Monetary and Non-Monetary Instruments of the State for Increasing the Efficiency of Agricultural Production
Authors: Archvadze Joseph 
Published: December 2024

Support of the agricultural sector from the state carries both monetary (allocation, subsidies, transfers, etc.) and non-monetary (legal regulation, taxation regime, preferences for individual regions or productions, programs to support local producers, farm households, etc.) .) forms. At the same time, there are no hard lines of distinction between the specified forms of state support for agriculture. From the point of view of a purely monetary aspect, the increasing expression of attention from the state is increasing the scale of budget financing. Despite this, the growth of volume production in this sector noticeably lags behind the growth of the corresponding government expenditures. If in 2012, each budget ruble directed to the agricultural sector accounted for 73.3 GEL of production in this branch, then in 2023 this ratio decreased 10.3 times - to 7.1 GEL. However, this clearly does not indicate a negative correlation between the growth of budget funds and the reduction of their effectiveness, since the purpose of public funds is not exclusively the growth of volume production. – No less important purpose is the creation of stimulating conditions, environments for entrepreneurial activity. I say otherwise, the current backwardness of the agrarian sector of Georgia is not due to the lack of financing of the agrarian sector by the state, but the result of the low efficiency of the production and business environment, which does not provide high motivation for the corresponding production. Separate high-efficiency farms only confirm that the breakthrough in this field is segmental and not systemic in nature. The government at this stage of development in the agrarian sector of the economy faces the following tasks:

- structural reforms, such institutionalization of organizations and production management, which will ensure progressive, highly effective and highly motivated production;

- attraction of innovative technology and investments;

- implementation of import substitution strategies;

- providing industries with highly qualified specialists of various profiles that meet modern requirements;

- ensuring food security, etc.

Thus, the role of the state in the growth of agrarian production should be considered not only in a narrow "monetary" aspect: "subsidization - volume of production", but also in a non-monetary, institutional aspect: "production environment - volume of production". When considered in the last aspect, the essence and purpose of state subsidies will serve to solve infrastructural, organizational and technical problems of the agricultural sector. And the strategic task of the growth of the production of the specified branch must be solved by the legal background, the order, which determines and stimulates the state subsidy of the highly effective connection of production factors. This latter implies the forms, methods and scales of government support incentives (formation of a specialized agricultural credit system, agricultural insurance, subsidizing fuel for agricultural work, etc.). The role of the state in the growth of agricultural production implies the presence, interaction and assistance in the process of two most important components - entrepreneurial activity and municipal cooperatives. The non-monetary form of state support and the corresponding infrastructure should also include centers and agencies for the development of enterprises, central and municipal funds of the state, leasing companies, advisory and training centers, guarantee funds, etc. Naturally, the creation of such funds must take place with the active financial and organizational support of the state, as well as donor organizations.