J.М. Seilhanova

East-Kazakhstan Scientific University of Agricculture

Foreign practice of integral manufacture of agricultural production

In the condition of global change of the world situation, after gaining independence, Kazakhstan experienced radical transformation of socio-political regime. The foundation of modern democratic system of our country was laid in the last decades. Also the liberalization of prices and all economic relations were established. The mixed economy was formed by transformation of the great part of government property into the private one, institutes and infrastructure were established. By the beginning of 2006 our country had stable agrarian infrastructure, consisting of 4919 non-governmental enterprises – agricultural production cooperatives, business partnerships of various types and corporations, 157 000 farms and 65 state juridical individuals represented by experienced farms of Research Studies Institute, institutes, educational institutes. Among other things agrarian structure consists of 2 000 000 farms of individuals of rural population and about 3 000 horticultural and dacha cooperatives that are engaged in production of agricultural goods. As a whole agriculture characterized by quite low pace of growth.

The basis of stable economic development depends on its economic competitiveness, resulting in the ability of the national firms to provide growth of production and high quality goods.

One of the main course of development of agriculture (competitive agricultural goods) can be considered the formation of the integrated structure in АПК, improvement of the corporate governance.

The purpose of launching of integrated formations – is to provide relatively equal economic conditions to participants of the process and consistently develop all the technological stages of manufacturing final product. Launching various types of incorporations serve to consolidate the capacities of isolated manufactures, repeatedly increase resources, increases responsibility and efficacy of each unit of the whole system. Efficiency of integrated formation on basis of already existing enterprises can only happen if it launched by the initiative and support of business, when all the enterprises come to necessity of unification, with a help of the government of course.

Successful integration examples exist all over the world. The integration movement is widely spread out all over the world and actively influence to social, economical and political processes of social development. Whether it be the cooperative or the cluster, horizontal or vertical, or mixed. Since 1968 Europe launched general directorship on regional policy under the EC. The European Regional Development Fund was launched in1975. In 1988 European Parliament accepted the charter of regionalism, the Counsel of regional and local communities began to work. At the same time USA began the development of the federal programs in cooperation and supply of the firms, marketing and commerce, labor and education. The farms cooperatives of the European Community produce 60% of the food goods.

The agro-industrial complex of Denmark exceeded by the volume of production all other sectors of economy altogether and dominant from the consumers market view, and investment potential. The main part of this process is given to “Milk Vertical” from the milk processor to supplier of equipment and technology. Denmark Counsel of business development responsible to the government for development of clusterization conception triggered the number of new researches in this field. This research was joined by Business and Industry Ministries, Research Ministry, Ministry of Education, Labor Department, Ministry of Finance, Agency of the Trade Development and Industry Department. In 1992 40% of all firms of the country participated in clusters, and provided 60% of export. In 1997 the annual report said that 513 analytics were participating in research from firms, organizations, institutes, ministries, and were united into 35 working groups. These groups specialized in specific fields; they gave 1522 suggestions, 66 of which have already been implemented. The Enterprises faced wide spectrum of problems, from changes in legal system and administration management to changes in government expenditure of ministries. The work that had been done in the past several years lead the management to changes in government expenditure. This work made Denmark one of the world leaders of economic clustering, where today 29 leading clusters function. The high level of agricultural cooperation lead agricultural integration groups, engaged in production, processing and sales of animal products that constitutes the basis of agrarian production of that particular country to the indicator of sale – Milk 90%, live cattle 80%, eggs 70%.

Italy developed Industrial Districts (ID). In the book “the Third Wave” O. Toffler called them “The Wave Of The 21 Century”. Italy – is a country of small busyness. And 2% out of 4 000 000 firms are considered to be large in which 1000 and more employees are engaged. Altogether in Italy function 200 ID, that unite 60 000 enterprises with 600 000 employees. Taking into account an interaction of industrial cooperation 1 000 000 small and medium enterprises function in ID, giving job to 4-6 000 000 people. ID enterprises upgraded their technological level and beginning their expansion to other regions. So from processing fruits they are going to manufacturing equipment for production of canned goods, giving the functions of processing to southern regions.

Japan integration groups process and sell about 90% of all agricultural goods and equip farmers with 80% of necessary means of production.

