Export state support system of agricultural products in the Russian Federation

Introduction

Currently, agricultural and food exports remain an essential component of world trade and global economy. A. A. Vologdina notes that several independent multilateral agreements between participants in world trade have been identified as part of the law of the World Trade Organization for this direction of international commodity distribution (Vologdina, 2018). According to A. S. Bilman, S. Turkelu, in the modern world there is a direct relationship between the effectiveness of foreign trade, the country's exports and the results of its economic growth (Bilman, Turkeli, 2013).

The goal of increasing export volumes not at the expense of oil, gas and other raw materials has always invisibly faced the national economic complex of Russia as a whole and its agro-industrial complex in particular. O. I. Katlishin emphasizes that diversification and export growth have been seriously increasing (at least in frequency of references in media) during periods of crises of foreign economic or global nature in general, when everyone understands the need for reforms in the structure of economy (Katlishin, 2016 ) These issues were raised after the financial and economic crisis of 2008−2009, as well as after the well-known domestic and foreign policy events of 2014. And if the global financial crisis affects the economy of the Russian Federation in 2008−2009 metaphorically consistent with the “fell-out” formula, then after 2014 the crisis in the domestic economy has a sluggish and permanent character. As a result, the issues of import substitution of the most important types of agricultural products were first approved in a natural manner, and after the relative achievement of food independence (security), priorities were shifted to a more difficult task − to achieve a tangible increase in exports of agribusiness sectors.

Until recently, the State Program for the Development of Agriculture had a section designed to ensure the export of agricultural products, which received a separate status of “priority project” (State Program for Development of Agriculture and Regulation of Agricultural Products, Raw Materials and Food Markets for 2013−2020, 2020). However, the existing measures were clearly not enough, and the so-called “new May presidential decrees” were issued in the latest presidential elections in which, among other things, a breakthrough goal was formulated to increase the volume of agricultural and food exports to $ 45 billion already in 2024 year.

Now, the domestic agro-industrial complex faces the most serious task of achieving a twofold increase in export sales of its manufactured goods, which is impossible without an adequate system of government support measures (Passport of the federal project “Export of agricultural products”, 2020). Due to this aggravation of accelerating the increase in export of food and agricultural products, the organization of work on state regulation had the following evolution: the priority project of Ministry of Agriculture of the Russian Federation was refined to the level of a federal project. This project was called the national project − “International Cooperation and Export” and was aimed to promote the export of agricultural and food products.

Materials and methods

If at the practical level the relevance of the topic of this article is understandable and due to the highest manifestation of political will, then at the scientific and methodological level of understanding of this issue, in our opinion, two of its aspects are relevant: firstly, the legitimacy and the need to support exports in general (the authors propose to disclose this aspect in discussion section of the article), and secondly, the effectiveness of such support and possibility of its improvement.

The scientific hypothesis of this article was the authors' assumption about the difficulty of implementing plans for a large-scale increase in exports of food and agricultural raw materials in connection with insufficiently clear target link between the areas of state regulation, financial support and required results.

Based on the foregoing justification of the relevance of the chosen research topic, we set the following goal: to consider the current system of state regulation of agricultural and food exports and to predict the possibility of implementing the approved plans for the development of exports. Achieving this goal several interrelated tasks had been solved:

1) to consider planned target indicators for the volume and structure of agricultural exports of the Russian Federation, as well as the main tools for its promotion;

2) to analyze the retrospective and planned dynamics of the volumes of financial resources that provide incentives for agricultural exports in the Russian Federation;

3) to evaluate (predict) the real possibilities of achieving the target indicators for the export of agricultural products, as well as processing and food industries in optimistic and realistic ways (taking into account the author’s adjustment of potential effectiveness of state regulation measures and funding volumes in relation to the development of agricultural exports).

To solve the first task, an analysis of the planned indicative dynamics of the approved state export development indicators is carried out. At the same time, exports are considered in dynamics until the end of 2024, according to the results it is required to fulfill the order of the President of the Russian Federation to bring the volume of agri-food exports to the level of $ 45 billion. According to the principle from general to private (induction), the commodity structure of planned exports is also considered. A simple analysis of the data of the state program for the development of export agricultural products can already show the difficulty in achieving its planned indicators, find flaws in its formation and, thereby, bring us closer to confirming or refuting our hypothesis.

To solve the second task of this article, an analysis of the financial support for achieving the planned export performance indicators from the federal budget is made. For this, an analysis of the dynamics of financing over three years will be carried out. And since Russian budget is adopted for the next two years, the change in budget allocations for the period from 2018 to 2022 will be analyzed. In addition the total amounts allocated in this direction, composition and structure will be analyzed. Structural analysis will assess the potential effectiveness of spending budget funds and their target logical linkage with the need to achieve target indicators.

