Herd Growth, Farm Organisation and Subsidies in the Dairy Sector of Russia and Kazakhstan

Abstract

Initially taken as a template for farm restructuring after the demise of collective agriculture, the 'Western family farm model' has taken root in the former Soviet countries only belatedly and incompletely. We examine dairy structures in Russia and Kazakhstan and analyse the drivers of recent herd growth. We are specifically interested in the role of farm management and organisation, vertical integration, and the role of policy. Regression analysis based on a sample of 180 randomly selected commercial dairy farms, using an innovative simultaneous equation framework, shows that better herd management and access to milk marketing contracts were more effective in stimulating herd growth than current subsidy payments. We do not find evidence that milking plants belonging to corporate entities or even supra-regional agroholdings grow more substantially than medium-sized individual farms. Twenty-five years after the end of central planning, structural change among commercial dairy farms in Russia and Kazakhstan appears similar in many ways to the patterns observed in the West more recently: smaller farms catch up in terms of herd growth and classical family-run operations coexist with or even emulate vertically integrated agribusinesses based on hired labour. In moving toward this 'new normal' of farming structures, commercial dairy farms in Russia may even be a few steps ahead of their Western counterparts. At the same time, the still sizeable but stagnating group of subsistence producers in rural households finds no equivalent in the West.

Trade Sanctions and Agriculture Support in Milk and Dairy Industry: Case of Russia

“…Petrick and Götz [9] have argued that current practices of subsidizing Russian dairy producers do not result in herd growth. Comparing the structure of producers' support in Russia and EU28, it is possible to see that subsidies are not the main channel of support for agricultural producers.…”

“…Interestingly, there is an evidence of relatively low price competitiveness of Russian agricultural producers due to real appreciation of the Russian ruble (a Russian currency denoted as RUB with a current exchange rate being slightly above 70 rubles for 1 euro (denoted as €)) as a result of difference in inflation rates in Russia and its main trade partners [8]. Looking on the problem from supply side, Petrick and Götz [9] demonstrated that current practices of subsidizing Russian agricultural enterprises have little influence to create herd growth. Authors also showed that controlling for herd size and other farm characteristics, individual farms received up to 18% higher subsidy amounts than enterprises, and subsidies seem to be more effective for individual farms in creating herd growth.…”

Ecological sustainability methodology for logistic chains of milk supply

“…At the same time, we are witnessing the processes of transformation of environmental consciousness in the world, which lead to the understanding that environmentally friendly value chains are not a "problem", but a "possibility", a competitive advantage. Sustainable supply chain management implies implementation through hard (for example, cleaner production equipment) and soft management (for example, expanding cooperation with suppliers in the field of eco-design) [17,18].…”

Determinants of corporate social responsibility among farms in Russia and Kazakhstan: a multilevel approach using survey data

“…In Kazakhstan, 200 farms were sampled randomly in Akmola Province. These regions were purposively selected for data collection to capture the diversity of the main agricultural regions in Russia, inside and outside of the black earth region, European and Siberian regions and the major grain-producing region of Kazakhstan (Petrick and Götz, 2019).…”