Adaptation of Agriculture to New Geopolitical Conditions

B. A. Kheyfets () and V. Yu. Chernova ()
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B. A. Kheyfets: Center for Post-Soviet Studies, Institute of Economics, Russian Academy of Sciences
V. Yu. Chernova: Center for Post-Soviet Studies, Institute of Economics, Russian Academy of Sciences

Studies on Russian Economic Development, 2024, vol. 35, issue 5, 725-732

Abstract: Abstract The article analyzes the impact of the sanctions policies of Western countries on the agri-food sector. It is noted that in difficult geopolitical and macroeconomic conditions, many problems that existed in the agri-food sector even before the increase in sanctions pressure on the Russian economy were exposed and intensified. With a high level of self-sufficiency in food products, the industry has maintained a high level of import dependence of agricultural production, primarily for seeds and breeding material, as well as for many other components of agricultural production. Adaptation strategies of the agri-food sector to new conditions are aimed at accelerating import substitution and increasing domestic production and replacing the importer from Western countries with a supplier of similar products from friendly countries. The increased attention to import substitution and the growth of investment attractiveness of the industry are shown. Key problem areas of the industry have been identified, including rising production costs, decreasing profitability and, as a consequence, decreasing demand for domestic agricultural machinery, and exacerbating the problem of personnel shortages in agriculture. The role of exports as a driver of production growth in a few agricultural sectors is noted in the absence of prerequisites for the growth of domestic consumption, which is hampered by a decrease in the purchasing power of per capita monetary income of the population and the lack of population growth. A decrease in profitability in agriculture against the backdrop of a significant increase in costs leads to a reduction in the purchase of domestic agricultural machinery products by agricultural producers and hits producers in related industries up and down the value chain. It is concluded that the sources of growth in agricultural production in the short and medium term will be import substitution in the field of breeding, ensuring an increase in the profitability of agricultural production, eliminating the shortage of labor resources in agriculture, increasing the investment attractiveness of the agri-food sector for new investors, developing exports.

Keywords: agri-food sector; sanctions policy; import dependence; self-sufficiency; labor shortage; decreased profitability; export; investment (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1134/S1075700724700266

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