Analysis of the Financial State and Efficiency of Activities of Organic

Producers in Russia

ANASTASIA S. BABANSKAYA1*, ZHANNA A. TELEGINA1, ELENA S. KOLOMEEVA1,

VICTORIA M. MINAEVA1, ANNA S. TIKUNOVA1, ALEXANDER YU. USANOV2,

NINA YU. TRYASTSINA1

1Russian State Agrarian University, Moscow Timiryazev Agricultural Academy,

RUSSIA

2Financial University under the Government of the Russian Federation,

RUSSIA

*Corrsponding Author

Abstract: - Is denoted to the analysis of the financial condition and efficiency of organic producers to assess

the potential for the development of organic agriculture in Russia. Methods of comparative and coefficient

analysis, estimation of trends in time series, statistical groupings, and studies of the general properties of the

sample were used. The source of information was the data of the accounting (financial) statements of organic

producers for 2019-2021 from the State Information Resource for Accounting (Financial) Statements of the

Russian Federation. Based on the results of the analysis, it was concluded that organic crop production prevails

in Russia, although this industry is inferior in terms of financial potential to other areas of agribusiness. The

most financially stable and solvent can be called the production of organic livestock products, processing, and

canning of organic products. The noted trend is more characteristic of the level of large agricultural enterprises.

It should also be taken into account that, in general, only a small part of the enterprises in the analyzed

population has reached the standard level of financial stability and performance indicators, which may

generally indicate the low financial potential of organic producers in Russia and the need to attract available

financial resources from external sources. The novelty of the study lies in the comparative assessment of

production efficiency at enterprises of various scales of activity and different specializations in the production

of organic products. The practical significance of the study lies in the development of sound proposals of

organizational and financial orientation to ensure a realistically achievable increase in the efficiency of organic

production in Russia, taking into account the identified resource potential.

Key-Words: - Organic agriculture, financial sustainability, business activity, financial condition, crop

production. animal husbandry, processing and canning, production development, organic

market.

Received: May 24, 2023. Revised: August 11, 2023. Accepted: September 3, 2023. Published: September 11, 2023.

1 Introduction

Organic agriculture is a system of agricultural

production that minimizes or eliminates the use of

artificial mineral fertilizers, pesticides, various

types of growth regulators, and GMOs. Enterprises

implementing a production strategy for obtaining

organic products adhere to the principles of

sustainable development, the rational use of

organic production waste as fertilizers, for soil

mulching, and also send them to feed livestock.

The prerequisites for the development of organic

production at the global level are: a sustainable

process of global warming, the objective need to

introduce climate finance to reduce greenhouse gas

emissions, the real need for the careful use of

natural potential, and the preservation of the

environment, as well as the growing trend of

promoting (popularizing) healthy lifestyle.

Organic food products are products that are

produced without the use of chemical pesticides

and fertilizers and do not contain synthetic

hormones. Organic food products, in accordance

with the legislation of many countries, have a

certificate of conformity, the logo and address of

the certification body are properly indicated on the

packaging, [1].

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Anna S. Tikunova, Alexander Yu. Usanov,

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Fig. 1: The growth potential of the organic products market in Russia in 2023. Source: [5], [6].

The availability of organic agricultural products

for consumers depends on the institutional

environment, the formation and pace of

development of markets for eco-products, the

efficiency of activities, and the financial

capabilities of organic producers. At the same time,

we share the point of view of authors, [2], [3], who

believe that in Russia there are a number of reasons

hindering the development of the organic market:

1) Weak institutional environment and

insufficiently developed a legislative framework

for regulating the organic products market. So, for

example, according to the provisions of Federal

Law No. 280-FZ of August 3, 2018, natural

agriculture is recognized as organic agriculture,

which does not use chemicals in the form of

fertilizers, pesticides, a number of veterinary drugs,

genetically modified elements, irradiation, and

other methods, [4]. However, this provision does

not guarantee the receipt of environmentally

friendly products;

2) Low and unstable level of well-being of the

population;

3) Lack of specialists in the field of organic

farming;

4) The complexity of passing certification

procedures, etc.

The noted factors hinder the growth and

development of the organic products market. In this

regard, there is a need for a deeper study of the

resource potential and efficiency of individual

groups of organic producers and the identification

of the most promising development segment.

