Modern problems of project management in agriculture of Russia

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This article examines the possibilities of applying project management in the field of agriculture from farms to Russia's largest agricultural holdings in order to find new opportunities to enhance entrepreneurial activity.

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International Journal of Mechanical Engineering and Technology (IJMET) Volume 10, Issue 03, March 2019, pp. 1655–1662, Article ID: IJMET_10_03_167 Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=3 ISSN Print: 0976-6340 and ISSN Online: 0976-6359 © IAEME Publication Scopus Indexed MODERN PROBLEMS OF PROJECT MANAGEMENT IN AGRICULTURE OF RUSSIA Margarita M. Simonova Department of Personnel Management and Psychology, Finance University under the Government of the Russian Federation, Moscow, Russia Stanislava A. Butyrina Department of Management and Socio-Economic Disciplines of the Moscow State Institute for Tourism Industry n.a. Yu. Senkevich, Moscow, Russia Elena V. Kamneva Department of Personnel Management and Psychology, Finance University under the Government of the Russian Federation, Moscow, Russia Grigory N. Butyrin Department of History and Theory of Politics Faculty of Political Scientists of the Lomonosov Moscow State University, Moscow, Russia ABSTRACT This article examines the possibilities of applying project management in the field of agriculture from farms to Russia's largest agricultural holdings in order to find new opportunities to enhance entrepreneurial activity. The proposed measures are aimed at improving the efficiency of project management at these agricultural enterprises in the context of the stagnation of the global economy and sanctions. Key words: agriculture, project, management Cite this Article: Margarita M. Simonova, Stanislava A. Butyrina, Elena V. Kamneva, Grigory N. Butyrin, Modern Problems of Project Management in Agriculture of Russia, International Journal of Mechanical Engineering and Technology 10(3), 2019, pp. 1655–1662. http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&IType=3 1. INTRODUCTION The priority national project “Development of the agro-industrial complex” provides for the solution of the following main social tasks: investment in a person, in improving the quality of life of citizens living in rural areas and developing entrepreneurial activity of the population through the implementation of specific projects. The practice of implementing these projects has confirmed the high efficiency of the invested funds. Over the past few years, Russia has occupied top places in the production and sale of wheat on the world market, and the country's http://www.iaeme.com/IJMET/index.asp 1655 editor@iaeme.com
Modern Problems of Project Management in Agriculture of Russia income from the sale of agricultural products has exceeded the income from the arms trade. The modern national project « Development of the agro-industrial complex» includes three main areas:  -accelerated livestock development;  - stimulating the development of small businesses;  - providing affordable housing for young professionals in the village. The development of agriculture, as well as the agro-industrial complex as a whole, is strategically important and one of the priorities for our country, given the protracted global economic crisis, the unstable political situation, sanctions, which were announced by the western countries of Russia in 2014 and are still in force. (In the UN report “World Economic Situation and Prospects 2017. Update as of mid-2017,” sanctions were mentioned among the three main factors that have a negative impact on the growth potential of total GDP of the CIS in 2015-2017 [9]. As of July 1, 2016, the number of employees of agricultural organizations was 1.4 million people, peasant (farmer) farms - 301 thousand people, individual entrepreneurs - 76 thousand people. According to the results of the 2016 census, the land area in farms of all categories for 10 years decreased by 23% compared with the results of the previous All-Russian Agricultural Census 2006, and amounted to 348.4 million hectares. At the same time, in agricultural organizations, the land area decreased by 29%, and in peasant (farmer) farms and among individual entrepreneurs, as well as in households, they increased by 47% and 30%, respectively. These data suggest that the farm sector is developing steadily in both the number of agricultural land and the production of gross agricultural products. In this regard, the need for technical re-equipment and modernization of the country's agro-industrial complex has increased. In 2014, this problem became very acute, and the sanctions policy of the United States and European countries intensified, and there was a danger to a certain extent of a slowdown in agricultural development in the Russian Federation. Switching to the search for internal opportunities brought positive results. Following the results of 2018, we can state that the requirements for the modernization of the agro-industrial complex in our country are almost limitless, and the implementation of the priority national project for the development of the agro-industrial complex was achieved even in the context of a deficit of budget funds. According to the Research Center of the Deloitte Company in the CIS, although there is a decrease in GDP growth in the agro-industrial complex from 2.9% to 1.1%, according to data for 2016, but the growth in agricultural output is still taking place [8]. The sanctions of the United States and the EU member states operate in several directions - both in terms of limiting the supply of various food products to our country, and in terms of limiting the supply of various types of agricultural equipment, technologies, production, etc., which is negative and not a key moment for our country, given the insufficient pace of modernization of domestic production of equipment and technologies for the agricultural sector. Agriculture is a consumer of products of many industries and services, ensuring the employment of millions of people of working age, the food security of the country and the standard of living of the population directly depend on the state of the agro-industrial complex. Despite the difficult economic situation and the reform of the industry, in recent years the processes of improving management forms, horizontal and vertical integration have been taking place in the agricultural sector of the economy, large agro-industrial complexes are being created, industry associations and cooperation of small agribusiness are being formed. Agricultural holdings produce more than 75% of agricultural products in the country. At the same time, the AIC continues to be one of the most problematic areas of the Russian economy. The most acute issue for the country's agriculture is the general technical and http://www.iaeme.com/IJMET/index.asp 1656 editor@iaeme.com
