The concept of small businesses and their meaning is clarified; the most significant features of small businesses, reflecting the specifics of the development of agricultural production are listed, the socio-economic role of small businesses in the development of agriculture in Russia is defined, a characteristic of the organizational and economic mechanism of state support for small businesses is presented; the main directions of state aid for agricultural producers for small businesses are shown; measures to improve the organizational and economic mechanism of state support for small businesses are highlighted; the main directions of development of small forms of farming in the agro-industrial complex are shown; the key problems faced by manufacturers of small businesses are indicated, the types of support for peasant (farmer) households and the main conditions for obtaining it are listed, the need to develop a scientifically grounded system of indicators of the effectiveness of state support for agriculture is substantiated, indicators of the level of state support, performance indicators of state support for the agro-industrial complex are classified; small forms of management are grouped depending on the efficiency of their spending of budgetary funds; a system of directions of state support for each group of agricultural farms has been developed, factors and conditions for the rational organization of production in small forms of management of the agro-industrial complex of the Russian Federation have been clarified.
In recent years, the support of the state in solving significant social and economic problems arising in the rural economy has been small forms of management. Small forms of management are one of the most stable forms of doing business in various economic formations. This is largely due to the fact that, compared to large business structures, they have a fairly high organizational and functional flexibility, effective internal mechanisms for adapting to changes in the external environment, more efficiently use resources that may not be attractive for the large-scale production sector, play an important role in agricultural production, determining the further development of the agricultural sector and ensuring food security in certain regions of the Russian Federation. This determines the need to study important theoretical and practical issues related to government support and the assessment of its effectiveness for small businesses (Baimisheva, et al., 2019; Zhichkin, et al., 2021a, 2021b, 2021c).
Scientific development of theoretical and methodological provisions for the formation of organizational forms of management, adaptation and functioning of flexible systems for organizing production of small businesses, which include peasant (farm) farms and the lack of a comprehensive generalizing methodology for assessing the effectiveness of state support for them determine the need for their further study.
To effectively influence the processes occurring in small forms of management, to regulate their development, it is necessary to study individual issues related to the specifics of activities, the organizational foundations of the development of modern small forms of management, study the role of small forms of management in the agricultural economy, increase the financial stability of small forms of management, determining the key factors affecting the efficiency of small businesses, as well as assessment of the effectiveness of state support for small businesses.
Purpose of the Study
Is to develop a generalizing complex methodology for assessing the effectiveness of state support for small businesses.
- determine the components of the organizational and economic mechanism of state support for small businesses;
- highlight the indicators that assess the effectiveness of state support for small businesses;
- group small forms of management depending on the efficiency of spending budget funds;
- develop a system of directions of state support for each group of farms.
During the research, general scientific and traditional methods of economic analysis were used.
The main directions of development of small forms of farming in the agro-industrial complex
The largest intersectoral complex that unites several sectors of the economy and forms the food and economic security of the country is the agro-industrial complex (AIC). It includes agriculture - the basic industry and industries that are closely related to agricultural production. One of the main conditions for the successful development of the agro-industrial complex is the effective operation of small forms of business.
Traditionally, small businesses in the agricultural sector include legal entities and individuals, peasant (farm) farms, consumer cooperatives, individual entrepreneurs and personal subsidiary plots. The above forms of management have their own characteristics that reflect the specifics of the development of agricultural production. Let's present the most significant of them:
- limited scale of production activities, which is capable of restraining the flexibility of resources;
- poor quality of the technical base and insufficient financial possibilities for updating the applied technical means;
- insufficient consolidation of economic interests in the development of cooperation and integration;
- weak susceptibility of the agro-industrial complex to the implementation of technical and technological innovations;
- often lack of competitiveness in a competitive environment and the dictate of conditions of large participants in the agricultural market;
- limited opportunities for small businesses to enter new more profitable sales markets for agricultural products from the point of view of sales.
In addition, the specific features of small businesses in the agro-industrial complex are also significantly influenced by the territorial characteristics of a number of regions of the Russian Federation, which are determined by natural and climatic conditions, the potential and level of development of the territory, participation in the system of interregional division of labour, the degree of integration and infrastructure (Titorenko & Zhichkin, 2021a; Zhichkin et al., 2020a, 2020b).