The solution of the second task will allow us to proceed the third task, that is, to make a forecast of approved planned indicators, taking into account the allocated funding for them and their planned effectiveness. The author’s version of the forecast of achieving the plans set by the head of state for exporting agricultural products is based on methodological assumptions prescribed by executive authorities in the Passport of the federal project “Export of agricultural products” (one ruble of state support should provide at least four rubles of growth in the value of exports of agricultural sectors), but taking into account the author's adjustment of the level of declared support for this issue definition (preliminary analysis of departmental budget of the Ministry of Agriculture of the Russian Federation has shown that, for example, items such as preferential loans and reclamation of previously were not on the list of state “agribusiness exports,” and can’t bring the desired results) (Passport of the federal project “Export of agricultural products”, 2020).

The methodological basis for solving the stated problems is traditionally the methods of analysis and synthesis, deduction and induction, dialectical materialistic, comparative, economic and statistical, as well as others.

The information base of the study was the open statistics of Ministry of Agriculture and legal acts on the topic of the study.

Results

To solve the first task posed in this article, namely, to analyze the planned dynamics of reporting indicators, we considered planned target indicators for agricultural exports to the Russian Federation. From the point of view of management, including the state, these plans are unconditionally subject to implementation (“orders are not discussed”), however, from the point of view of agricultural economics, the objectivity and realism of export plans is subject to critical analysis, because it is impossible to predict their potential feasibility without the analysis of planned values. The passport of special federal project provides the implementation of “New May decrees of the President of the Russian Federation” in context of non-resource exports development, namely, in terms of growth in exports of agricultural products. In this document, conceptually and even partially in a programmatic form, plans (target indicators) are established for the project implementation years up to 2024 inclusive, including priority groups of agricultural products and foodstuffs with significant export potential. Planned indicators of agricultural products are recorded in Table 1 (Passport of the federal project "Export of agricultural products", 2020).

Table 1. Export plans of agricultural products, billion dollars.

As can be seen from the Table, in general, it is planned to almost double the flow of currency into the country for food exported from it. It should be borne in mind that $ 23 billion accepted for the base is already historically the maximum value. The same can be said about grain exports, where Russia in recent years has become a world leader, approaching its potential capacity for this product group. Domestic producers of dairy products haven’t met domestic needs yet, and a high export potential for meat is possible only in poultry farming and, to a lesser extent, in pig farming. That is, it will be very difficult to solve the task set by the President.
Unfortunately, the above table shows a certain bureaucratic approach, when during the first four years the growth rate of forecast exports is minimal and the main results are planned for the last three years of the federal project. Nevertheless, the announced plans are grandiose in nature and need serious resources for their implementation (to comply with the logic of research material presentation, the directions of state support designed to ensure the achievement of plans for the export of agriculture are shown in Table 3).

Accordingly, for implementation of plans, there has been a significant change in the volumes and directions of budget financing allocated as financial support for achieving the target indicators (which corresponds to the solution of task 2 of this article). This problem was solved by a joint analysis of the level of budget allocations allocated in a targeted way for export promotion in accordance with the Federal Budget Laws for 2018−2020, for 2019−2021 and for 2020−2022. For the analysis, reliable objective data of the Federal laws on the budgets of the Russian Federation for the past three years were used. At the same time, planned allocations from the federal budget were disbursed by 89%; there are no data on the actual budget execution for 2019. Based on a comparative analysis, it can be seen that, in connection with the political will expressed at the highest level of government control over the need for export growth, over the past three budget years there has been a sharp increase in budget allocations to support this area of agricultural development (Table 2). Transformation of planned budgetary financing of agricultural exports for the period 2018–2022 is shown in Table 2.

Table 2. Volume planned budget financing transformation of export agricultural products over three years, thousand rubles.

The thing is that the Federal Law on the State Budget for 2018 is supposed to provide for financing of this area only in the status of a priority project. At the same time, directions were planned such as the creation of a specialized analytical center − 86.5 million rubles, its financing during the budget period − 92.2 million rubles, and the organization of the Russian Export Center − 183.7 million was financed. rub. (Federal law "On the federal budget for 2018 and for the planning period of 2019 and 2020", 05.12.2017 N 362-FL, 2020). As a result of raising the status of the project on export promotion to the level of federal project in 2019, the volume of financing for export development under the departmental State program for the development of the agro-industrial complex has increased many times (by almost two orders of magnitude), amounting to almost 21.7 billion rubles. (Federal Law "On the Federal Budget for 2019 and for the Planning Period 2020 and 2021", 11.29.2018 N 459-FL, 2020). In 2020, state export support for farmers and food production has increased again with the possibility of further growth (Federal Law dated 02.12.2019 N 380-FL "On the federal budget for 2020 and for the planning period 2021 and 2022", 2020). That is, the law on the budget for 2019 provided a nearly sixty-fold increase in financing for export development issues, and in 2020, as a result of another increase in federal support, a 1.5-fold increase in appropriations was provided. This doesn’t simply mean a declaration by the authorities on the need to increase not oil and gas exports, but a real desire to stimulate certain progress in diversifying the economy and export of the Russian Federation.

