Impact of subsidy groups and production digitalization on growth in Russian dairy sector

Issue № 7, 2024, article № 2, pages 15-24

Section: Digitalization in agrarian and industrial complex

Language: Russian

Original language title: ВЛИЯНИЕ ГРУПП СУБСИДИЙ И ЦИФРОВИЗАЦИИ ПРОИЗВОДСТВА НА ОТРАСЛЕВОЙ РОСТ В МОЛОЧНОМ ЖИВОТНОВОДСТВЕ

Keywords: MILK PRODUCTION, STATE SUPPORT, CONCESSIONAL CREDIT, PRODUCTION FUNCTION, PANEL DATA

Abstract: The article investigates the extent to which subsidies to dairy farming, which are characterized by high relative to the agricultural average, affect branch growth. The analysis was performed using a random effects (RE) model on the data of dairy enterprises of the Leningrad region for 2016-2021. The research includes an evaluation of the impact by subsidy groups' and production digitalization. The empirical data show a positive and statistically significant effect of subsidies on production growth in dairy farming, which, however, is significantly lower than expected given the actual level of subsidies to revenue. The entire effect of subsidies is derived from a group of payments related to compensation of current expenses. Capital investment subsidies turn out to be statistically insignificant, the paper discusses likely reasons – level of this support and the specifics of individual subsidies in the group. A separate model is built to estimate the impact of subsidies on concessional credit, taking into account the available data for a shorter period. The results show that the fact of receiving a concessional credit has one of the strongest effects on stimulating branch growth. The positive and statistically significant impact of milk production digitalization (using cow health monitoring technologies as an example) on industry output was quantitatively confirmed. It is found that in group of enterprises with implemented digital health monitoring technologies, the impact of subsidies on output is lower, although only slightly, relative to enterprises group without such technologies, which does not confirm the original hypothesis. The paper discusses some practical implications of the findings aimed at improving the efficiency of agrarian subsidies.

Authors: Nikulina IUliia Nikolaevna