In the context of the insolvency of most agricultural organizations, a decrease in their material and technical base, a reduction in the scale of production activities, and as a consequence of a decrease in employment in production and an increase in unemployment in rural areas, the development of small businesses will contribute to the development of agriculture. Since they are not only a form of management, but also entrepreneurship in the countryside. Their successful development provides the agrarian complex with new jobs, reduces the level of unemployment and labour migration of the rural population, contributes to the development of a competitive environment and saturation of the food market.
The state, assessing the social and economic role of small businesses in agriculture, purposefully improves the organizational and economic mechanism for their support, using special tools (Figure 1).
The organizational mechanism is singled out as the main elements of the mechanism for supporting small forms of farming in the agricultural sector. It includes a set of rules for the formation of an organizational and functional structure, a management system, various subsystems of regulatory, legal, personnel, financial, information support, as well as an economic mechanism that ensures the implementation of management functions and resource support. The improvement of the mechanism for the development of small forms of management must be carried out in a comprehensive manner, according to the main directions of their development:
- the first direction includes support for the small business sector, self-employment of the rural population, rural areas and local producers;
- the second direction is focused on the development of integration and cooperation processes, which implies the choice of optimal forms of interaction between economic entities of the agro-industrial complex in the framework of the development of relations between production and consumer cooperation and agro-industrial integration. Within the framework of this direction, the possibility of forming territorial and product structures of a cluster type is being considered;
- the third direction combines a set of measures related to improving the quality of resource provision for small forms of farming in the agro-industrial sector. The main ones include increasing the fertility of agricultural lands, the use of promising varieties of agricultural crops, livestock and poultry breeds adapted to the growing conditions, the use of modern modernized and resource-saving technologies and technical means;
- the fourth direction is associated with the development of infrastructural support for the activities of peasant (farmer) households and personal subsidiary plots. This direction provides for the development of a system of production, information infrastructure, as well as infrastructure for supply, procurement, storage and transportation of agricultural products (Lakomiak & Zhichkin, 2019; Mamai et al., 2018; Titorenko & Zhichkin, 2021b). At the same time, the development of small forms of farming in the agro-industrial complex is determined by their ability not only to integrate into the market space, but also to successfully compete with representatives of large business. According to world economic practice, this requires the development of an effective system of state support. The leading countries of the world spend significant amounts of budgetary allocations to support agricultural producers to ensure national security.
In Russia, over the years of market transformations in the agro-industrial complex of the country, profound socio-economic transformations have taken place, which entailed a disparity in prices for industrial and agricultural products, an increase in energy prices, an increase in production costs, the use of outdated technologies, equipment, which led to an increase in the proportion of unprofitable agricultural enterprises. To restore their lost positions and reach a qualitatively new level of production, it is necessary to allocate subsidies. At the same time, special attention should be paid to their most efficient distribution, including for peasant (farmer) households. They represent a form of development of production activities and entrepreneurship, a special way of life, which forms the foundation of the cultural traditions of various peoples of the state, a source of vitality and development of rural areas.
In 2019, there were more than 250 thousand peasant (farmer) households in Russia, the number of farms, by 2020, increased by 14.5%. This can be explained by an increase in the amount of state support provided in the form of subsidies and grant support. In 2020, the total amount of funds allocated for the development of small businesses amounted to more than 15.0 billion rubles, which is almost 40% more than in 2019. Peasant (farmer) farms of the region began to receive grants based on a competition in 2013. As part of state support for the purchase of livestock and equipping a farm, novice livestock breeders (“Beginner Farmer”) could apply for an amount of up to 1.5 million rubles, and for larger farms (“Development of family livestock farms”) with experience for the development of agriculture from the budget was allocated up to 10 million rubles. Grants were also allocated as a one-time aid - up to 250 thousand rubles for household arrangements for novice farmers. The heads of the farms were obliged to master the grant in 18 months, after the expiration of the specified period, the ministry could draw conclusions about the effectiveness of the use of the funds provided.
The main areas of government support included:
- subsidies for loans for development and modernization;
- grants for housing and household amenities;
- assistance to pay off the lease fee for agricultural machinery and farm animals;
- development of family farms with compensation for operating costs.
Despite the action of the above directions of the state program in the agro-industrial complex, there are many unresolved problems. The most significant of them are:
- weak material and technical resources;
- difficulties in selling products;
- insufficient government support;
- inconvenient location of lands, their low fertility and others.
In addition, it can be noted that the majority of farm owners do not pay enough attention to the problems of improving their professional and business qualifications, as well as introducing agricultural innovations into their production (Abramov et al., 2020; Khayrzoda et al., 2020; Morkovkin et al., 2020).
