Organizational and Economic Transformations towards the Greening of Agro-industrial Production

Abstract

The increase in the production of agricultural products and food supplies in excess of regulatory needs and the provision of food safety in Russia led to the expansion of the export of agricultural products and the change in the course of the development of the agro-industrial complex from import substitution to export-oriented production. However, the entry to world food markets requires high quality of products from manufacturers and its certification in accordance with world standards. The article presents the organizational and economic transformations towards the greening of agro-industrial production, namely, the use of the resource potential, the involvement of Russian manufacturers in the production of environmentally friendly products and the development of organic agriculture; the mechanisms for solving the set problems are substantiated.

Full text

European Research Studies Journal
Volume XXI, Special Issue 3, 2018 pp. 28-38
Organizational and Economic Transformations towards the
Greening of Agro-industrial Production
O.Yu. Voronkova
1
, D.F. Islamutdinovа
2
, O.G. Gordeyeva
3
, I.I. Frolova
4
,
I.V. Fedulova
5
, A.E. Zhminko
6
Abstract:
The increase in the production of agricultural products and food supplies in excess of
regulatory needs and the provision of food safety in Russia led to the expansion of the export
of agricultural products and the change in the course of the development of the agro-
industrial complex from import substitution to export-oriented production.
However, the entry to world food markets requires high quality of products from
manufacturers and its certification in accordance with world standards.
The article presents the organizational and economic transformations towards the greening
of agro-industrial production, namely, the use of the resource potential, the involvement of
Russian manufacturers in the production of environmentally friendly products and the
development of organic agriculture; the mechanisms for solving the set problems are
substantiated.
Keywords: Economics, management, food safety, efficiency, agro-industrial complex,
ecology, food export.
JEL Classification: O13, Q1, Q18, R11, R58.
1
Altai state University, Barnaul, Russia, olka2004@yandex.ru
2
Yugra State University, Khanty-Mansiysk, Russia, dina-vadima@yandex.ru
3
Economic Cheboksary Cooperative Institute of Russian Cooperative University,
Cheboksary, Russia, gog3@yandex.ru
4
Kazan Innovative University named after V.G. Timiryasov (IEML), Kazan, Russia,
fii@mail.ru
5
Altai State Agricultural University, Barnaul, Russia, fedulova_innavl@mail.ru
6
Kuban State Agrarian University named after I.T. Trubilin, Krasnodar, Russia,
nadezhda8871s@gmail.com

O.Yu. Voronkova, D.F. Islamutdinovа, O.G. Gordeyeva, I.I. Frolova, I.V. Fedulova, A.E. Zhminko
29
1. Introduction
The food market in modern conditions shows a clear priority towards the
development of the sector of organic products. The development of the organic
market is due to many reasons. It is the uncertainty of possible consequences and
distrust of genetically modified products; the perceived danger of products of mass
production for human health; the comprehensive information campaign aimed at
promoting ecologically friendly products, public preferences for a healthy lifestyle,
including nutrition with organic products and others (Avarsky et al., 2014; Sycheva
et al., 2015; Voronkova et al., 2018a; Poltarykhin et al., 2018; Yemelyanov, et al.,
2018; Akhmetshin et al., 2018c).
Organic production has been practiced in more than 160 countries of the world and
on more than 37 million hectares of agricultural land. In Russia, 150 thousand
hectares of agricultural land have been certified for organic production (Sycheva et
al., 2015; Voronkova et al., 2018b). The resources of the regions of agro-industrial
specialization allow expanding the production of organic products. At the same time,
there are unresolved problems; the development of organizational and economic
mechanisms for solving them is required.
2. Methods
The study is based on the works by domestic and foreign scientists on the economic
regulation of processes of the greening of agro-industrial production, problems of
organizational and economic transformations in the regional sector of the AIC. The
methodological basis is the systematic approach, which allowed ensuring the
integrity and purposefulness of the study. Analytical, economic and statistical, as
well as monographic research methods, were applied in this work.
The study of the experience of agricultural production shows that the development
of agriculture in the countries of the world community is more focused on organic
production of environmentally friendly products that are safe for human health,
which ensures increased quality and longevity of the population. Scientists and
practitioners work on the issues of organic agriculture. Discussions continue, starting
with the terminology used in the research and practice of organic agriculture, the
resource potential and technologies of ecological farming (Altukhov and Kundius,
2009; Poznyak and Romanovsky, 2009).
3. Results
In general, organic agriculture includes social responsibility, ensures environmental
safety and economic efficiency. It is a biological and dynamic method of
management, the main idea of which is to execute agricultural production in
accordance with the laws of nature. Due to the understanding of the environmental
conditions prevailing in the modern world, over the past two decades, there has been