As part of the solution to the third task of the article, we have compiled two options for forecasting the achievement of target program indicators for food export (this is the author’s subjective vision of the issue). The author's optimistic forecast model of the possibilities to achieve indicators of the project passport for the export of agricultural products, based on the above methodology, generally confirms the vision of the executive bodies of state power (Table 3). Estimated export indicators, taking into account the amount of financial support envisaged by the budget, are presented in Table 3.

Table 3. Assessment of the feasibility of meeting export indicators, taking into account the amount of financial support envisaged by the budget, million rubles.

As simple simulation calculations show, the allocation of such significant financial resources with their planned effectiveness can undoubtedly lead to the achievement of the final goal -−$ 45 billion of the total export revenue of agricultural enterprises in 2024. Although the predicted results obtained by the authors are somewhat different from the program parameters, they generally confirm the very possibility of their implementation. Such unprecedented financing, while ensuring planned efficiency, when a unit of budgeted funds brings in four units of export growth (five since 2022, six since 2023) will certainly ensure the achievement of the final planned indicator for agricultural exports and food products.

Nevertheless, such a flood of the export problem with budget money may not lead to the desired result for many reasons, including the structure of allocated state subsidization of exports. For example, in 2018, the allocated federal budget funds were relatively small, but they were directly related to exports, while the large-scale increase in the budget for this article, for example, in 2020, cannot always be directly linked to targeted support for exports. The state program aimed at financing the export of agricultural products by the federal budget for the period 2020–2022 is shown in Table 4.

Table 4. Directions for financing export growth activities agribusiness products in the federal budget for 2020−2022, thousand rubles.

As can be seen from the analysis of budget items up to 80% or more of all budget funds and the development of exports of agricultural sectors are subsidies for partial reimbursement of interest rates on loans, which in previous years belonged to other sections of financing the agricultural sector. Also, a significant part of the funds is allocated for land reclamation, which also has a separate section and funding under the State Program for the Development of Agriculture. The authors are deeply convinced that these funds will not be able to ensure the normative efficiency of export growth in the coefficient of 4 or more. Subsidizing interest rates and land reclamation measures can only contribute to the growth of gross output of agriculture and food industry, but not guarantee its export destination (and this contradicts the principles of WTO and may run counter to the interests of consumers in domestic market). Moreover, the most effective measures to stimulate exports occupy no more than 20% of the total budget for the export of agricultural products. For example, measures included in green basket to promote domestic products abroad, its advertising, certification in local markets, participation in international exhibitions, etc. quite efficiently, but occupies only 2.2% of the total amount of funds allocated for the federal project under consideration. Measures for phytosanitary veterinary support of exports are also effective, as well as subsidizing the logistics costs of transporting agricultural products across the vast territory of our country.

Given the difficulty of allocating the volumes of products sent to domestic market and for export, depending on the receipt by the agricultural business entities of working and investment loans for the development of production, as well as support for land reclamation, a second scenario is proposed for achieving the target indicators of the federal project under consideration. The second scenario is modeled on the same principle as the first, but it directly takes into account only the items of the budget list that are most relevant to export, indirect financing items are taken into account by a factor that reduces (twice) (Table 5). Evaluation of the potential achievement of control targets for export, taking into account the author’s adjustment of the amount of financial support is shown in Table 5.

Table 5. Evaluation of the potential achievement of control targets for export, taking into account the author’s adjustment of the amount of financial support, million rubles.

Given the adjustment in the effectiveness of allocations for providing agribusiness enterprises with preferential loans and subsidies for land reclamation, the effect of supporting agricultural exports is somewhat reduced, which should also lead to a decrease in its annual growth relative to the earlier scenario. Therefore, in a somewhat pessimistic scenario, the development of food exports will continue actively, but not so fast, but more gradually, reaching $ 40 billion by the end of 2024, which, of course, is also a good achievement, but in fact, this project failure.

In addition, opportunities to fulfill export plans face many global and domestic risks:

1) a decrease in the growth rate of exports in 2019 to 2% (due to the low base at the beginning of the start of the project, the growth of agricultural exports exceeded 20% per year);

2) the global economy is affected by the coronovirus pandemic, instability, forecasts for the growth of the global economy are very pessimistic, the factors of the trade war between the USA and China have not exhausted themselves, and new sanctions against the Russian Federation are also possible;

3) the project has not taken into account the possible impact of currency risks.

