The State Regulation of the Input Market Shick О.V. The Analytical Centre of Agro-Food Economics, Moscow In this study, on the basis of the data obtained as the result of the investigation in three regions as well as the information obtained as the result of work in other subjects of the federation the regional policy of the market of purchased inputs regulation has been analyzed and the attempt to estimate the effect of application of the state support programs of inputs use was made. We consider only the three most significant programs of subsiding for the costs of inputs — the support of the use of fertilizers, the support of fuels and lubricants purchase, and the support of machinery purchase.
For the quantitative estimation of the efficiency of the state support of inputs use we are based on the supposition that the aim of the support programs of inputs use is the reduction of the actual price for inputs for agricultural producers. The efficiency of the support program can be measured by the reduction of the price for inputs by agricultural producers as the result of its realization. The following question rises: “From what level is it necessary to measure the fall in prices” Theoretically — from the equilibrium price for inputs, i.e., from the price fixed in the analogous market by the absence of any state interference. The conventional NPR (nominal protection rate) index was used as an index of efficiency.
The index compares the value of inputs for agriculture in the actual and equilibrium prices. It is expressed as a percentage:
PibQi Pid Qi ii NPRinputs = Pid Qi i where Pid — actual prices for inputs i, Pib — equilibrium price for inputs i, PidQi, PibQi — value of inputs i in the actual and equilibrium prices.
For the empirical calculations we took for the equilibrium price either the price for inputs at which farmers buy the analogous inputs (in the regions where farmers are not included in the support programs) or an average price for such inputs in Russia.
It is obvious that the negative meaning of the NPR coefficient testifies that the program has led to the rise in prices for inputs, i.e., agricultural producers do not receive compensation as the result of its realization, but, on the contrary, pay an abnormally high price and a final receiver of the compensation is not an agricultural producer but a producer or a supplier of inputs. The higher the meaning of the nominal protection rate, the more reduced is the price for inputs for an agricultural producer.
But the fall in prices for inputs is not an end in itself — more often the aim of the state programs of subsiding for the costs of inputs is the development of its use in the agrarian production. That is why the index of increase of the use of inputs and the efficiency of its use is chosen as the second criterion of the program efficiency.
On the basis of the analysis of support programs Russia regions are grouped according to the type of the agrarian policy, and the connection of the type of the agrarian policy in a region with the efficiency of support programs is investigated.
1. The programs of the input market regulation.1.1 Mineral fertilizers From the beginning of the reforms in Russia the program of subsiding agricultural producers for a share of costs of fertilizers acts at the federal level. The subsiding for a share of value of purchased inputs results in the growth of demand for fertilizers. The growth of demand by inelastic supply leads to the rise in prices and, according to the most researches,1 the inner supply with fertilizers is inelastic in Russia. As the result of this measure, the prices for fertilizers increased for agricultural producers. In some years, the losses of producers caused by the rise in prices were higher than paid subsidies.
From 1999, the scheme of subsidies for fertilizers at the federal level has been changed. At present, the subsidies are paid not to purchasers but to producers of fertilizers. It caused a short-term fall in prices for agricultural producers. However, in the middle-term prospect it should lead to monopolization of the sector: each region receives a restricted quantity of suppliers who, in addition, get the advantage in the form of the interest-free state loan.
Practically in all regions, the federal program of subsiding for the costs of fertilizers is supplemented one way or another with the analogous regional programs. Subsequently, in many regions the authorities approve the list of suppliers of fertilizers — receivers of the state subsidy without any competition. The administrative allotment of producers of fertilizers with the monopolistic power within a region results in the rise in prices for inputs for agricultural producers.
Practically anywhere in regions, the subsidy is paid directly to agricultural producers not to suppliers of inputs (Table 1). Such a scheme may result in the rise in prices and taxation of agricultural producers.