In recent years, in a number of regions of the Russian Federation, the tasks of surviving the agricultural sector and increasing its competitiveness have been solved, which determines the need for interaction between the state and agriculture through state support.
Developed countries, including the European Union countries, consider state support to agrarians a priority, therefore, in recent years, the level of financing of the Western agricultural economy by 2020 is more than $ 300 per hectare of agricultural land, in Japan - $ 437 per hectare, in Canada - $ 188 per hectare, while in the Russian Federation it is less than $ 10. At the same time, the aggregate state support from developed Western producers for agricultural producers of the value of gross agricultural production is 32-35%, in Russia it is not more than 6,9%.
Indicators assessing the effectiveness of state support for small businesses
Despite a wide range of government support measures, there is currently no single system of indicators to assess their effectiveness. There is a misconception that its level is determined only by the amount of funds allocated by the state and their increase will lead to an improvement in the situation in the agricultural sector. In conditions of limited budgetary resources, the state faces the question of their effective use. This is why it is necessary to develop a scientifically grounded system of indicators of the effectiveness of state support for agriculture.
To assess the performance of agricultural enterprises, the Ministry of Agriculture and Food of the Russian Federation uses a tool (report on the results and main areas of activity or DROND). However, in this document, the system for assessing the effectiveness of state support has shortcomings. The most significant of these is the lack of relationship between the amount of public funds and the main production results.
We propose to single out indicators that characterize state support for the agro-industrial complex:
- indicators of the level of state support;
- indicators of the effectiveness of state support for the agro-industrial complex.
Indicators of the level of state support are subdivided:
- absolute (reflect the amount of funds allocated for the development of agriculture);
- relative (determine state support per hectare of agricultural land, per head of livestock);
- specific (characterize the share of expenditures on agriculture in the expenditure side of budgets of all levels, %).
Indicators of the effectiveness of state support for the agro-industrial complex are classified into the following groups:
Production efficiency assesses the impact of government support on the dynamics of agricultural production. At the same time, it is necessary to calculate the coefficient of the growth rate of gross output per 1% growth of government support.
Technological efficiency determines the degree of renovation of fixed assets, which is possible with government support. Here the indicator of the share of state support in the amount of fixed assets introduced is calculated:
Ккн = SOE/OS*100%, (1)
where Ккн – the share of state support in the amount of fixed assets introduced; SOE - the share of state support; OS - the sum of the main funds.
3.National economic efficiency characterizes the return of funds allocated by the state at the expense of taxes paid. Within the presented group, the ratio of the amount of taxes paid and the amount of state support can be distinguished:
Кt = t/SS, (2)
where t – the amount of taxes paid; SS – the amount of state support.
4.Financial efficiency determines the return on investment from the profit received by farms. This group provides for the calculation of the efficiency ratio of agricultural enterprises, taking into account government support.
5.The cumulative efficiency of budget financing is determined by the amount of financial resources that are attracted to the development of agricultural production as a result of measures of regional support for the agro-industrial complex.
Assessment of the overall performance (OPss) of the effectiveness of state support allows us to identify a range of fluctuations that allow us to judge the effectiveness of state support for small businesses. It is calculated as the sum of the efficiency ratio of farms taking into account government support, the ratio of the amount of taxes paid and the amount of government support, the share of government support in the amount of fixed assets introduced. If the value of the calculated indicator
OPss > 1, then this is a high degree of efficiency of state support;
OPss < 1, then state support is ineffective;
OPss from 0.9 to 1, then there is an average degree of efficiency of government support.
It is obvious that the presented indicators should strive for the maximum and are a reflection of the investment attractiveness of the regional agro-industrial complex.
Based on the classification of farms, it is possible to form their groups depending on the efficiency of spending budget funds and propose a system of directions of state support for them (Table 1).
includes farms that have a profitability of sales without subsidies, that is, state support allows these farms to carry out expanded reproduction, which is possible at their own expense.
includes farms with an average loss of sales without subsidies.
includes farms that exceed the average profitability of farms in the region, taking into account subsidies. This group differs in that state support does not have a significant impact on their activities.
includes most of the farms in the region. They are unprofitable without and without government support.
In order for the state budget funds allocated to support small businesses to be spent rationally, it is necessary to take into account the formation of factors and conditions for the rational organization of their production (Nosov et al., 2019, 2020) (Figure 2).