Organizational and Economic Transformations towards the Greening of Agro-industrial
Production
30
an increasing interest in environmental issues of farming, contributing to the natural
restoration of soil fertility and maintaining an equilibrium natural ecosystem. The
number of farms in the USA, China, India, Japan, and the European Union countries,
executing agricultural production based on environmental principles, is increasing.
This technology of agricultural production is a serious alternative to the established
traditional (industrial) farming (Krilatih, 2008).
Today, the degree of efficiency of agricultural production largely depends on the
level of its balance, as well as the applied organizational and economic methods of
farming. The public consciousness has reached a certain level of its development,
when the measure of agricultural production is not only the growth in the volume of
manufactured products but also the degree of preservation of natural resources,
which is determined by constantly increasing technogenic pressures on
environmental objects – soil cover, bioorganisms, atmosphere, and water resources,
which leads to an imbalance of the fragile natural balance (Dautov et al., 2018;
Zhundibayeva et al., 2013).
The resulting dilemma of the further development of agricultural production and the
preservation of the natural environment as the basis of the vital activity of future
generations has determined the search for alternatives for the development of the
agricultural sector. Thus, for about three decades, leading foreign agricultural
scientists and practitioners in the sphere of solving territorial environmental issues
and improving food quality, have gradually introduced organic methods of
agricultural production, turning this trend into a strategically important and
significant sector of the economy (Lysenko, 2008; Miloserdov, 2012).
Organic agricultural production dynamically develops in the USA, Canada,
European Union countries, Australia, China, and Japan. According to the report of
the International Federation of the Organic Agriculture Movements (IFOAM),
agricultural manufacturers in more than 130 countries around the world, in parallel
with the industrial system of agricultural production, are introducing methods of
organic production of agricultural products. Asian countries occupy the third
position in the ranking of countries, engaged in organic agricultural production in
terms of the area of land, which is allocated for organically oriented methods of
management. The main consumer of eco-products today is the European Union,
where Germany accounts for the main sales volume (Plotnikov et al., 2018a; 2018b).
The physiological full-value and ecological safety of organic products is the most
important criterion for consumers, who are willing to pay a higher price for it
(Zhuchenko, 2012; Smoluk-Sikorska and Luczka-Bakula, 2013).
Based on the conducted analysis, it becomes obvious that the current situation in the
agricultural sector does not imply quick and large-scale rehabilitation of the AIC. As
a result, it is required at the state level to define clear strategic and tactical goals
(Korableva et al., 2017) for the systematic development of environmentally oriented
agriculture, substantiate specific ways to achieve these targets, clearly define