Margarita M. Simonova, Stanislava A. Butyrina, Elena V. Kamneva, Grigory N. Butyrin technological lag behind its main competitors on the world food market, and farms are significantly less dependent on expensive technologies [5]. However, taking into account quite serious state subsidies for the development of the Russian agro-industrial complex, which are provided under the State Program for the Development of Agriculture and Regulation of Agricultural Products, Raw Materials and Food Markets for 2013-2020, an adequate increase in the output of agricultural products is also required. This is possible only with the use of modern approaches to the implementation of various capital investments in the form of the so-called “national project approach”. The project approach is something other than a more careful selection of projects for implementation, taking into account their expected feasibility, efficiency, maximum consideration of the risks of project activities and ways to minimize them. A proper organization of project management is required in such a way as to get the most out of the staff and creative staff of the project teams. Farming in economically developed countries remains a subsidized industry, so when implementing projects in the field of agriculture, you need to create such project teams (VTK) that would significantly save resources, get the most return on investment and have the most favorable impact on the development of the agricultural sector of the Russian Federation. The topic of project management in the field of agriculture for our country is relatively new, since the intensive development in the agro-industrial complex of Russia has become a priority only in a market economy and a sanction regime, although some elements of the project approach were used in the USSR. Until recently, in domestic practice the term “project” was usually used primarily in the technical field, and it was associated with an idea of the totality of documentation for the creation of any structures or buildings. In Western management, it is customary to understand a project with a certain initial data and expected results (goals), which determine the ways to solve this problem in a certain period of time. Thus, with the approach of Western experts, the project includes the following main elements:  - intention (problem);  - means of implementation (decision);  - results (goals) [7]. The project does not necessarily create a “unique product or service”. This approach is more justified in the field of innovation. But it should be noted that every project is innovative, since it always has a specific time for implementation, it is carried out in unique conditions by a unique management team and ITC. Therefore, as the authors of this study believe, the property of uniqueness and innovation is inherent in any effective project. As stated in the Guide to the VGG project management knowledge base, the concept of “project” is interpreted as a task with certain initial data and the required results (goals) determining the way to solve it. At the same time, the project includes the intention (problem), the means of its implementation (solving the problem) and the results obtained in the implementation process [1]. Project management, planning, organization and control of labor, financial and material and technical resources of the project, aimed at the effective achievement of project objectives. The process of project management activities aimed at the effective achievement of project objectives with a given quality, in a timely manner, according to the approved budget, with the existing restrictions and uncertainty, through the use of available resources and technologies [3]. http://www.iaeme.com/IJMET/index.asp 1657 editor@iaeme.com
Modern Problems of Project Management in Agriculture of Russia In the most general form, the project management methodology (project management) defines and formalizes the procedures, methods and tools for the implementation of five groups of management processes (according to the PMBOK Guide standard):  - initiation (initialization) of the project;  - project planning;  - organization of performance;  - control of project implementation;  - completion of the project. Project planning is a process that includes the definition of goals and interaction parameters between the work and project participants, the allocation of resources and the selection and adoption of organizational, economic, technological decisions to achieve the goals of the project [6]. The project life cycle, in accordance with ISO 21500: 2012, is understood to be the established phase sequence from the beginning to the completion of the project [4]. The project approach in the development of the modern Russian agro-industrial complex will make it possible not only to specify the responsibility for the expenditure of public funds, taking into account the specifics of its functioning, and to significantly increase the pace of its development. The specificity of the agricultural sector in the Russian Federation is characterized by the following factors:  - not a high level of organization of management;  - low security of computer equipment and access to information resources;  - the outflow of qualified personnel from rural areas;  - the lack of sufficient resources for agricultural enterprises to pay for the services of consulting organizations;  - poor development of communication. Thus, with all the universality of project management methodology for all sectors of the economy, the ideas of a scientific approach to project management are quite difficult to implement in the field