Dairy Cattle of the Smolensk Region: Transition from Stagnation to Investment Attractiveness of the Industry

International Journal of Advanced Biotechnology and Research (IJABR) ISSN 0976-2612, Online ISSN 2278–599X, Vol-10, Issue-2, 2019, pp299-311 http://www.bipublication.com Research Article Dairy cattle of the Smolensk region: Transition from stagnation to investment attractiveness of the industry Alexey V. Kuchumov1 and Elena S. Vorobeva2* 1Candidate of Economic Sciences, Associate Professor, Rector 2Candidate of Economic Sciences, Associate Professor, Head of the Department of Economics and Accounting 1,2 Federal State Budgetary Educational Institution of Higher Education "Smolensk State Agricultural Academy", BolshayaSovetskaya, 10/2, Smolensk, Russian Federation, 214000 *Corresponding Author: [email protected] [Received: 11/02/2019; Accepted: 27/04/2019; Published: 01/05/2019] ABSTRACT. Today, for most of the Smolensk region farms, dairy cattle breeding remains a priority industry, generating main incomes. More than two hundred agricultural organizations and farms are engaged in this direction, which is 60% of all existing agricultural organizations. Currently, dairy industry of the Smolensk region, as well as of the country in general, has found itself in difficult conditions, there is stagnation on the Russian milk market. Against this background, the main system problem of the industry, associated with low investment attractiveness, becomes acute. The aim of the study is tofind ways andopportunities that would help to break the trend of falling production volumes and fill out retiring volumes of dairy raw materials and finished dairy products for 8-10 years by increasing the productivity of “strong” agricultural organizations. The statistical data of a unified database of federal statistical information was usedfor the study. The survey of respondents (producers and processors of milk) was carried out with the help of the National Union of Milk Producers, basing on their data, the raw materials development forecast was calculated. On the basis of a comprehensive study of the dairy industry, we developed the basic ideas of the new dairy strategy of the region, which is closely tied to the general investment attractiveness of the industry, as well as to existing government support measures. The introduction of the new development model of the region as a set of integrated development of the dairy industry basing on the attracting investment and state assistance will allow the region to take a new level of economic development, will give the necessary impulse to the development and financial well-being of the village. Key words: food security, investment attractiveness, agricultural products, milk, dairy industry, dairy strategy. INTRODUCTION. Smolensk region is located in the West of the Moscow is 390 km. The length from North to European part of Russia, on the border with South is 255 km, from West to East is 285 km. Belorussia.The territory includes 49786 sqm km. The population density is 19 peopleper 1sqm The distance from the administrative center to km,the Smolensk region is inhabited by 950 Dairy cattle of the Smolensk region thousand people. The largest settlements of the hundred agricultural organizations and farms are Smolensk region (more than 5 thousand engaged in this direction, which is 60% of all inhabitants) are Smolensk, Vyazma, Roslavl, existing agricultural organizations. Yartsevo, Safonovo, Desnogorsk, Gagarin, At the beginning of the current year, 234 Verkhnednepropetrovsk, Dorogobuzh, Yelnya, agricultural commodity producers were engaged Rudnya, Pochinok, Demidov, Sychevka, Velizh. in dairy cattle breeding in the Smolensk region, It borders with Moscow, Kaluga, Bryansk, including 124 agricultural organizations, 110 Pskov and Tver regions of Russia, as well as peasant farms andself-employed entrepreneurs with Mogilyov and Vitebsk regions of [1]. Belorussia. On January 1, 2017, agricultural organizations The climate is temperate continental. The had 27.6 thousand cows, which is below the summer is warm (the average temperature in level of January 1, 2018 by 900 animals or July is 17-18 degrees Celsius), the winter is 0.3%. In peasantfarms and self-employed moderately cold (the average temperature in entrepreneurs, there were 5.5 thousand dairy January is minus 8.5). The annual rainfall ranges cows, which is higher than in 2017 by 0.2 from 530 to 650 mm [6]. thousand animals or 3.4% [11]. Competitive advantages of the Smolensk region This year, after 6 months, the reduction in the are: number of dairy cows occurred in 47 farms, - the most important transport and including 34 agricultural organizations (28% of communication hub; the total) and 13 peasantfarms and self- - border position; employed entrepreneurs (11% of the total). - the proximity of the largest metropolis of the Also, as of January 1, 2018, in 51 farms, the country; number of milk cows decreased compared to the - availability of qualified personnel; beginning of 2017 (by 1705 animals). - a significant