The market system of economic relations does not mean the exclusion of weak or unprofitable farms from the system of measures of state protectionism. In our opinion, such farms require the development of a special comprehensive program for overcoming the crisis. Thus, at the federal level, it is recommended setting fixed prices for fuel and energy resources that do not depend on the magnitude of seasonal demand and price dynamics in the world market; at the regional level, we propose the creation of a state structure that ensures the promotion of products to the market, the organization of a network of stores for the sale of products manufactured by farms.
In recent years, the problems that have accumulated in the agro-industrial complex require scientifically grounded, long-term solutions, the implementation of a comprehensive strategy for the effective and sustainable development of the agro-industrial complex. The development of agriculture depends on the successful implementation of important directions, measures, mechanisms of the state's agri-food policy, and in this, an assessment of the effectiveness of state support, including for small businesses, plays an important role.
As a result of the research work, it was revealed that small forms of business need attention from the state. This determines the need to use some measures to develop them and increase their efficiency. To stabilize production costs, the authors recommend setting fixed prices for fuels and lubricants as proposals that do not depend on the magnitude of seasonal demand and price dynamics in the world market and create a state structure to ensure the promotion of agricultural products on the market.
The study showed that the success of the spent public funds is determined by the presence of a scientifically grounded system of indicators for assessing the effectiveness of state support for agricultural production. The assessment criteria should be logically grounded and reflect the level of achievement of the set goals of the state impact on agriculture, the indicators should be based on the “effect-cost” ratio. This will make it possible to assess the effectiveness of state support from various angles, to identify the range of fluctuations that make it possible to judge the effectiveness of state support for small businesses. Based on the classification of farms and their formation into groups, depending on the efficiency of spending budget funds, a system of directions of state support for them is proposed. Nevertheless, for the effective functioning of small forms of farming, it is not enough to focus only on state support; one should also take into account the formation of factors and conditions for the rational organization of production in the farm.
The results of the research work were adopted for practical application by the Ministry of Agriculture of the Samara Region, the Territorial Administration of Agriculture of the Kinelsky and Koshkinsky municipal districts of the Samara Region, introduced into the work of peasant (farmer) enterprises in the Samara Region, theoretical provisions and methodological aspects put forward in the research work, are used in the educational process of the FSBEI HE “Samara SAU” in the study of compulsory disciplines “State regulation of the agro-industrial complex”, “State regulation of the economy”.
The development of agriculture depends on the successful implementation of important directions, measures, mechanisms of the state's agri-food policy, and the effective use of public funds plays an important role in this. Based on the study of various methods, the authors revealed that at present there is no generalizing complex methodology for assessing the effectiveness of state support for small businesses in the Russian Federation. In this regard, a system of indicators was developed to analyze the effectiveness of budgetary financing of small businesses, which will allow in the future to assess the impact of state aid on their financial and economic activities and will have a positive effect on their development. The use of the author's methodology will optimize the distribution of budgetary funds, will lead to an increase in the cost of gross output for each ruble of government support.
Kurmaeva I.S. is a participant in the development of the state program “Development of agriculture and regulation of markets for agricultural products, raw materials and food in the Samara region” for 2015-2025 and a regional component of the federal project “Creation of a support system for farmers and the development of rural cooperation” (Implementation act from the head of the budget planning department and financial control of the Ministry of Agriculture and Food of the Samara Region). Kurmaeva I.S. is a member of the regional program “Plan-forecast of socio-economic development of the municipal district Kinelsky for 2013-2020”. Kurmaeva I.S. is the recipient in 2020 of a cash payment to young scientists and designers working in the Samara region (Appendix to the minutes of the meeting of the competition committee dated 10.04.2020 No. 8). The title of the research work “Evaluation of the effectiveness of state support for small businesses in the Samara region”.
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25 September 2021
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Kurmaeva, I. S., Pertsev, S. V., Baimisheva, T. A., Makushina, T. N., & Dyachenko, O. V. (2021). Evaluation Of The Effectiveness Of State Support For Small Businesses. In I. V. Kovalev, A. A. Voroshilova, & A. S. Budagov (Eds.), Economic and Social Trends for Sustainability of Modern Society (ICEST-II 2021), vol 116. European Proceedings of Social and Behavioural Sciences (pp. 1993-2003). European Publisher. https://doi.org/10.15405/epsbs.2021.09.02.224