O.Yu. Voronkova, D.F. Islamutdinovа, O.G. Gordeyeva, I.I. Frolova, I.V. Fedulova, A.E. Zhminko
31
government support measures and designate the sequence of stages for reforming the
land relations system towards the organic development.
The main condition for the effective functioning of the proposed system is the
development of methods of transition to environmentally oriented agricultural
production, both in large agricultural organizations and in small organizational and
legal forms of management. It is advisable to conduct the formation of the organic
sector of land use in several successive interrelated stages that will ensure the
effective functioning of organic agricultural production in the future (Nedelkin et al.,
2016; Abramov, 2016; Akhmetshin et al., 2017a). The formation of an organic
farming system does not mean abandoning industrial agricultural production. In the
authors' opinion, both organic and industrial farming systems can function
effectively in parallel with each other, gradually transforming into an agricultural
technology that can meet the current and assumed needs of the population for high-
quality and environmentally safe food products.
The transition to environmentally oriented agricultural production should meet the
goals and development strategy of each agricultural manufacturer. Given the
incompatibility in size and diversity of the organizational and legal forms of
agricultural enterprises, it is proposed to distinguish measures for the transition to
organically oriented land use based on the production sizes of agricultural
manufacturers. The essence of the proposal is that, based on the existing soil and
fertile, natural and climatic, organizational and economic, social and environmental
conditions and needs of the market, it is necessary to create optimal conditions for
increasing the economic efficiency of agricultural production.
Agricultural manufacturers, applying the principles of organic agriculture and
wishing to enter the domestic and world markets with their products, need to be
certified. However, many agribusinesses, particularly in developing countries,
execute natural organic farming due to the lack of financial resources for the
purchase of synthetic fertilizers of plant protection (Yemelyanov et al., 2018a), as
well as the lack of access to modern intensive technologies without having
certification of their manufactured products.
Most scientists believe that not only Russia but also many other countries are
characterized by the absence of an agreed concept of an environmentally friendly or
organic product, respectively, organic or ecological agriculture. One of the
generalized definitions characterizing a product manufactured in accordance with
organic (ecological) agricultural technologies means that these products are grown
without the use of chemical plant protection products, synthetic mineral fertilizers in
the soil, where the humus content is increased by adding organic substances.
Moreover, these are the products grown in soil, the mineral substance content of
which is increased by applying natural mineral fertilizers; products were not
manufactured with preservatives, hormone-containing drugs, and antibiotics.
Ecological agriculture is also accompanied by social, ecological and economic

Organizational and Economic Transformations towards the Greening of Agro-industrial
Production
32
efficiency (Zyrin and Ilinova, 2016).
Table 1. Ecological rating of the subjects of the Russian Federation. The accounting
period is June 1, 2017 – August 31, 2018).
Rating
dynamics
The subject of the
Russian
Federation
Nature-
protective
index
Industrial
Ecological
Index
Socio-
Ecological
Index
Consolidated
Environmental
Index
-
Tambov Region
68/32
54/46
75/25
67/33
-
Altai Republic
67/33
37/63
70/30
60/40
-
Altai region
54/46
45/55
70/30
58/42
+4
St. Petersburg
33/67
51/49
73/27
56/44
-1
Chuvash Republic
48/52
36/64
74/26
56/44
-1
Ulyanovsk region
52/48
46/54
63/37
55/45
-
Moscow
27/73
53/47
73/27
55/45
-2
Belgorod region
42/58
49/51
69/31
55/45
+4
Murmansk region
51/49
45/55
65/35
55/45
-
Kursk region
58/42
37/63
64/36
54/46
+9
Komi Republic
56/44
37/63
65/35
54/46
+4
Magadan Region
70/30
31/69
59/41
53/47
The expansion of arable land as a result of introducing fallow land leads to the need
to increase the livestock of animals, and this, in turn, increases the level of
employment of the population in providing year-round work for people, creating
additional jobs and solving the problems of rural employment (Nedelkin et al., 2017;
Yemelyanov, 2014a). Most Russian manufacturers of organic products is located in
the European part of the Russian Federation and is concentrated in the Yaroslavl,
Saratov, Rostov and Moscow Regions, as well as in Krasnodar Krai.
Experts of the Ministry of Agriculture of the Russian Federation emphasize that in
15-20 years Russia can occupy up to 10% of the world market for organic products
and food, and organic agriculture itself can become a new area of global influence.
For achieving this, the Russian Federation has everything: huge natural potential,
vast reserves of fresh water and fertile land, etc. For example, today the countries of
the Asia-Pacific region consider Russia as an area to produce organic products. This
is especially true for the Far East of the country, which is a "young" zone of
agriculture, since "150 years is not a long period of time for land".
In the authors' opinion, the development of agriculture, focused on the production of
organic products, should be based on solving a list of interrelated primary tasks:
✓ conducting land monitoring in the main agricultural regions of the Russian
Federation to determine the land potential, suitable to produce organic
products;
✓ substantiating the methodological basis for the elaboration of a mechanism
for the formation and development of agriculture, focused on the production
of organic products at the state, regional and local levels;