network of vocational education The main reasons for the reduction: institutions; - fight against cattle leukemia (6 farms); - developed transport communications and - purchase of land by a large investor (13 farms); modern communication facilities; - lack of working capital (30 farms); - high energy supply; - pre-bankruptcy state (2 farms). - the presence of a legislative framework that The retired livestock in the liquidated farms was ensures the reliability of investments; actually compensated by increasing the dairy - readiness of regional authorities to create herd by 1,545 animals in the farms that received favorable conditions for investors [8]. or are applying for thedevelopmentgrant. In Currently, dairy industry of the Smolensk addition, the implementation of measures for the region, as well as of the country in general, has grant support of family and novice farmers found itself in difficult conditions, there is contributed to the increase in the number of stagnation on the Russian milk market. Against cows in this category of farms. this background, the main system problem of the By the end of 2017, the Smolensk region is on industry, associated with low investment the 13th place among the 18 regions of the attractiveness, becomes acute.To increase milk Central Federal District in gross milk production production, raise the level of quality, as well as in agricultural enterprises and only 16th in the the competitiveness of dairy products of local productivity of dairy herds with an indicator of producers, provide residents with dairy products 4,600 kg of milk, despite the fact that over the produced in the region, and solve food safety past five years the region has grown milk yield issues are the main task that we are facing at this by more than 1 thousand kg of milk [10]. stage. The share of agricultural organizations Today, for most of the Smolensk region farms, accounted for 99% of the gross milk yield in the dairy cattle breeding remains a priority industry, region (Table 1). generating main incomes. More than two Alexey V. Kuchumov, et al. 300 Dairy cattle of the Smolensk region Table 1 - Gross milk production in agricultural organizations of the Smolensk region in 2017, tons Number of Cow population Milk yield per one Grossmilkyieldin total, Group agricultural (at the end of the year), dairy cow, kg thousand tons organizations animals 1 More than 7000 5 21,3 2 628 2 5000-7000 9 32,1 5 900 3 3000-5000 55 53,9 14 169 4 not exceeding 3000 55 12,6 4 745 TOTAL: 46011 124 119,92 27 442 Source: calculated according to the Federal State Statistics Service, statistical reports of the Smolensk Region Agriculture and Food Department, 2018 Currently, there is a negative trend in the reduction of gross milk production in farms of all categories. So, for the first half of 2018, 94.5 thousand tons of milk were produced, which is 3.5 thousand tons or 3.6% less compared to the level of 2017. Let’s unite dairy farms in 4 groups, the main factor influencing the gradation is the yield per cow (Figure 1). Figure 1. Gradation of dairy farms by productivity The highest milk yield per cow was recorded in AO (OOO) ZolotayaNivaof the Safonovsky district (1st group) – 8,496 kilograms of milk (89% higher than the average regional index).The smallest yield was in OOO Plemennoye of the Roslavl district (4th group) – 466 kilograms of milk (18.2 times lower than the average regional index). The main decline in gross milk production in the current year is observed in individual households. During this period the yield was 26.9 thousand tons of milk, which is 2.4 thousand tons less than last year. The decline in gross milk yield over this period in peasant farms was 0.1 thousand tons or 1%. In January-June, 2018, agricultural organizations produced 57.2 thousand tons of milk, which is 0.8 thousand tons less than in the same period last year. 1averageregionalindex 2 makes up 99% of the gross milk yield of all agricultural organizations of the region (total 121.1 thousand tons of milk) Alexey V. Kuchumov, et al. 301 Dairy cattle of the Smolensk region The reduction in gross milk production in farms of all categories is due to the reduction of dairy herds. In the Smolensk region on June 1, 2018, the number of livestock of dairy cows in all categories of farms was 43.1 thousand animals, which is by 1.7 thousand animals or 4% lower than the previous index. MATERIALS AND METHODS. The study of the dairy herd milk production is the main indicator of the dairy industryeffectivenessas a whole. Support for the dairy industry is one of the priorities of the Smolensk region administration. However, we need to determine: how to support the industry? To help everyone in the same way, including those who receive 2.5-3 thousand kilograms of milk from a cow, and where theinvested ruble in the economy not only disappears, but also causes losses? The main idea of development is that in the region, it is necessary to implement a support program linked to the production efficiency.

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