State support of dairy farming in the Vologda region of Russia

Milk and dairy products are traditional in food ration of Russian people. At the same time in many districts of the country the volume level of average per capita milk consumption stays lower than the dietary intake. Due to this fact there is an objective necessity for milk production scale-up. Agrarian production is apriority-oriented, socially important and dynamically developing sector of the Vologda region economics. Products of milk processing are the brand of the region. That is why the government of the Vologda region pays special attention to the branch of dairy farming. The article presents the study results of influence of different forms of state support of milk production in agricultural enterprises of the Vologda region on performance indicators of their business activities. The trends in volume dynamics of state assistance and its results have been found out.


Introduction
The necessity of the state support of agriculture is defined by its sectoral characteristics.Providing subsidies for agricultural enterprises is mainly aimed at the elimination of inequivalent commodity exchange between economic sectors, maintenance of effectualagricultural production in general.
Milk and dairy products traditionally take up one of the leading positions in food ration of Russian citizens.According to the data of Ministry of Agriculture of the Russian Federation, the volume of milk production in agricultural enterprises in 2014 increased in 2,6 % up to 16,3 million tons [4].However, with the growth of milk production dairy products consumption by the population doesn't reach dietary intakes.
The state support has provided for positive dynamics of milk raw materials in Russia for the recent years, but in 2014 deficit of raw milk in Russia remained and was 7,2 million tons [5].Current situation influences negatively on usage of productive capacity of processing enterprises -dairy plants, therefore, on the level of dairy products consumption by the population.Sustainable development of agriculture is the basis of food safety of the country, stabilization of food market in Russia and substantial decrease of agricultural import.
Over the last years,some measures to create the complex system of the state support of agriculture in the regions have been taken in Russia, funding of the sector from the federal and regional budget has increased.Since the Vologda region is one of the most significant regions for milk and dairy products production in Russia, it is necessary to evaluate the measures taken by the state, to make the obtained results clear and analyze the efficiency of the state support ofdairy farming in the Vologda region.

Data and Methods
The Vologda region belongs to the number of regions which are large enough in territory in the European North of Russia.Having 0,6% of agricultural lands of the Russian Federation, the Vologda region produces 0,8% of all the agricultural products of the country [1].
Agriculture refers to priority-oriented economic sectors of the Vologda region.In spite of the fact that the region is located in the area of risk farming, it is rightly considered to be agricultural: annually agricultural production is produced here amounting to more than 20 milliard rubles.The main suppliers of agricultural production on the market of the Vologda region are agricultural organizations.They produce 72% of the total volume of agricultural production of the region.
Dairy farming is the main sector of agriculture of the Vologda region.Profits from sales of animal products take the biggest relatives hare in income of agricultural enterprises -91 % (among them from milk sales -50 %) [1].
Unfortunately, for the recent years negative processes can be seen.During the last 10 years productive livestock population has reduced in 30 % in the Vologda region (table 1).In 2014 cattle population was only 69,8% from the level of year 2005 and cows population -69,7%.The main cause of livestock reduction was the high price of credit resources and insufficient state support in terms of subsidies for compensation of interest rate.In 2009 milk producers were forced to send "for meat" about six and half thousand milk cows in order to pay back their credits [1].
At the same time agricultural enterprises increased the usage rate of livestock population.In 2014 milk yield per cow amounted to 6025 kilograms, that is 13,3% above the average in Russia (drawing 1).
Nowadays in Russia and in the Vologda region the shortage of milk and dairy products consumption can be seen.In the Vologda region in 2014, according to the data of the Federal service of state statistics yearly consumption of dairy products calculated as milk totaled 239 kilos per capita at the physiological rate of 392 kilos [7].
The main reason of such situation is the reduction of volume of milk production because of cows' population reduction, excess of milk and dairy products export over import in two times in the region, that infringes the food safety of the region.Agriculture of the Vologda region develops in conditions of insufficient financial resources.To a large extent it is defined by a low level of direct state support.If in 1990 70% ofinvestment costs were compensated out of the funds of budget of agricultural enterprises then in 2014only 2% [8].
The influence of financial and economic crisis unfavorably implied on the situation with the agricultural sector.The situation on the inner market of dairy products didn't work out in favor of agricultural enterprises because the prime cost of milk production was 75-83 % of sales price [7].
Insufficient attention of the state to the problems of market regulation and support of agriculture led to extensivedisparity of prices, earnings dilution and loss development of agricultural production.According to the data of the Federal service of state statistics for year 2014 prices in the region increased comparing with the previous year: for electricity -in 7,7%, gas -13,8%, diesel fuel -2%, feed-stuff-12,5%.At the same time, prices for agricultural products increased only in 3,8%, for milk -14,3% [3].
Increase in productivity of cows and milk production, reduction of labor input for production couldn't overcome disparity of prices on feed-stuff market, diesel fuel and energetics and etc., share of costs for which made from 56 to 65,8% in expenses for milk production in agricultural enterprises [2].That's why the prime cost of products in enterprises of the Vologda region increases constantly (drawing 2).Taking into account the role of agriculture in social and economic system of the country and particularity of its functioning, it's necessary to admit that the sector is in need of regulation and support from the state more than many other sectors of the national economy that is reasonably caused by the current level of sector development, by its low investment potential, risky nature of running entrepreneurship.