O.Yu. Voronkova, D.F. Islamutdinovа, O.G. Gordeyeva, I.I. Frolova, I.V. Fedulova, A.E. Zhminko
33
✓ development and co-financing of programs aimed at the preservation and
restoration of soil fertility of agricultural lands;
✓ implementation of programs aimed at increasing the level of knowledge and
developing the skills of maintaining organic land use systems for
agricultural manufacturers of various organizational and legal forms of
ownership to overcome the lack of economic thinking and acquire an
education level, which is adequate to the existing conditions;
✓ development of national standards for certifying agricultural organic
products, as well as the formation of conditions for obtaining international
environmental certification by organic products (Yemelyanov et al., 2018b).
It is believed that relevant ministries, departments, public and private organizations
with a certain share of participation in international environmental movements
should take part in the process of forming a system of organic farming as a
component of the integral agricultural system of the country. The fundamental task
of the system of organic land use is the development of incentives for the production
and sale of organic (ecologically friendly) food. The emerging system of organic
farming should include the following activities:
✓ further development and adoption of the regulatory framework, which is
necessary for the effective functioning of the system of organic farming and
markets for selling organic products;
✓ making the necessary amendments in the current tax legislation of the
Russian Federation aimed at providing support and economic incentives for
the developing organic sector of agricultural production;
✓ elaborating a set of measures and adopting a state program under the project
title "State support for agricultural manufacturers of organic
(environmentally friendly) products";
✓ providing consulting and information support to manufacturers of organic
products and forming an environmental culture of consumers;
✓ participation of international organizations and quality auditors in the field
of environmental certification and labeling of organic products;
✓ organization of the environmental management system in national
agricultural production;
✓ formation of a register of agricultural organizations, manufacturing organic
products that meet the required parameters of international environmental
standards for food products;
✓ formation of prerequisites for voluntary environmental certification of
agricultural organizations and providing a label of "organic
(environmentally friendly) product" to organic products manufactured by
them, based on the declaration of these products for compliance with
environmental requirements;
✓ promotion of organic products through advertising, round tables,
exhibitions, fairs, competitions, media coverage and on agricultural

