization for making the correct decision. The organization of the project provides the analysis of existing equipment efficiency, development of design and budget documentation and its coordination with allowing structures, acquisition and delivery of the processing and special equipment, installation and adjustment of the acquired equipment, organization of deliveries of raw materials, training of experts, commissioning and exit of the enterprise to design capacity.
The total cost of the project is 75,3 million rubles. It includes purchase and installation of the equipment of greenhouse, boiler room, engineering systems. It is planned to raise own enterprise assets for financing.
The calculation was carried out for the period equal to the average term of operation of a hothouse complex - 10 years. A rate of discount is the indicator of an average cost of equity of producers of subsector, which was 19%.
The following results were received:
Period of payback (PB) - 2 years 3 months
Discounted period of payback (DPB) - 3 years
Net provided value (NPV) - 83,7 million rubles
Profitability index (PI) - 3,8
Internal standard of profitability on the project (IRR), % - 48,8%
The calculations show that the offered project pays off for 2 years and 3 months at the expense of the planned income. For 1 rub enclosed in the project the investor would gain 3,8 rub of net income. The net discounted income for all term of implementation of the project would make more than 80 million rubles, thus the discounted payback period of the project would be 3 years. The internal standard of profitability on the project is 48,8% that allows to characterize the project as steady against change of a discount rate.
However, it is necessary to make the analysis of sensitivity of indicators of its efficiency to changes for the final conclusion about feasibility of the project entrance parameters, put at calculation. One of the most widespread methods of calculation of critical points of the project is definition of a point of profitability percentage of design capacity. It is planned to realize production of several names, the point of profitability pays off on cost indexes. At such approach the point of profitability reflects the size of proceeds from sales of production, at which profitability level is reached. According to the calculations, position of profitability is reached by the enterprise at the revenue level of 19,6 million rub that makes 27% of the planned income level. Thus within a year this indicator changes that is caused by various production program and costs of economy.
The analysis of sensitivity of efficiency indicators of the project to changes of environmental conditions is carried out in the following parameters:
- prices of realization of vegetable seedling;
- volume of realization of vegetable seedling;
- cost of materials and accessories;
- amount of investments into constant assets.
The key indicator of efficiency is the net discounted income from the project for the entire period of its realization.
The calculation showed that the project is most sensitive to changes of two parameters: prices and volumes of realization of vegetable seedling. At decrease of the average price and volume of product sales by 30%, the net discounted income from the project becomes negative, and, therefore, investments into its realization are inexpedient.
The calculation showed that the net discounted income from the project would be negative at an increase in resource prices for 75% that is rather high rate and speaks about low sensitivity of the project to this parameter.
The project is even less sensitive to the amount of investments into constant assets. So, at increase in the sum of investments more than twice NPV has positive value, however, the project becomes financially unrealizable. Negative value of an indicator of the rest of money on accounts of the enterprise testifies it.
High sensitivity of the project to parameters of the prices of realization and sales volume is characteristic for projects in branch of agriculture and demands competent and effective marketing strategy of sales.
Discussion
Problems and prospects of vegetable growing development in the agricultural organizations of the Russian South of found broad reflection in the modern scientific researches. Studying scientific works allows to conclude that prospects of subsector development lie in technological modernization for production of vegetables of open soil and organization of the system of their processing (Nechayev V. I., 2011; Dementiev S. Yu., 2016). For vegetable growing of closed soil the main directions of innovative development are introduction of resource-saving technologies of cultivation, modernization of a hothouse complex, development the system for storage and sale of vegetables (Belova, 2015; Kondratyeva O. V., 2015; Sokolova A. P., 2016). However, organization of specialized complexes for cultivation of seedling of open and close soil and development of subsector to supply producers with qualitative landing material was not widely adopted in scientific practice.
Conclusion and Recommendations
The conducted researches prove the relevance and priority of studying the questions of plant growing infrastructure development in the agricultural organizations of the South of Russia. The offered directions for development of vegetable growing subsector are perspective, and investments into their realization pay off in short terms and are favorable to the investor.
The results of the research can be interesting to scientists and researchers studying aspects of development of vegetable growing subsector and specialists of agricultural organizations as justification of investment and innovative projects.
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