2 Literature Review

According to the Research Institute for Organic

Farming in Switzerland, the market for organic

products is one of the high-margin, fast-growing

segments of the global food market. Over the past

15 years, it has grown almost five times and,

according to forecasts, until 2025 it will continue

its growth to the level of 10-12% per year (2022),

[5]. According to the estimates of the National

Organic Union, the volume of organic production

in the Russian Federation is currently about 160

million dollars, or only 0.15% of the world's

organic production (Figure 1), [6].Organic farming

can be more cost-effective than conventional

farming. So, for example, according to E.L.

Hanson, 20% of Minnesota farmers compared the

results of organic and conventional production as

equivalent in terms of profitability, and 73% of

farmers recognized organic as more cost-effective,

[7]. At the same time, only 3% of the farmers who

participated in the study recognized organic

production as less profitable, [7]. However, it

should be noted that the authors of the study did not

consider the relationship between the efficiency of

organic production and the existing methods of

state support and pricing methods for the final

product.

In the study, [8], the authors found that the yield

and profitability of potato production grown using

traditional technologies are significantly higher

than that of potatoes produced using organic

technology. The average yield of conventional and

organic potatoes was 19.22 and 7.48 t/ha,

respectively, and the benefit-cost ratio was 1.27

and 0.40, respectively, [8]. In this regard, there is a

need to study the causes and factors that negatively

affect the performance of organic production and

the efficiency of enterprises of various

specializations in the production of organic

products, [8].

In, [9], a study of the competitiveness of organic

agriculture at the global level is presented. This

study referred to the financial performance of

producers not only of organic products but also of

economic entities producing goods using traditional

technologies. As a result, the authors concluded the

low level of the ratio of profits and costs of organic

agriculture (7-8%), in contrast to traditional

agribusiness (23-27%) in the absence of organic

premiums. With the use of premiums, the

Organic Market Capacity

0.15% of the world

10-15% of the world

Organic Consumers about 1-3% of the

population of Russia up to 10-20% of the

population of Russia

Certified Manufacturers 0.1% of certified

worldwide up to 1-2% of certified

worldwide

potentialities

actual

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Anna S. Tikunova, Alexander Yu. Usanov,

Nina Yu. Tryastsina

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profitability of organic production increases

significantly to the level of 22-35%. Thus, the

results of the study, [9], say that organic production

has a great potential for growth in the context of

additional financial support.

In, [10], the authors evaluated and compared the

economic efficiency of organic and conventional

dairy farms in the United States. The authors

grouped and compared traditional and organic dairy

farms in terms of the scale of activity. Organic

dairy farms have in most cases shown higher

profitability than conventional dairy farms of

similar size. Small farms, on average, did not cover

the total cost of production and were low-margin.

Thus, the problem of increasing the efficiency of

organic production is directly related to the

possibilities of expanding pastures and increasing

the scale of activities.

In Russia, [11], conducted a comparative analysis

of the production of triticale, oats, and rapeseed

using traditional and organic technologies.

According to her predictive calculations, the use of

organic crop production technologies provides a

positive economic effect. The study took into

account the decrease in crop yields, but even under

such conditions, “... the profit of organic

production remains, as a rule, higher than

traditional, due to the presence of an organic

premium and the absence of costs for mineral

fertilizers and chemical protection agents”, [11].

In, [12], the authors compared the economic

indicators of growing products in organic farming

(the use of organic fertilizers and biological

products) with the results of traditional farming for

three years. As a result, they concluded that organic

farming is less efficient and competitive than

traditional farming. For example, producers of

organic products in Russia, to reach the level of

profitability of traditional technologies, need to

increase the selling price of finished products by an

average of 40-90%. In European countries, prices

for organic products are only 30-40% higher than

for traditional ones, [12].

Thus, the problem of increasing the efficiency of

organic agriculture requires an in-depth study of

financial indicators and factors in the context of

individual activities, taking into account the size of

organizations. Most of the literature is a study of

theoretical problems of the efficiency of organic

agricultural production, but not all of them are

supported by the results of experimental and

practical studies or predictive calculations of

efficiency. Also, the development of the Russian

accounting and analytical system of agricultural

units allows for a comprehensive analysis of the

financial condition and financial performance of

organic producers, [13].

