This program is quite traditional in its form; the bulk of measures envisaged in relation to centralized purchases of equipment, pharmaceuticals, construction of new medical centers, etc. However, it contains no conceptual proposals for reforming the institutions and mechanisms of providing medical care. The main results of the program’s implementation are seen by its authors as the lowering of indices of the population’s mortality linked to specific diseases. However, even a simplest economic analysis of the planned costs and results reveals profound discrepancies between the costs per one survival indices (see Table 1). This is clear evidence of inadequate cost-effectiveness of the suggested distribution of resources.
Table Costs of implementing the measures outlined in the Government Program of the Public Health Care System’s Development in the period of 2009 – Measures Total costs, billion Reduced mortality, Costs per one survival, rubles thousand persons thousand rubles Medical care for car- 15.8 462 diovascular patients Medical care for vic- 14.1 34 tims of traffic accidents Care for cancer patients 34.7 183 Source: Government program of the public health care system’s development (2009 - 2012), draft; the author’s estimations.
Small and medium business in Russian agriculture:
problems of identification N. Shagaida Problems of statistical recording of small and medium entities in the economy at large are discussed. The emphasis is made on agriculture where small and medium businesses produce a sizable share of commodity output (65%). The actual share of small enterprises in the sector is estimated. It’s noted that the Federal Law “On development of small and medium entrepreneurship in the Russian Federation” needs a whole set of principal amendments to be made.
The notion of “small and medium entity” is defined in the Federal Law “On development of small and medium entrepreneurship in the Russian Federation”. According to this law (Articles 3 and 4) a business having the status of small or medium entity should not be unitary (state or municipal) and the shares of state and municipal unitary enterprises, foreign legal bodies and individuals, public and reli gious organizations (associations), charity and other funds in its authorized capital should not exceed 25%. The share of one or several legal bodies not being small or medium entities should not exceed 25%. One more criterion for qualifying an entity as a small or medium one is the number of employees. Their average number should not exceed 15 persons for micro entities, 100 persons for small and 250 – for medium ones. Besides, receipts from marketing goods (works, services) less VAT and the book value of assets (depreciated value of fixed capital and intangible assets) in the preceding calendar year should not exceed the limits established by the RF Government. Although this criterion will take effect only since 2010, its parameters for receipts from marketing are already set: up to 40 million rubles for micro entities, up to 400 million rubles – for small and up to 1 billion rubles – for medium ones33. Consumer cooperatives are also eligible for being qualified as small or medium businesses.
The clear identification of small and medium entities is needed for rendering them efficient support.
But who knows how many such entities currently exist The identification of small and medium entities in agriculture is very difficult due to several reasons.
First of all, it’s not clear what entities can be qualified as small or medium businesses. The law reads that the share of one or several legal bodies should not exceed 25%. Some questions arise in this respect. First, do these 25% comprise only shares of state unitary enterprises, foreign legal bodies, public and religious organizations and funds or shares of other legal bodies as well Second, even if the legislators clarify shares of which investors should be taken into account, how can one actually find out who of them is a small or medium entity Or, to be precise, what will be the associated transaction costs Besides, it’s not clear why the lawmakers found it necessary to limit the share of legal bodies not being small or medium entities but set no limitations for investors-individuals not registered as small entities. In case two legal bodies not being small or medium businesses found an entity with 99 employees, it won’t be qualified as a small one. But in case an individual not registered as an entrepreneur is the single shareholder of 100 companies with 99 employees, each of them will be eligible for small entity status.
The third question regards production cooperatives. They can operate in any sector of the economy but in agriculture this is the prevailing organizational and legal form of entities. How can one apply the “number of employees” criterion here 300-500 members is a common practice for cooperatives.
At the same time they may employ not a single worker. A member of production cooperative has to work in it. Statistical service traditionally regards all members of a cooperative as its workers. Can such a cooperative be qualified as a small entity According to provisions of the law in case an entity has no employees, it’s not just a small but a micro-entity. But if a cooperative with 300 members applies for participation in the program of supporting small and medium business, it will get a refusal since in the traditional accounting and statistical forms its members receiving income from engagement therein are regarded as workers.
Besides, it will be difficult to sort out small and medium entities using, for instance, the 2006-database. Until recently34 “Rosstat” (Russian statistical agency) classified agricultural entities on the basis of criteria formulated in the early 1990’s. This approach was applied when carrying out the Agricultural Census – entities were grouped as 1) large and medium and 2) small ones. Information on agricultural entities is still presented in the same way: large and medium (all together) and small entities. Analysis reveals that among large and medium there is a lot of entities that according to the current classification should be regarded as medium and small ones.
It’s also impossible to estimate the number of small and medium entities on the basis of respective registers since the latter are not kept at the places of legal bodies’ registration. The absence of registers implies lack of information on the number of such entities. A small or medium business reveals itself only at the moment when it applies for participation in some support program. Only then one can check its compliance with criteria of small and medium entrepreneurship. The absence of registers also hinders entities from realizing that they are small or medium businesses and thus are eligible for state support. The registers of small and medium entities – recipients of such support are currently kept. But they do not allow to solve the problems of estimating the number of respective entities and drawing up support budgets.
