Supply regulation at Russian regional markets

The central concept of the Russian agro-industrial production stabilization programme is a combination of market relations with government protectionist policy. The results achieved in the course of agrarian reforms in Russian regions indicate that there have been provided important legal and organizational conditions for successful functioning of multi-layer agriculture and formation of land market. However, as the paper shows, the agrarian reform still fails to bring about any growth in production. The present situation is such that if the current trends in AIC remain the downswing in production may make another 15% in the nearest years. This requires immediate measures to be taken in order to increase food supply and protect the domestic commodity producers. For the purpose of planning a strategy of further reforms in AIC there have been identified the basic factors of stabilization of regional food markets. The paper contains the results of correlation-regression analysis and the typology of Russian regions based on the evaluation of the factors that govern the food demand and supply and the complex indicator of the level and structure of nourishment. It is shown that if the Russian food market is localized within the bounds of individual regions then the principal factors restraining food consumption are the low level of quality ecologically pure products. The paper also contains suggestions associated with improvement of the taxation system in part it is applied to agricultural commodity producers. principal factors restraining food consumption are the low level of development of the agrarian sector in the region and the insufficient provision of the local processing enterprises with raw agricultural produce. It is proven that the regional agrarian policy must pay due respect for the specific natural and climatic features as well as for the resource potential of the region. Along with this it is clear that food self-provision of regions must not in any way neutralize the production specialization and hamper the development of inter-regional ties. The research shows that the existing underdeveloped market environment is the cause for the low effectiveness of market means of regulation like interest rates and tax privileges. The application of direct economic instruments of regulation such as compensations for the agricultural producers' expenses, intervention purchases, subsidies and budget allocations for realization of investment programmes seems more reasonable in this situation. It is important that the agricultural commodity producers be supported selectively, the most effective ones having the priority. The authors outline some fundamental principles of a flexible price mechanism. The latter allows for the prices adjusted on federal and regional levels, pledge and target prices and price differentials for high quality ecologically pure products. The paper also contains suggestions associated with improvement of the taxation system in part it is applied to agricultural commodity producers.