of agriculture. Project management in the agro-industrial complex and, therefore, an analysis of their implementation has specificity that distinguishes project management from other industries and activities [2]. First, there is a feature of coordination in the sectoral structure of the agro-industrial complex:  - the branches providing production of means of production for agriculture;  - direct farming - crop production, agriculture and livestock;  - processing industries. For example, as part of the first industry, machine-building, chemical, construction, enterprises of the microbiological and mixed feed industries. The second branch consists of agricultural enterprises, as well as forestry enterprises. These enterprises produce both final and intermediate consumption products for various groups of consumers. The third, the most difficult, is focused on processing but agricultural raw materials. Here there is a significant specificity of raw materials and technological bases. Enterprises processing http://www.iaeme.com/IJMET/index.asp 1658 editor@iaeme.com
Margarita M. Simonova, Stanislava A. Butyrina, Elena V. Kamneva, Grigory N. Butyrin agricultural raw materials and related to the food industry, as a rule, have special requirements for raw materials. A significant difference in the activities of agricultural enterprises is also in the specifics of the seasonality of the production and working period. In agriculture, the production period not only differs by a longer duration compared to that at the enterprises of the first and third structural groups of the agroindustrial complex, and usually this period is much longer than the working period over time. At the same time, agriculture is the main link in the structure of the agro-industrial complex. Thus, on the one hand, agriculture satisfies its needs at the expense of the first and third structural groups, that is, is dependent on them. On the other hand, agriculture provides with orders, raw materials, products, jobs for enterprises of the first and third structural groups. Both the entire agro-industrial complex and its constituent industries, in turn, are complex hierarchical structures. In addition, there is a regional specificity of agriculture, reflecting, among other things, climatic and natural conditions. Thus, it is quite convenient to use the ideas of project management when managing projects implemented in enterprises and organizations of the first and third areas, despite the fact that the agricultural sector is quite problematic for the implementation of a systematic approach to project management. In the field of agriculture, there are both processes that are managed and cannot be fully controlled by the subject. This is observed, for example, in crop production or animal husbandry. Moreover, if in plant growing, it is possible, for example, to accelerate the processes of plant vegetation through the use of modern technologies, then in the second one it is quite problematic to do so. The consequence of industry, organizational and technological features of production is the use of various methods and techniques for cost accounting. Due to the unevenness, seasonality of production, the discrepancy between production time and obtaining results in one reporting period (year) and the occurrence of significant rolling- over residual production proceeds to the next year, they are taken into account for crops, for the main technological processes, for years. In agriculture, a significant role in obtaining the desired result from project implementation is played by various factors that are considered in project management as inputs to the planning process. These factors are highly likely to affect the results of the project but they are not always controlled by the project management. For example, in the field of agriculture weather and climate conditions play a significant role. If, for example, weather and climatic factors are now minimized even in such sectors as construction, then in the field of agriculture, weather and climatic factors still remain key. The factor of seasonal gain of profit plays a significant role, primarily in the farms of the crop profile. The main period of income in such farms is autumn and winter. Therefore, it is necessary to find ways to equalize the incomes of the farms by creating inventories of marketable products, providing a commodity loan to customers, creating additional industries and strategic business enterprises (CPS). Also, environmental factors are no less important for agriculture, for example, land reclamation costs may not be taken into account, despite the fact that in crop production, land is a major factor of production and is considered not only as a production resource, an object of cost accounting, and a key element of functioning capital and main means of production http://www.iaeme.com/IJMET/index.asp 1659 editor@iaeme.com
Modern Problems of Project Management in Agriculture of Russia The factors of urbanization of the population of the Russian Federation are also extremely difficult to take into account. The rural population in the country continues to decline in favor of the urban population. At the same time, agricultural production should be provided with appropriate personnel, which may simply not be close to one or another agricultural enterprise. The profitability of agricultural enterprises in the Russian Federation remains not high, therefore, it is not always profitable for such enterprises to bear the cost of transporting workers from other localities. However, it should be noted that there are factors that contribute to the successful use of project management in the field of agriculture. First, it is the organizational and legal structure of modern agricultural enterprises. Along with the peasant farms in the agricultural sector, there are large holdings, the structure of which includes not only enterprises producing agricultural products and processing enterprises, various financial structures. Such organizational and legal forms of enterprises make it possible to intensify the process of bringing cities and villages closer together in the areas of organizing management, introducing new, modern technologies, increasing the financial stability of all enterprises within a holding company due to