Features of economic situation in Stavropol Territory

In first half of the 90-s the economic situation in the territory was constantly deteriorating. It was negative influenced by long destabilisation of social and economic situation in North Caucasia, rupture of economic relations, low competitiveness of local agricultural production in conditions of market reforms. The volume of commercial production in the beginning of 1997 was only 36% of the level of 1990, investments in the fixed capital ? only 27%, gross agricultural production for this period decreased for one half. By the level of consumption of the budgetary funds per capita the territory occupied the 83rd place in the Russian Federation. In the laws of the Russian Federation on federal budget since 1996 Stavropol Territory is addressed as "requiring financial support" and "especially requiring financial support".

The roots of present economic difficulties were inherited from the Soviet period. They are as follows: the main part in the gross regional product belonged not to finished products but to exported agricultural raw materials and industrial semifinished products which reduced the revenue. However the former system of production technological specialisation and co-operation of the USSR regions allowed the local budget to get the income covering the costs of maintenance and development of the social and economic sphere. The collapse of the USSR has deprived the companies of traditional markets for their production in Transcaucasia, Baltic States and Ukraine, and the changed tax system oriented on finished products has put the territory in unequal conditions compared with many other regions. The companies of Stavropol Territory specialising in engineering, light industry and agriculture were in the most difficult situation. Finally the share of unprofitable companies became 45%. By the middle of the 90-s many companies of defence industry that used to manufacture chemical, electrotechnical and electronic production stopped their operation. The amount of production in food and light industry, the main partners of agriculture, sharply decreased. The issue of petroleum supply in the region was very important since this was traditionally part of import.

The situation was adversely influenced by mass migration requiring large budget costs. Due to all these factors the load on social budget costs increased and the profit of companies decreased. It resulted in gradual degradation of Stavropol Territory formerly known as "all-Union granary and health resort" and transition of the territory to the category of territories requiring financial support.

In 1997 ? 1998 the economic situation was slightly stabilised, mostly in industry. This was stimulated by economic policy of the territory administration and assistance of the federal centre. For the first time during all previous years the decrease of gross production was stopped and the growth of commercial production started (till 1997 the annual reduction by the physical volume index was 5 ? 10%). The positive tendencies in the economy are connected with successful implementation of target programmes on stabilisation of activity of companies of mechanical engineering, chemical and defence industry, as well as support of small business.

In 1998 the industrial production of the territory was for 13 billion roubles, which is 14.5% more than in 1997 (in 1997 ? increase by 2.6% compared with 1996). The volume of delivered production in 1998 constituted 94.5% of the manufactured products, which means that the majority of the companies did not work "for warehouse". Whereas in 1997 the volume of production mostly increased at small and ancillary companies, in 1998 the growth was observed at large and medium companies that increased their production by 16.6%.

Four of the eight main industries show production growth: chemistry and petrochemistry where the increase of production was 23.7%, in engineering ? 25.8%, in oil industry and food industry (confectionery, wine production, soft drinks production and flour-milling industry). The production of synthetic resin and plastic was twofold increased, 1.9 times ? three-phase meter production, 1.2 times ? truck cranes and industrial pipeline fittings, almost 7% ? oil production, 17.7% ? production of mineral fertilisers. A noticeable growth of physical amount of production was observed at industrial companies of Nevinnomyssk, Budennovsk, Georgiyevsk, Lermontov, Ipatovsky and Krasnogvardeisky regions of the territory.The positive shifts were noticed in the production of consumer goods that was reducing during the previous years (including the first half of 1998). In the second half of the year there was an increase of production by 9.3%, including food products ? by 9.6%, and other products ? by 5.3%.

On the other hand, in 1998 the production was reduced in electric power industry, light industry, woodworking, sugar, meat and dairy and mixed fodder industry, a number construction areas.

The volume of gross agricultural production in 1998 was 8.9 billion roubles, which in comparable prices was 12% less than in 1997. The reduction has affected crop production ? the production was reduced by 13% compared with 1997, and cattle breeding industry ? 11% reduction. The year of 1998 was quite unfavourable for production of agricultural products (drought and natural disasters). The productivity of the majority of agricultural products was lower than in 1997. This resulted in reduction of output of agricultural companies (compared to 1997): grain ? by 11%, sugar-beet ? by 8%, potatoes ? by 26%, forage crops ? by 16 ? 37%, fruit ? by 44%, grapes ? by 34%.

The situation in cattle breeding industry remained very difficult. Due to the lack of fodder the reduction of livestock continued both in agricultural companies and in private farms. Production of cattle breeding industry reduced in 1998 (compared with 1997): meat ? by 12% (207.5 thousand tons produced), milk ? by 9% (518.6 thousand tons), eggs ? by 10% (715.9 million pieces).

Despite all efforts of the territory government to support agricultural commodity producers the overwhelming majority of facilities do not have current assets and, therefore, bear losses. The experts attempt to explain this situation by lack of professional managers in agriculture. The government of the territory has developed and implemented measures to restore the system of purchases of agricultural products at private farms through consumer co-operation society. This will allow to load the companies of food processing industry, to get rid from numerous intermediaries receiving superprofit from the sale of production of private manufacturers.

The investments in the fixed capital in 1998 constituted 3.3 billion roubles, which is 12% less than in 1997. About 20% of them are the funds of the budgets of all levels and own funds of state enterprises, and the remaining 80% are private and mixed capital investments. They were allocated for construction of underground gas storage, parquet production facilities, power supply lines, motorways, housing, etc. The existing facilities for oil seed processing were renovated, a sugar plant in Kochubeyevsky region and a glass packaging material plant in Novoaleksandrovsky region were constructed.

The retail turnover for the year has grown by 2% and in 1998 constituted 13.4 billion roubles. Per one inhabitant of the territory for one year the goods were purchased for 5011 roubles, and on the average per month ? for 418 roubles (in 1997 ? for 3914 and 326 roubles respectively). Almost 35% of the total amount of purchases was made at commodity, mixed and food markets, there 90% of clothes, 70 ? 80% of footwear, meat, poultry, 50 ? 60% of confectionery and tobacco products were bought.