In addition, among the works aimed at a

comparative analysis of traditional and organic

production, there are few studies on the comparison

of production efficiency in enterprises of different

sizes; studies on the production of livestock

products are rare, and in the field of processing and

canning, they are completely absent.

It is also worth noting that, according to the results

of the analysis of the literature on organic

production, there were no comprehensive studies

that would compare the branches of agriculture

with each other, which determines the relevance of

the work.

3 Materials and Methods

The purpose of the study is to analyze the financial

condition and performance of organic producers to

assess the potential for the development of organic

agriculture in Russia.

Achieving the goal of scientific research involved

solving the following tasks:

- Analysis of financial results and business activity

of organic producers;

- Analysis of the financial state and assessment of

the financial potential of organic producers.

We carried out a comparative analysis of the

activities of producers of organic products

differentiated by size and sectors of agriculture:

crop production, animal husbandry, processing, and

canning for 2019-2021.

The following methods were used in the study:

comparative and coefficient analysis, estimation of

trends in time series, statistical groupings, studying

the general properties of a sample population, and a

graphical method.

To analyze the financial state and performance

efficiency, available (open) sources of information

were used - the State Information Resource for

Accounting (Financial) Statements of the Russian

Federation, [14]. Analytical study period: 2019 –

2021.

The analyzed population included 70 certified

producers of organic products in Russia in the

Central, Southern, Volga, and Siberian Federal

Districts. The choice of enterprises was influenced

by the following factors: the availability of publicly

available financial statements for the last 3 years

(according to the state information resource of

accounting (financial) statements, [14]),

organizations operating at the time of the study (the

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Anna S. Tikunova, Alexander Yu. Usanov,

Nina Yu. Tryastsina

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absence of liquidated or in the process of

liquidation and reorganization).

Fig. 2:. The structure of the analyzed population of certified producers of organic products in Russia, %.

Source: compiled by the authors according to the data of the National Organic Union of the Russian Federation,

[6]

The analyzed population did not include enterprises

producing alcohol-containing products and

manufacturers of biological products approved for

use in organic agriculture. The main criteria for

selecting organizations for the study were

identified: the type of economic activity according

to OKVED codes, and the scale of activity,

characterized by the volume of production and

sales of products. All enterprises included in the

database for analysis were assigned to three

selected sectors of production: crop production,

animal husbandry, processing production, and

canning.

To identify patterns of development and assess the

effectiveness of the activities of organic producers,

the study used the methodological approach of

classifying enterprises as large, medium, and small,

proposed by, [15]. For the analysis, the

differentiation of organic producers is carried out

based on the revenue criterion as follows:

1. Small organizations - the average annual revenue

is less than 500 million rubles.

2. Medium organizations - average annual revenue

from 500 million rubles. up to 1 billion rubles

3. Large organizations - the average annual revenue

is more than 1 billion rubles.

For the analysis, financial ratios were calculated for

each organization: profitability, business activity,

financial stability, and liquidity. The general

statistical population was tested for normal

distribution, and the average values of the

indicators were calculated in each typical group.

4 Results

Producers of organic crop production predominate

in the general population of the sample by sectoral

focus. Of all the analyzed certified enterprises, 54%

belong to the production of organic crop products

(Figure 2).

The result of the study was an assessment of the

financial potential of producers of organic products

in Russia. The efficiency of enterprises with

different scales of activity within individual

industries and the industries themselves was

compared. To assess the efficiency of activities and

the financial potential for the development of

producers of organic products, a comparative

analysis of indicators of the financial state and

financial results for individual sectors of

agricultural production was carried out. According

to the analysis, a conclusion was made about the

low efficiency of organic production compared to

traditional production in terms of profitability,

financial stability, and solvency. The operating

activities of organic production are not efficient

enough due to the fact that revenues do not cover or

cover expenses not in full due to price disparity and

high inflationary pressure on the domestic

economy. Therefore, we believe it is objectively

necessary to expand sales markets or significantly

reduce costs (due to economies of scale,

cooperation, or the organization of closed-loop

production) based on enhanced state support for

agriculture. Taking into account the limitations laid

down in the study, the worst results were shown by

producers of organic crop products, which is

Crop

production

54 % Animal

husbandry

20 %

Processing

industry and

canning

26 %

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objectively explained by a longer production cycle

due to natural and climatic factors.

