NATALIA SHAGAIDA SPOKE ON WHY CONTROLS SHOULD NOT BE TIGHTENED IN AGRIBUSINESS

The Accounts Chamber audited the effectiveness of subsidies provided to agro-industrial complex (AIC) and revealed violations worth over Rb 1bn. None of the audited regions fully met the terms of the agreement to increase and maintain agricultural production volumes. Moreover, Rb 17mln had been spent indicating damage to the state's economic interests. Natalia Shagaida, Head of Agrarian Department of the Gaidar Institute, told “Profil” magazine why the controls should not be tightened.

"The state program has been amended 29 times over nine years, changing conceptually both the strategic trends of the sector's development as well as the set of measures and amounts of their financing," said Natalia Shagaida.

"It would be logical to assume that changes in the selection of certain measures should have taken into account the evaluation of the effective of achievement of the state management goals before the introduction of new measures in the State Program, however, such analysis, if made by the Russian Ministry of Agriculture, had been left out," the expert was wondering.

According to Natalia Shagaida, the root of the problems is that the current state support mechanisms are artificial and complicated. In practice, many violations have been fixed because of over-regulating the permissible use of the subsidy. This is one of the reasons why not all agricultural producers want to use the subsidy and it reduces the number of agricultural producers. It would be more productive to bring the system up to a level that does not require stricter controls or growing costs of administering the use of the subsidy and reduces the role of subjective assessments by controllers.

"All that matters is that the distribution must be transparent and access to federal subsidies equal for those who comply with the requirements for accessing federal support," Natalia Shagaida stressed.

According to Natalia Shagaida, the principal issue is the goal of the subsidies, if they are aimed to help not only the economic but also the social development of the region. "Given that even the production growth does not ensure increase in the employees' income, the income is shifted towards the owner (assets, dividends) and top management, while the effectiveness of subsidies aimed at the priority development of certain regions could be assessed by the growth of wages of basic professions for agriculture in these regions," Natalia Shagaida believes.