XII Международная студенческая научная конференция Студенческий научный форум - 2020

The key idea of agricultural enterprises integration is the process of combining production and distribution of agricultural products.

The agricultural holding is a community of companies and subsidiaries that are controlled by this company while producing and selling agricultural products. The special feature of this form of agricultural integration is the presence of a single governing body, strict centralization, organizational and legal form (joint-stock company); the results of scientific research are applied only within the framework of conducted activities.

The agricultural holding should be considered as the main form of the agricultural integration due to the fact that in this case the organizations have more opportunities to attract investments, both domestic and foreign.

However, during the agricultural integration, as in the case of agricultural producers, the land concentration is carried out by means of displacing the land from the lease market, which is the cause of the deterioration of the socio-economic situation in the country.

Outstanding characteristics are as follows:

– termination of activities of agricultural enterprises in the relevant area;

– loss of job for a certain number of people living in rural areas;

– decrease in the flow of tax revenues to the local budget;

– termination of rural social infrastructure financing.

One of the significant drawbacks of the agricultural holding as the agricultural integration is the damage to agricultural lands used in the production due to the import of genetically modified plants and monoculture production, which leads to the degradation of agricultural lands.

The next form of the agricultural integration is a technology park or agricultural park. It is a combination of financial institutions, commercial and non-profit scientific and educational organizations, enterprises that actively interact with each other, as well as state authorities, in order to carry out activities to form new technologies for the innovative agricultural production.

A cluster is a form of the agricultural integration, which involves the combination of enterprises supplying equipment and providing specialized production and maintenance services, research and educational organizations that have ties of territorial proximity and functional dependence in the production and sale of goods and services.

The special feature of this form of the agricultural integration is its narrow specialization, the presence of a management company, the absence of a single charter, and in this case, contractual relations are a form of interaction.

The creation of agricultural production clusters is one of the main factors that contributes to the growth of competitiveness of economic entities in this sector. The concentration of production enterprises, service organizations, as well as business entities for processing and sales of manufactured products is carried out in one territory, which creates the conditions for obtaining a synergistic effect. If at the same time there is a mechanism for the effective interaction between the listed entities, this has a positive effect on the labor productivity in the agricultural sector.

Creating such an agro-integrated structure as a cluster the state has the opportunity to realize socially significant interests through combining the development of large and small forms of farming in the country. At the same time, small enterprises should be included in the cooperation system. They are considered as a determining factor in their competitiveness level in the agricultural market.

Further the negative features of the agricultural integration process are identified:

– low innovation interest due to the weak competition. In this case, the manufacturer does not tend to use new technologies in its activity because of dominance in the market. It guarantees the manufacturer a high stable demand for the manufactured products. This feature is negative. It can reduce the flow of innovations in the agricultural complex;

– the determination of the sale price level, the desire to shift the costs to the end consumer, who is not able to exert a reverse effect on the manufacturer, which leads to a decrease in the living standards of the population;

– reducing the quality of products, the monopolist achieves the saving of its own funds. Quite often, the management of such organization sets the task to reduce the costs without considering a negative impact on the quality of products.

The state’s high-priority task is the creation of basic conditions for the development of cooperation of small forms of farming in the country in the form of personal subsidiary plots and small farming forms and not the organization of integration entities that combine large agricultural organizations and agricultural holdings into the whole production system.

Also, the issue of the accessibility of land resources, providing farmers with access to veterinary services and plant protection should be resolved.

The state’s important task is to inform and popularize the cooperative production. When realizing this task, it is necessary to take into account the inadmissibility of using measures to form the cooperation systems that reduce the self-initiative of members of this association and allow the transition of these structures to vertically integrated holdings.

The forms of the state support may include: subsidies, grants and donations that are related to the targeted activities of agricultural producers and support for the interests of business owners and the state.

The problem of withdrawal of large integrated entities from the sector is not to be excluded. In the event of any change in market conditions, investors from other economy sectors leave the agricultural production sphere, while not creating a significant material and technical base in agricultural organizations, which in most cases leads to the bankruptcy of such enterprises.

The problems of agro-integrated structures related to the scale of their organizational structure should be separately highlighted.

1. Loss of management, namely a complex non-dynamic management structure, a high probability of making late and not rational decisions.

2. The heterogeneity of subsidiaries, which finds the differences in goals and corporate culture. The occurrence of this problem is explained by the lack of the coordinated work in the above areas. If one of the subsidiaries has sold products of its own production, at the same time setting a high price on it for third-party buyers, this will lead to an increase in the profitability of this organization, while it has become necessary for another subsidiary to purchase raw materials from third-party organizations at the set price. As a result, the manufactured products have turned out to be less competitive, and the performance indicators have declined.

3. Lack of independence in the management of subsidiaries. No matter how the structure of the agricultural holding is optimized, its organizational structure is a rigidly formalized and complex hierarchical system characterized by a bureaucratic apparatus with repetitive functions at various levels of the organizational structure.

It should be noted that the above mentioned problems of operation of agro-integrated structures are caused by certain conditions. In order to solve them it is necessary to improve the system of management of this type of organizations first of all by creating an integration and diversification functional structure.

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