RF Government Resolution No. 556 of July 22, 2008.
“Rosstat” intends to shift to classification of entities using criteria set up in the named law. Still, only the “number of employees” criterion will be practiced. All other criteria of small business are almost impossible to apply in statistical surveys.
In case one a) skips the criterion of the way of forming the authorized capital or share fund when qualifying an entity as a small or medium one; b) does not go deep into the question of membership in a production agricultural cooperative; c) applies the criterion of grouping entities by number of employees, the following estimates of the number of entities in agriculture can be made – see Table 1.
Table Small and medium entities in agriculture, Total number % 1. Large and medium agricultural entities less unitary enterprises (as classified before adoption of the Federal Law “On development of small and medium entrepreneurship in 15377 the Russian Federation”) out of them (if classified according to provisions of the Federal Law) 1.1. large 1797 1.2. medium 4542 1.3. small 9038 2. Small agricultural entities 20404 3. All agricultural entities 35783 Source: database of selected indicators from annual reports of agricultural entities in 2006. Preliminary results of Agricultural Census. http://www.gks.ru/news/perepis2006/volume2/Russia/tabl.htm Table 1 shows that entrepreneurship in agriculture is predominantly small: 82% of entities are small ones. The share of medium entities is 13%.
Beginning from 2010 the criteria of receipts from marketing and the value of fixed production assets will also be used when qualifying an entity as a small or medium one. The size of receipts from marketing to be applied for dividing entities into categories was already established in 2008. Is it important for agricultural entities Will the sector’s business structure change after the introduction of this additional criterion The data in Table 2 demonstrate that it will remain actually the same.
Table Grouping of large and medium agricultural entities* on the basis of “number of employees” and “receipts from marketing” criteria (2006) Entities Criteria of grouping Number % Micro entities Number of employees up to 15 persons, receipts from 1410 marketing up to 60 million rubles Small entities Number of employees up to 100 persons, receipts 7625 from marketing up to 400 million rubles Medium entities Number of employees up to 250 persons, receipts 4543 from marketing up to 1000 million rubles Large entities Number of employees over 250 persons, receipts 1799 from marketing over 1000 million rubles Total 15377 * according to classification in force before adoption of the Federal Law “On development of small and medium entrepreneurship in the Russian Federation”.
Source: database of selected indicators from annual reports of agricultural entities in 2006.
Actually the dividing of entities into groups of micro, small, medium and large ones will all the same be based on the “number of employees” criterion since by the “gross output” criterion they won’t show results enabling to include them into a group of larger entities. In case the division into groups was based on the value of receipts from marketing without regard to the number of employees one could state that 99% of all entities in agriculture are small and 89% of them are micro ones (Table 3).
Table Grouping of large and medium agricultural entities* on the basis of “receipts from marketing” criterion (2006) Entities Criteria of grouping Num- % ber Micro entities Receipts from marketing up to 60 million rubles 13691 Small entities Receipts from marketing up to 400 million rubles 1545 Medium entities Receipts from marketing up to 1000 million rubles 108 Large entities Receipts from marketing over 60 million rubles 33 Total 15377 * according to classification in force before adoption of the Federal Law “On development of small and medium entrepreneurship in the Russian Federation”.
Source: database of selected indicators from annual reports of agricultural entities in 2006.
Individuals are also engaged in small agricultural entrepreneurship. They can be registered as individual private farms and individual entrepreneurs operating in agriculture. There were about 285.thousand such entities in 2006 of which 147.5 thousand were engaged in agricultural production (Table 4).
Table Number of individual private farms and individual entrepreneurs engaged in agricultural production, Entities Number Individual private farms and individual agricultural entrepreneurs including engaged in agricultural production Share of operating entities, % Source: All-Russian Agricultural Census, 2006.
Entrepreneurship (entrepreneurial activity) of individuals is their self-motivated and self-reliant activity without establishing a legal body targeted at receiving profit or personal income and carried out in their own name, at their own risk and on their own property responsibility35. It does not ensue from this definition that entrepreneurial activity requires compulsory registration. Provisions of the RF Tax Code imply the same: “the earning of profit or personal income” from sale of agricultural output produced on a household plot is not prohibited and is even encouraged – Article 217 declares these incomes non-taxable. However, population grows agricultural products on plots of different status, not only on plots intended for household farming. How can one then sort out the output exempt from taxation Table Share of small and medium entities in the total commodity agricultural output (%), Small and medium entities Share in the commodity output Small entities 47.including Individual private farms and individual entrepreneurs 8. Individual (family) plots 27. Small agricultural organizations, enterprises, etc.* 12.Medium entities 17.Total small and medium entities 64.* according to the “number of employees” criterion.
Source: Marketing of agricultural output by farms of all types in 2006, Rosstat; database of selected indicators from annual reports of large and medium agricultural entities in 2006, Rosstat.
Individual (family) plots account for over 52% of the total agricultural output and for over 27% of the respective commercial output. Individuals not registered as entrepreneurs are the largest group of commercial output producers among small and medium entities (Table 5). At the same time they are not qualified as small or medium entrepreneurs.