Discussion

When discussing the need to support the export of agricultural products, we rely primarily on the data of A. Vologdin, which says that direct export subsidies belong to the so-called “red basket”, that is, are prohibited by the WTO rules (Vologdina, 2018).

However, the data of other researchers, such as M. M. Galeev, A. S. Baleevskikh, O. I. Katlishin, E. R. Urazaev indicate the use by other countries, in particular the USA, of export subsidies, in any case at the time of the RF’s active entry into the WTO (Galeev, Baleevskikh, Katlishin, Urazaev, 2014). M. M. Galeev claims that export subsidies were unacceptable in relation to the Russian Federation itself, since at the time of filing the application and conducting initial negotiations, the applicant did not apply measures to support agricultural exports (Ibid.).

M. A. Yermoshina, analyzing the modern agri-food and customs policy of Russia, emphasizes the need for state support for the development of agricultural exports, welcomes the efforts of the authorities in this direction and complains about the existing raw materials character of these export items (Yarmoshina, 2019).

Ukrainian scientists also consider it necessary to provide state support for agricultural exports, for example, Professor V. Gubenko requires an integrated approach to regulating this issue for the agricultural sector of his country (Gubenko, 2014), and T. Stukach strongly recommends providing agricultural and financial support to compensate for high logistics costs when exporting their products abroad (Stukach, 2017).

Professor E. V. Serova also supports the version of the need for state support for the export of agricultural products, but within the framework of the current regulatory field of international trade (Serova, 2008). The authors of this publication just believe that the measures taken to promote food exports comply with the requirements of the WTO, relate to unrelated support or the green box measures used by other participants in international trade. However, relying on sanctions announced against the Russian Federation, as well as unfair practices used by other countries, we consider it possible today to depart from these rules, relying on bilateral agreements with partners. At the same time, we must not forget that the allocated funds from the federal budget of the Russian Federation should support the national economy than than become a means of social support for the population of partner countries.

Conclusions

As a result of the deliberate efforts of the state, significant successes have been achieved in recent years in the development of agricultural and food exports of the Russian Federation. There is an increase in agricultural food exports, which was ensured both by successes in the agricultural sector (by harvests and export of grain and products of its processing abroad), and by the creation of a state system to stimulate the promotion of Russian exports. As a result, in 2019, the growth in exports of agri-food group relative to the pre-crisis 2013 increased by more than one and a half times, respectively, the share of food in the country's total export structure almost doubled from 3% to 5.9%.

In our opinion, the hypothesis set at the beginning of the study about the difficulty of implementing state plans for an unprecedented increase in the volume of exports of food and agricultural raw materials in connection with the scale of the task is confirmed.

The study revealed a number of shortcomings in the existing system of state regulation and export promotion, leading to relevant proposals in the system of its improvement. For example, the approach to planning the overall results for export volumes, when the main growth shifts closer to the end of the terms of the federal project implementation, is doubtful.

It will be very difficult to achieve indicators for export growth by crops, given the fact that in recent years maximum results have been achieved in terms of their gross yield and further production growth will be already difficult due to the economic law of "diminishing returns." Regarding milk export, it is also necessary to take into account that these are only a few small volumes of transactions, since the domestic needs of the Russian market are still not satisfied with these products. As for fish export, its producers practically do not receive any significant state support, although they provide a significant share in the structure of food exports. The article “other agricultural exports” is clearly regulatory, leveling for the main indicator, since it does not understandably increase or decrease over the years of the project.

The volumes of budget support revealed a clear bias towards supporting agribusiness entities due to their soft loans, which cannot lead to an unambiguous predictable result in achieving plans for export volumes. It seems that the solution to the problem of export growth is proposed in the form of "pouring money" in this direction. Such support is also questionable in conjunction with the methodology for planning project results, suggesting that once allocated budgetary funds will ensure that the achieved result is consolidated in export growth for subsequent years, which does not take into account the risks of the international market situation.

In our opinion, state support measures should be more specific, targeted programmatically linked to the desired results of the federal project. Moreover, absolute and relative priority in obtaining support should be given to products of higher processing, high margin products with a high level of added value. Also, in our opinion, in the current legislation there is no systematic support for domestic agricultural and food engineering, breeding, seed production and other areas that supply resources for the agricultural sector. As a result, a situation may arise when the increase in agricultural exports will be almost completely offset by the increase in imports that ensure it.

Summarizing all of the above, we believe that it will be very difficult and unlikely to be 100% fulfilling the plan to increase agricultural exports, however, support for the development of agricultural exports is extremely necessary for the modern economy of the Russian Federation and with such a serious level of financial support, growth will inevitably be achieved its indicators. At the same time, the effectiveness of the existing measures certainly requires further scientific study and analysis in practice, testing the durability of time and appropriate adjustments.