the possibilities of redistributing financial resources. This process should be considered when considering issues of project management in the field of agriculture. It is obvious that it is quite difficult to implement the ideas of project management at the level of a small peasant farm for a variety of reasons, for an average agroholding this task is quite realizable. The most important condition for the successful implementation of project management in agribusiness is quick payback of projects. This is possible subject to the following rules:  - growth in production volumes;  - reduce material and labor costs per unit of production. These conditions are most successfully implemented at large agricultural enterprises, primarily in agroholdings. The presence of a substantial financial "recharge" among holdings allows them to quickly implement large investment projects, reduces the time needed to build livestock farms by up to 1 year; contributes to the renewal of the park of agricultural machinery. However, significant risks in the implementation of project management in the field of agriculture must be carefully considered both in the pre-investment, investment and implementation phases of the project. With all the universality of project management methodology for all sectors of the economy, the ideas of a scientific approach to project management are not sufficiently implemented in the field of agriculture. This is because in the field of agriculture, but there are processes both managed and practically unaffected by the subject of management [3]. A significant role in obtaining the desired result of a project is played by various factors that are considered by project management as inputs to the planning process. These factors are likely to affect the results of the project, but they are not always controlled by the project managers. According to experts, the use of project management in the field of agriculture, like the agro-industrial complex as a whole, is quite convenient in managing projects in the field of processing agricultural products, as well as in enterprises that provide the technical functionality of modern farms. At the same time, directly at agricultural enterprises, along with controlled processes, there are unmanaged processes. However, no one will call investment activities, for example, sowing sugar beets or obtaining marketable milk at the livestock complex. Therefore, the problems of providing http://www.iaeme.com/IJMET/index.asp 1660 editor@iaeme.com
Margarita M. Simonova, Stanislava A. Butyrina, Elena V. Kamneva, Grigory N. Butyrin modern approaches in the implementation of investment projects are in a different plane, namely:  - due to low profitability (or the desire of the management of holdings to save on rural producers) farms;  - due to the lack of due attention to the issues of modern technological support of processes in the AIC by the state;  - due to the lack of due trust of the management of agricultural enterprises in modern management technologies. Project activity at the level of agricultural enterprises is not much different from the project activities of other companies in other industries, for example, in the purchase of equipment or the erection of production facilities. In agriculture, natural factors play a significant role in obtaining results. At the same time, in project management, they are considered as important inputs to the planning process, they should be under scrutiny, but they are practically unaffected by management. 2. CONCLUSION AND RECOMMENDATIONS Thus, a systematic approach to project management in agricultural enterprises is not only possible, but also necessary, precisely in order to save money. It is precisely because of the lack of a qualified, systematic approach in the field of design that agricultural enterprises often lose significant resources (which are often government subsidies for agricultural producers). It is possible that the “retreat economy” factor also works in part, when at the regional level certain suppliers and contractors are recommended, and farm managers, in this case, are not “concerned” with optimization and logistics. Currently, in the field of agriculture, factors that promote the use of project management are increasing. In the agricultural sector there are large holdings, in the structure of which there are not only enterprises producing agricultural products, but also processing enterprises, various financial structures. Such organizational and legal forms of enterprises make it possible to intensify the process of bringing the city and village closer together in the areas of organizing management, introducing new modern technologies, and improving the financial stability of all enterprises within the holding company due to the possibilities of redistributing financial resources. This process should be considered when considering issues of project management in the field of agriculture. REFERENCES [1] Verzuh E. Project Management. Accelerated MBA course. Williams. 2017, 471 p. [2] Ilyenkov L.D. Application of project management in the agro-industrial complex: problems and ways to solve them. Milk herald. № 4. 2016, 49-54. [3] Lobzov A.V. How to build a corporate project management system. Management today. № 6. 2015, 33-39 . [4] International standard for project management ISO 21500: 2012 "Guidelines for project management" // http://mconlab.com/stati/proekty/27-iso-21500-russkaya-versiya [5] Sayapin A.V., Kozhevnikova T.M., Belchenko O.A. (2018). The past and the present of the agrarian economy of the Tambov region. Socio-economic phenomena and processes. Tambov, № 11, 2018 16-34 [6] Tikhomirova O.G. Project management. Practice: study guide. Infra-M, 2016, 256 p. http://www.iaeme.com/IJMET/index.asp 1661 editor@iaeme.com
Modern Problems of Project Management in Agriculture of Russia [7] Tikhomirova O.G. Project management. An integrated approach and system analysis. INFRA-M. 2017, 273 p. [8] Deloitte website https://www2.deloitte.com/content/dam/Deloitte/ru/Documents/research- center/obzor-rynka-selskogo-hozyajstva.pdf [9] World Economic Situation and Prospects 2017. Update as of mid-2017 (eng.). United Nations. – Growth prospects for the region in the 2015-2017 season http://www.iaeme.com/IJMET/index.asp 1662 editor@iaeme.com