Table 1. Peculiarities of the regional support programs of the purchase of fertilizers, 2001* Chelyabinsk The Vologodska Permskaya Rostovskay Ivanovskay Nizhegorods RF aya oblast Chuvash ya oblast oblast a oblast a oblast kaya oblast Republic Restricted choice of +++ - -+0 suppliers Subsidy is paid to -++++- 0+ agricultural producers *0 – there is no corresponding program Source: the regional Departments/Ministries of Agriculture, Consultant Regions.1.2 Fuels and lubricants The subsiding for costs of fuels and lubricants in the agrarian sector is implemented in the form of the so-called commodity credit. In the recent years, the programs of commodity crediting are used only in regions. The commodity credit hampers the development not only of the input market for agriculture but the market of agricultural production as well. The coordination of the commodity credit with the supplying for the regional funds gives the regional authorities the formal grounds for prohibitions on export of agricultural production that results in the separation of the singular market in the country and the deterioration of the exchange proportions for agricultural producers.
Е. Серова, Н. Карлова, О. Мелюхина, И. Храмова, Т. Тихонова, А. Тарасов. Повышение эффективности использования бюджетных средств в АПК России. Москва, 2000. www.iet.ru/afe/projects/budget.pdf;
Рынки факторов производства в АПК России: перспективы анализа. Материалы научной конференции 67 июля 2001 г. Голицино - II. М., ИЭПП, As far as the structure of the regional programs of commodity crediting copies the structure of the federal program that turned to be inefficient, they cannot solve the problems of providing agricultural producers with fuels. In the recent years, this problem becomes more serious owing to the sharp rise in prices for fuels and lubricants.
In regions, the programs of subsiding for rates of interest on credit received by agricultural producers to purchase fuels and lubricants occur, and such a form seems to be more effective because it makes no provision for the participation of the authorities in the choice of a range of receivers of subsidies and determination of the price proportions.
Table 2. Peculiarities of the regional support programs of the purchase of fuels and lubricants, 2001* Chelyabinsk The Vologodska Permskaya Rostovskay Ivanovskay Nizhegorods RF aya oblast Chuvash ya oblast oblast a oblast a oblast kaya oblast Republic Commodity credit + + 0 0 - - + Coordination of the -+00- -+commodity credit with the supplying for the regional reserve funds Subsiding for rates of +- n/a n/a ++-+ interest on the commercial credits *0 – there is no corresponding program n/a – not available Source: the regional Departments/Ministries of Agriculture, Consultant Regions.1.3 Agricultural machinery The development of the agrarian sector in the recent years allows agricultural producers to solve the problem of re-equipment of its production and the state programs could take part in the intensification of this process. However, the scheme of realization of the federal leasing program resulted in the fact that the machine works and the state leasing company turned to be its main beneficiaries.
In June 2002, the program of subsiding for the share of interest on three-years credits for the purchase of agricultural machinery and equipment started at the federal level. The terms of this program are much more profitable for agricultural producers than the terms of the state leasing program. Probably, it will result in the increase in middle-term investments in the agrarian production, in the beginning of re-equipment of the branch.
In many regions, the regional leasing programs began to act simultaneously with the federal program of the state leasing. The most of them are analogous to the federal ones. The organizations-leaseholders are chosen through the competition and machinery is given by the order of the authorities that lead to monopolization of the delivery and the discrepancy of the nomenclature of leased machinery to the needs of producers.
However, there are positive examples. Thus, in the Vologodskaya oblast the assignment of the only manager of expenditure apportioned for the leasing programs was rejected. As the result, about a half of the total purchase of machinery and equipment in this region is implemented owing to the state (federal and regional) leasing schemes of machinery delivery. In the region, there are several intermediate structures that provide agricultural producers with machinery and relatively many representations of foreign companies.
In some regions, leasing is supplemented with other systems. Thus, in 2001 in the Chuvash Republic the program of subsiding for interests on the middle-term credit for agricultural machinery purchase started in addition to leasing. In the Permskaya oblast, leasing was rejected in favour of subsiding for the costs of machinery purchase.
In the Rostovskaya oblast, in order to provide agricultural producers with harvesters they are given the budgetary credit to purchase the production of the open joint-stock company “Rostselmach.” The return of credits is implemented through the delivery of cereals for the regional food fund. A restricted number of participants the list of which is adopted by the law have access to this program. Harvesters are delivered at a fixed price that breaks the competitive environment of the region.
