Why does Tatarstan need food industrial parks?
Ruslan Khalilov from the Direct Investment Fund on how to help the republic’s food producers to take the lead in innovative undertakings again
Agriculture and the Agro-Industrial Complex (AIC) in general together with oil production and oil refining are a core sphere of Tatarstan’s economy. Agriculture reaches 7,1% of gross regional product. The republic’s food security, the population’s quality of life, provision of foodstuffs depend precisely on the Agro-Industrial Complex. It provides hundreds of thousands of jobs and income to a number of large and small farms. But it is high time the AIC rested not only on classical technologies in its development but also launched new facilities of economic activity. In a column for Realnoe Vremya Ruslan Khalilov, a manager at the Direct Investment Fund (DIF), says how food industrial parks would be useful for the republic.
Repetition of the basics: what the AIC includes
The Agro-Industrial Complex consists of agriculture itself, processing of agricultural produce and the food industry, of course. Generally speaking, the food industry is a huge army of enterprises that accumulates feedstock, processes and delivers it to the end consumer. Over 40 separate sectors produce foods, tobacco and alcoholic commodities. Five large groups of the food industry are widely presented in the republic:
- food products;
- flour and grains;
- bread baking.
Like in most other regions, the number of food enterprises in Tatarstan is much higher than in others, it is no surprise. Because firstly, it is cheaper to process wheat and milk locally, in one’s region than taking it somewhere for processing. Moreover, Tatarstan is in Russia’s top 3 in gross agricultural production — we have 4,5 million hectares of arable land in the republic.
Secondly, products are what a person always needs. This is why expenses of food enterprises, as a rule, pay back quickly — it is one of the most effective businesses.
And even during the pandemic when almost all manufacturers suffered, food companies didn’t feel a sudden fall in demand for their products. However, it is no secret that small companies — farms where cheese is made, confectionaries, private bakeries, dairy and meat companies — found it much tougher than large corporations.
Recipe to solve the AIC’s problems
The food industry doesn’t stay still. New technologies are a guarantee of the efficiency of any enterprise, no matter if it is a mechanical engineering plant or a sausage shop. This is why a course for automation of the production cycle, careful production, growth of production efficiency — all this is topical for the AIC too. Take at least that even the simplest conveyor greatly simplifies people’s labour, while the quality and speed of operations increase it repeatedly by eliminating the renowned influence of human factor.
I didn’t say in vain that small companies find it the hardest. Due to a lack of working capital, it is hard for them to buy expensive equipment and augment production. But efficiency can’t rise when working in the old fashion. I am fully convinced that the problems the AIC has should be solved systematically and structurally. Nothing will work without the direct involvement of authorities — both at regional and federal level. Everything that is offered now and what leading experts in food production talk about can be divided into several key takeaways one should go by (moreover, simultaneously, not gradually).
- Higher processing of products and their sale in one’s own chain stores. Subsidiary industries should develop: this will provide thousands of new jobs, increase workforce productivity, people will have an additional income.
- It is necessary to design a specific mechanism of movement of land and property from less effective economic executives to more effective ones. Let’s remember thousands of hectares of fields overgrown with weeds that belong to depressed households that are short of workforce, enthusiasm, machinery, managerial will. Unfortunately, they still exist in Tatarstan. Legal instruments are necessary to fix this.
- Any business needs the latest information and smart legal consultation. If a farmer or, for instance, an owner of a cheese factory doesn’t know where to ask for help, he isn’t aware of his rights and possibilities, he will be in the dark. This is why it is necessary to create understandable information resources in every region and provide a team of lawyers who could consult any entrepreneur from the AIC. This work is already done in Tatarstan, but practice shows that it is not enough yet.
- Agricultural companies traditionally still do not take ample marketing opportunities of their activity. The majority works in the old fashion agreeing on supplies via calls. But some households hire strong teams of marketing managers — these technologies work by propelling a business to a new, modern level. Knowing the economic situation in the market, using fresh research, households can flexibly regulate the structure of their production and promote their products on a scale that has never been seen.
- A rise in workforce productivity and the introduction of innovations is a common topic for any modern-day business. Today it is a cornerstone of development both in agriculture and the processing industry. Not using this means staying in the Stone Age. And here we go back to the smart management process and, of course, technologies.
Food industrial parks as solution to small enterprises’ problems
Going back to small, local food enterprises, I would like to talk about how to help them. I think there is no point in endlessly injecting public subsidies in them: to feed a person, he should be given a rod, not fish. And as one of such rods, it is offered to organise food industrial parks in the republic — a kind of structural organisation of the sector that will enable enterprises to both simultaneously unite to survive and increase productivity and save a business’s isolation.
As we think, they should operate following a pattern of numerous industrial parks, which are already organised in the republic, but they should specialise precisely in food production. And if everything is organised smartly, metaphorically, it will be a huge industrial minesweeper. I will briefly enumerate what the fulfilment of this strategy will bring:
- Small agro-industrial enterprises will be able to reinforce their positions in the market by increasing internal sales and obtaining the possibility to export.
- Enterprises can reach a new technological level without big financial losses.
- They will get a big package of services for promotion after entering the industrial park.
- The population will get products that were made using perfect technology, underwent all necessary quality and safety tests.
In a word, primitive production is a thing of the past, and small enterprises should unite their effort under one roof to survive. I will repeat once again: this idea doesn’t threaten the legal isolation and integrity of enterprises. We don’t pursue a goal of creating a Soviet food factory by bringing a fish plant and a dairy factory together. In modern Tatarstan, there must be a diversity of property forms and variety of agriculture: from the largest to medium-sized and small enterprises.
Vysokaya Gora District: 100-ha agro-industrial park
Today the Direct Investment Fund is developing and preparing to implement a project on a pilot agro-industrial park in Vysokaya Gora District. It is planned to be a huge territory of 100 hectares. Various enterprises that will process agricultural produce and make ready-to-eat food will be located here. The management of the park will be centralised, it is planned to create all necessary communal infrastructure, set up warehouses meeting all the latest requirements. In other words, an enterprise will get a series of preferences if it is situated here.
The republic will only benefit — big payments will be made both in the federal and local budget. By interim calculations, this project will allow attracting over 25 billion rubles of investments, moreover not only from Russian but also from foreign investors. As many as 2,500 jobs are considered to be created for both residents of Vysokaya Gora District and adjacent municipalities of the republic.
Residents’ revenue from the sale of ready foods is forecasted to be 14 billion rubles. It will be possible to produce halal food in the park, which is very important for many entrepreneurs from our republic. The DIF has already created a similar park, however, not a food park. Industrial Park M-7 already set up an industrial area in Zelenodolsk Area with ready engineering infrastructure, convenient logistics and a managing company. The area of the M-7 park is 39,5 hectares, 50 residents work there today, 2,000 jobs were created. The same company plans to develop Vysokaya Gora agro-industrial park too.
When the project is implemented, the republic will get the first sample of a new structural organisation of the processing food industry. I am sure this will become a new big chance for small enterprises, support the republic’s businesses and allow Tatarstan’s Agro-Industrial Complex, which is one of Russia’s first complexes, to reach a new level. Today the republic is in the lead in most indicators in the country. So why not become a pioneer in agricultural produce processing? Because the attraction of additional working capital and extensive support for entrepreneurs is one of the key prospects of the development of the food industry in the Republic of Tatarstan.