Cooperatives of the Scandinavian countries supply 85% of agricultural goods. Enterprises that belong to Cooperatives produce the half of all production of the food industry. In USA, where the scientist began to study the principles of regional economics development, and the processes of integration a long time ago, and M. Porter became a pioneer-developer of cluster model, integration groups supply 30% of a market of all agricultural goods, that is being manufactured in the country (including total of milk, 53%-sugar, 30%-cotton, 25%vegetables and fruits).

Israel has unique example of agricultural integration. Agriculture plays a key role in the economics of the country, 5% of GNP(Gross National Product) and 5.6% in the structure of export. Israel satisfies not only its own requirements in food supply, but annually exports agricultural goods worth 1.3 billion of USD. Israel takes first place in animal productiveness -8785kg under 135 000 heads (for example USA – 8257kg with livestock greater by 68times, in Japan – 8566kg/heads and national herd by 9.3 lesser than in USA, Russia – 2370kg). Under the severe, unfavorable conditions (water shortage and good soil) – only 20% of land is good for agricultural use, and half of all the land needs to be irrigated. Agriculture of Israel seizes activities of various forms of cooperative farms – from purchasing and marketing to the commune with common property. In distinction from European countries the cooperation develops not only as a tool for employees defense from exploitation of big business and to increase the level of accumulation in consolidated farms, but as a necessity to solve the problems of defense during the conflicts with local Arabian population more efficiently, to make optimal form of immigrants organization for developing waterless lands, so they would harmonize with religious canons. Presently farm cooperation of Israel is represented by 3 kinds of settlements: kibbutz, moshav-ovdim, moshav-shifuty. Kibbutz –develops big farm, moshavs – develops small family farms. Kibbutz and moshavs are the dominants of Israel’s agriculture production. They take 70% of croplands, and 74% of main farm funds, and about 80% of agricultural foods of country. Kibbutz and moshavs are rivals they compete with each other and at the same time they complement each other. Kibbutzs - have better developed field-husbandry, milk and meat cattle breeding. Moshavs – have better developed the growth of time consuming plants (Citrus plants, vegetables, cucurbits crop, flowers) dairy farming, and poultry farming. By the level of productivity Kibbutzs exel Moshavs and Moshavs surpass non-cooperative farmers. But not only cooperative basis that was laid at the beginning of 20 century and helped to successful development of agriculture of Israel. Also public policy, in the form of the rights, privileges, credit-loan decision, close collaboration of scientists and farmers, rational management with water resources (Israeli water pipe that allowed to increase amount of irrigable lands from 30 000 hectares in 1948 to 255 hectares at present days, drip irrigation, and develop the programs of desalination, cleaning of sewage water, controlling the weather).

Integration processes under preferential crediting and taxation, and implementation of communication (new roads and connection) led china to a new level of production of agricultural goods. For the past 14 years china doubled gross agricultural product and provides with agricultural goods neighboring countries including Kazakhstan.

Integration processes seizes Commonwealth of Independent States. In Russia for the purpose of improvement of management of agroindustrial complex of Penza region, on the base of insolvent enterprises Moksha region by means of uniting of their property in favor of paying for share stock, the regional agroindustrial association Mokshanskoe (PAO) was formed. One of the goals of launching Joint Stock Company Mokshanskoe PAO is a revival of once broken farms, preservation of their property and establishment of control on the activities of farms participants of PAO. The efficiency of carried out transformations confirm that fact that the growth of indicators on “PAO Mokshanskoe” greatly exceeds the temps of growth on the district. 8 of 10 farms became profitable. Profitability even in the conditions of negative price situation in the market of corn in 2002 was 19,7% in comparison with negative profit 20,3% in 2000. Its growth according to PAO was 49,6%(Mokshansk district the level of profitability was raised by 22,6%)

We know the integration agro-companies “Ug Rusi”, Joint Stock Company “Donhlebproduct”, LLC “Zolotaya Niva” АПО “Urozhainoe” etc. in Rostov region and the Savropol territory. Among the first meat integrated formations like pig breeding complex, animal feed mill, meat packing plant, were CJSC “Niva Verchove” (1997), OC “Omsk Bacon”, JSC “Omsk Bacon”, JSC “Agrofirma Mcenskaya” and etc. The integration took place with loss and preservation of juridical person.

Analysis of processes and forms of agro-integration abroad draws the conclusion that in the presence of some general principles of integration movement exist wide variety of forms and methods of fusion, its organizational structure, responsible to local or national peculiarities. Fusion is not an alternative of market, but its major element and practical method of existence of farms in market economy.