Home  Journals  Financial Analytics: Science and Experience  32(218) - 2014 August

Renewal of capital assets of agricultural enterprises under the WTO conditions

Available online: 19 August 2014

Subject Heading: Investment policy

JEL Classification: 

Pages: 23-32

The main goal of the research is to identify the activation mechanisms that drive the investments in the agricultural organizations. The object of the research is to discover the levels of providing the fixed capital in agricultural organizations and the sources of financing in correlation with the production effectiveness. The article points out that under the conditions when financing from own resources is lacking, when they are required to ensure the expanded reproduction, relatively high cost of the loan resources and the lack of the full volume of their provision, the growth of an investment activity in the agrarian sphere is almost impossible. The paper emphasizes that the various economic levers, which operate in the agrarian sphere, currently work not very effectively that is testified by a significant amount of the unprofitable organizations and organizations with overdue accounts payable. Such situation enhances the importance of investments as factor of development of the agrarian sphere and economic growth of the agricultural organizations. The paper uses the statistical data processing, including the horizontal and the structural analysis and the analytical grouping method. The findings identify that the existing volumes of the budget resources allocated to the agricultural organizations are not sufficient to sustain their ability to compete in the WTO environment. The authors emphasize that the sustainable production growth of the fixed assets of the Russian agricultural enterprises is only possible under the condition, which imply that the share of the budget subsidies in their financing support significantly increases. The authors consider a practical approach in ensuring agricultural organizations with sources of financing taking into account the target level of the output profitability, which is envisaged by the Government program for the development of agriculture and regulation of the markets of agricultural products, raw materials and food stuff for the period of 2013-2020. Thus, in order to achieve the level of output profitability of 10,2%, the authors recommend the optimum size of the budgetary subsidies within the amount of 830 Rubles for one hectare of the farmland, with a total amount of investments to reach 940 Rubles. The use of the results of this research is possible within the framework of the improvement of the mechanism of budget resources distribution in order to enhance the effectiveness level of their absorption by the agricultural organizations, and also when developing the financial policy of the agrarian sector of the Ulyanovsk region economy.

Keywords: fixed assets, reproduction, investment, financing source, budgetary funds, profit, production profitability, agricultural organization, Ulyanovsk region

References:

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