Organizational and Economic Transformations towards the Greening of Agro-industrial
Production
34
websites, covering successful activities of domestic and foreign agricultural
manufacturers of organic products;
✓ organization of a centralized marketing service, promoting organic products
of domestic agricultural manufacturers in the domestic and international
sales markets.
The main condition for the effective functioning of the proposed system is the
development of an organizational and economic mechanism for agricultural
production of organic products in both large agricultural organizations and small
organizational and legal forms of management (Korableva and Guseva, 2015;
Sycheva et al., 2018a; 2018b; Akhmetshin et al., 2017b; Osadchy and Akhmetshin,
2015a; 2015b). In the conditions of competitive environment, it is important to
provide opportunities for civilized and dynamic market development and the
creation of a high level of competitiveness of the economy, which are the key
elements among the national and regional priorities of any country and, therefore,
the most important functions of state regulation (Yamova et al., 2018; Akhmetshin
et al., 2018a; 2018b; Nagimov et al., 2018; Polyakova et al., 2018; Dmitrieva et al.,
2017; Sharafutdinov et al., 2017; Latyshev et al., 2015; Tarman, 2016).
4. Models and Results
In connection with the intensification of the negative anthropogenic impact of
human activity on the environment, high rates of population growth, a delay in
reproduction and restoration of natural resources, and the intensification of the
production of material goods, primarily agriculture. Global warming will accelerate
the processes of desertification, complicating the living conditions of the population
and farming (Yemelyanov, 2014b). In this regard, the movement for environmental
safety and the preservation of the environment, soil resources, water, renewable
energy sources are becoming increasingly active; the Slow Food movement is
expanding for healthy nutrition and preservation of the traditions of national and
regional cuisine. In Russia, 2017 has been declared by the president as the year of
ecology, which indicates the country's integration into the world trend.
The ecological safety of the vital activity of the population requires an integrated
approach to solving problems of environmental conservation and ecosystem
management of production processes and environmental management. Ecosystem
management is one of six cross-cutting thematic priorities of the United Nations
Environment Program (UNEP). The six cross-cutting thematic priorities are as
follows: climate change; disasters and conflicts; ecosystem management;
environmental governance; harmful substances and hazardous waste; resource
efficiency – sustainable consumption and production. The organic land use sector
should be formed in several consecutive and interrelated stages that will ensure the
effective functioning of agriculture, focused on the production of organic products,
in the future.

O.Yu. Voronkova, D.F. Islamutdinovа, O.G. Gordeyeva, I.I. Frolova, I.V. Fedulova, A.E. Zhminko
35
5. Conclusion
Russia's long-term goals are export-oriented agriculture and food industry, because
the country has a unique export potential and acquires enormous natural resources
for the production of environmentally friendly products (Rasskazova et al., 2014).
These are 20% of the world's freshwater reserves, 9% of the arable land of the planet
(115 million hectares), 58% of the world chernozem reserves, 38.8 million hectares
of fallow agricultural land (including fallows) that had not been chemicalized for a
long time (Voronkova et al., 2018c). Approximately 67% of arable land is
concentrated in agricultural organizations, about 15% is accounted for by peasant
farms (farming enterprises) and individual entrepreneurs, and 17% of arable land is
used by the population's households. In the world, the main volume of organic crop
production falls on farm enterprises and personal subsidiary farms. In this regard, it
is necessary to pay attention to the importance of environmental and social
responsibility of business.
The environmental functions and management of the resource potential of organic
agriculture in the regions are performed by administrative departments, and regional
ministries have been created. For example, the Ministry of Natural Resources and
Environment of Altai Krai is the executive authority of Altai Krai, which
implements the state policy in the field of environmental protection and nature
management, water and forest relations, protection and use of wildlife objects,
aquatic biological resources, as well as hunting and conservation of hunting
resources. The Ministry executes general management and control over
environmental management within the framework of its powers, and this requires the
resolution of many issues related to the production and sale of environmental
products.
Russia's ability to withstand compliance with international standards and be
competitive in world markets where environmentally friendly agricultural products
are in demand is quite high: huge reserves of land in Russia, the introduction of
ecological farming systems need to be executed over large areas, coordinating with
many small owners. It remains problematic to provide farmers with information on
new, more efficient technical means, biotechnologies in organic agriculture and
certification of organic products for ecological cleanliness, the safety of their
manufactured products, use of intensive biotechnologies, financial support for
organic agriculture, as well as processing and selling eco-products.
For the domestic economy, where about 27% of the population live in rural areas
and more than 12% of the working-age population is employed in the field of
agricultural production, the formation and development of agriculture focused on
organic production will allow solving not only the problems of ecological safety of
food and environment but also the social problems of rural areas by increasing the
level of employment of rural residents. The authors believe that the strategic
development of environmentally oriented food production will allow solving the

Organizational and Economic Transformations towards the Greening of Agro-industrial
Production
36
important national economic problem of import substitution – ensuring food safety
of the state, saturating the domestic market with high-quality and environmentally
safe products of domestic agricultural manufacturers and developing rural areas of
the country.
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