Table 3. Peculiarities of the regional support programs of the purchase of agricultural machinery, Chelyabinskaya The Chuvash Vologodskaya Permskaya Rostovskaya Ivanovskay Nizhegorods RF oblast Republic oblast oblast oblast a oblast kaya oblast The only leasing ++ + - - + - company Restriction of machinery -/+ +/+ n/a/ n/a -/- -/- + -/+ 0/suppliers/nomenclature (Rostselma of the delivery ch)/+ Subsiding for interest on + 0+ 0 + 0 0 + the investment credit *0 — there is no corresponding program n/a — not available Source: the regional Departments/Ministries of Agriculture, Consultant Regions 2. The estimation of the efficiency of the support programs of purchased inputs at the regional level.2.1 Results The results from Ошибка! Источник ссылки не найден. for 2000 show that whether the high or low MP value is used, fertilizer’s VMP greatly exceeds its domestic price. The results suggest that an additional ton of fertilizer to produce grain would increase farms’ revenue two to four times the fertilizer’s cost. Farms are using fertilizer at far below the profit-maximizing volume.
On the basis of the data of the investigation it is possible to try to implement the quantitative estimation of the efficiency of the support programs of inputs in the sample regions. In Table 4, the calculations of the NPR index for fertilizers in Rostovskaya and Nizhegorodskaya oblasts are show.
In the Rostovskaya oblast, the NPR coefficient for fertilizers is less than zero, correspondingly, the aim to make inputs cheaper is not reached: the prices at which producers purchased fertilizers within the framework of the program were higher than they would be by its absence. The quantity of applying fertilizers is lower by one ha than in other regions. It may be the result of the existing situation when the authorities of the region choose both suppliers of fertilizers and agricultural producers that take part in the program, and the distribution of guarantees between them is approved by the decree of the government.
Table 4. Efficiency of the support programs of the purchase of fertilizers for agricultural enterprises in the sample regions, Rostovskaya oblast Nizhegorodskaya oblast Restrictions on the choice of suppliers +Subsidy is paid for agricultural producers -+ Actual price, rubles/1000 kg 2895 Equilibrium price, rubles/1000 kg 2735 NPR -6% 11% Quantity of applying fertilizers, kg/ha 42 Subsidies from the budget of the subject of the 27 190 20 RF, thousand rubles Efficiency of subsidy (Subsidy+PidQi,- 10% 43% PibQi)/ PibQi Source: own calculations according to the data of the investigations and Goskomstat of the RF.
In the Nizhegorodskaya oblast, the program makes provision for subsiding for the costs of fertilizers for all agricultural producers independently of the source of purchase. The structure of the program in the Nizhegorodskaya oblast turns to be more effective from the standpoint of making resources cheaper, especially from the standpoint of the intensification of its use than the program used in the Rostovskaya oblast when the authorities strictly regulate the delivery of fertilizers.
.2.2 Fuels and lubricants Let us consider the use of the support programs of fuels and lubricants in the sample regions.
In the Ivanovskaya oblast, as well as in other regions that use the delivery of fuels and lubricants on the commodity credit, the role of the regional authorities in the approval of the list of receivers of the commodity credit is very significant. The calculation of the NPR showed the inefficiency of the program in connection with the fall in prices for inputs for agricultural producers. The prices for fuels and lubricants are relatively lower than the inquiry prices only in the Nizhegorodskaya oblast and the prices for diesel — in the Ivanovskaya oblast.
Table 5. Efficiency of the support programs of the purchase of fuels and lubricants for agricultural enterprises in the sample regions, Rostovskaya oblast Ivanovskaya Nizhegorodskaya oblast oblast Commodity credit -+ Subsiding for the rates of interest +- + Actual price, rubles/1000 kg 6139 6346 Equilibrium price, rubles/1000 kg 6158 6337 NPR for gasolin 0,3% -0,1% 3,3% Actual price, rubles/1000 kg 5476 5923 Equilibrium price, rubles/1000 kg 5191 6115 NPR for diesel -5,2% 3,2% 3,1% Source: own calculations according to the data of the investigations and Goskomstat of the RF.
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