Results and Discussion
For the purposes offinancial support the state compensates a part of operating and investment costs of agricultural enterprises.However, first of all the volume of budgetary support stays low.The fact that only 0,6% of GDP is given for agriculture in Russia, when 1,3% -in the USA and 2,8% -in EU testifies this.Secondly, the main part of the budgetary funds for the recent years has been directed to the compensation of a part of costs to pay credit interest rate; that is not for developing the production but for creating market infrastructure, which is connected with financial institutions [9].Therefore, the measures of economic stabilization and development of agricultural sector in Russia influence its condition slightly.
At the moment the state support of production of agricultural products in Russia is realized in accordance with the State program of agricultural development and regulation of markets of agricultural products, raw materials and provisions for 2013 -2020.The program allows providing subsidies from the federal budget to regions in many directions, one of which is support of dairy farming.
The regional program of the state support has been accepted in the Vologda region.In 2014 additional resources for amount of 500 million rubles were given from the regional budget to support agriculture in order to provide food safety in the region and because of the risk of foreign policy caused by the food embargo.Therefore, in 2013-2014 the volume of the state support for the agricultural sector in the region, -Subsidies for growth of livestock population -Subsidies for reimbursement of expenses on purchase of livestock The reason for reduction of expenses share for the state support of dairy farming was the decrease of subsidies given from the federal budget of the country.Comparing with 2013 significant changes of the structure of dairy farming funding can be seen in the growth of subsidies share from the regional budget from 15,3% in 2013 to 56,3% in 2014 году.That is, the regional budget has to bear the main responsibility in providing the state support for milk production (table 2).
In 2014 thank to implementation of new types of the state support from the regional budgetsubsidies for growth of livestock population and for reimbursement of a part of expenses on purchase of cows by private farm holdingsit was possible to stabilize cow population in the Vologda region.As a result of taken measures total growth of milk production in the Vologda region made 14,4 thousand tons (103,3% to 2013), the average milk yield from one cow -6028 kg (109,1% to 2013 г.), relative economic stabilization and increase of production of agricultural products were achieved [6].
The analysis of the state support efficiency of agricultural enterprises has shown that the increase of volume of budgetary expenses influenced positively on the situation in agriculture of the Vologda region.
In 2014 by using the state subsidies it was possible to overcome the crises of 2012-2013, when the high price of credits and belated state support of enterprises led to reduction of livestock population, decrease in production of milk and other agricultural products.The high value of budgetary efficiency in 2010-2012 tells about "pumpover" of financial resources from agricultural enterprises back to the budgetary system.For the recent years the situation has changed for the better.Also we can mention that the state takes measures to regulate the disparity of prices.In 2014 state subsidies compensated to agricultural enterprises 25 % of expenses for milk production.Taking into account the state support, which had been provided to agricultural enterprises, profitability of production increased (table 3).
According to preliminary evaluation of the Department of agriculture of the Vologda regionin 2015 the volume of production of agricultural products made 29, 0 milliard rubles, it was 2 % more than in the previous year.In spite of the positive tendencies in dairy farming the main tasks in the sector for 2016 -2017 are further increasing the volumes of milk production, providing the population with safe and quality food products of own production, continuing the modernization of production [3].

Conclusion
According to the results of the study a conclusion can be done that current economic conditions of functioning of the dairy farming sector in the Vologda region, the volume of its state support do not provide the necessary level of the sector development.The solution of the problem of stabilization and development of the dairy farming sector has a complex nature and depends on the actions of government authorities of federal and regional levels in the sphere of regulation of milk production market.

Drawing 1 :
Milk cow productivity in Russia in the Vologda region for the period 2005 -2014 Source: Official Internet portal of Vologdastat.«Statistical Yearbook of the Vologda region in figures 2014».Retrieved from: http://vologdastat.ru/bgd/cifrfakt/Isswww.exe/Stg/2014/i720104r.htm resources form the federal budget, made 2,6 milliard rubles annually (table2 by the authors according to the Official website of the Department of agriculture and food resources of the Vologda region.Annual reports on the implementation of the State program «Development of agroindustrial complex and consumer market of the Vologda region for 2013-2020» for 2013 and 2014.Retrieved from: http://www.vologdaagro.ru/images/stories/Годовой_отчет_по_ГП.pdf.

Table 3 : The analysis of the state support efficiency of agricultural enterprises of the Vologda region
Source: Calculated by authors based on official Internet-portal of Vologdastat.«Statistical Yearbook of the Vologda region in figures 2014».Retrieved from: http://vologdastat.ru/bgd/cifrfakt/Isswww.exe/Stg/2014/i720104r.htm