4.1 Analysis of Financial Results and

Business Activity of Organic Producers

The analysis of performance results is necessary to

understand how efficiently an enterprise uses its

assets, and to what extent the sources of their

formation are balanced. With the help of the

analysis, it is possible to assess the stability and

rationality of the formation of the structure of the

company's property and the sources of its

formation.

The financial results of the enterprise are

characterized by the amount of profit received and

the level of profitability. The greater the amount of

profit and business activity, the more efficiently the

enterprise operates, the more stable its financial

condition, and the higher the level of profitability.

First of all, we carried out a comparative analysis

of revenue, profit from sales, and net profit

between commodity producers of differentiated

groups by industry. In 1/3 of enterprises, the net

profit exceeds the profit from sales, which is

primarily due to low operating efficiency and the

formation of income from other activities on a large

scale. The sales and net profit indicators for all

enterprises do not reach even 1/5 of the revenue

values, which is associated not only with the high

cost of production but also with significant

commercial and administrative expenses, which

average 10-15% of revenue.

For the group of small enterprises, the following

signs were noted: for all the studied industries,

producers are operating at a loss; the presence of

manufacturers whose net profit significantly

exceeds the value of profit from sales (i.e.

organizations generate financial results through

other activities).

At the level of large and medium-sized enterprises,

the following signs were noted: there are more

unprofitable organizations in the livestock and crop

production sectors than in the processing industry

and canning. When comparing industries with each

other, it is worth noting that the share of

unprofitable producers in the crop industry is 20%,

in livestock - 50%, among enterprises in the

processing industry - only 11%. In the livestock

and processing industries, net profit is at the level

of profit from sales; In the horticulture industry,

there are producers with high operating efficiency,

whose profit from sales is much higher than the net

profit (more than 50% of producers).

The financial condition and financial results depend

on the scale of activity, which is associated with

such an economic phenomenon as economies of

scale - when the consolidation of production (i.e.,

with an increase in output), the cost per unit of

production decreases. However, it should be borne

in mind that this effect can be not only positive but

also negative.

All three sectors in general demonstrate the so-

called positive economies of scale - indicators of

financial results improve with the increase in the

size of the activities of producers (Table 1).

Table 1. Comparative analysis of the average values of the profitability indicators of organic

producers, differentiated by the scale of activity and industries, for 2021, %.

Enterprise

groups

Return on

Equity

(ROE)

Return on

Assets

(RОА)

Return on

Sales (ROS)

Return on

Investment in

Fixed Assets (ROI)

Return on

Fixed Assets

(ROFA)

Norm

10-12%

> 5% -

admissible,

> 20% -

optimal

Exceeds

inflation

rate,

> 5-15% -

optimal

Industry averages

35-50%

Industry

averages

20-30%

Crop production

Small enterprises

5.88

0.38

1.00

41.02

13.73

Medium enterprises

22.45

3.48

7.03

33.44

41.76

Large enterprises

43.33

2.66

7.88

44.69

6.20

Animal husbandry

Small enterprises

19.90

-2.42

-31.09

-7.83

-3.17

Medium enterprises

15.53

3.07

-15.91

19.32

16.07

Large enterprises

30.22

24.81

20.13

35.64

58.82

Processing industry and canning

Small enterprises

9.46

3.41

2.72

40.29

39.75

Medium enterprises

8.85

4.73

4.60

21.27

9.05

Large enterprises

9.35

3.30

3.02

17.82

62.69

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Source: compiled by the authors based on the analysis of data from the State Information Resource for Accounting

(Financial) Statements of the Russian Federation, [14].

In general, in the crop production industry,

taking into account the increase in the scale of

production, the performance indicators of

organizations are increasing, with the exception of

such indicators as the return on assets and the

return on fixed assets (for small enterprises: ROE

5.88%, ROS 1.00%, ROI 41.02%; for medium

enterprises: ROE 22.45%, ROS 7.03%, ROI

33.44%; for large enterprises: ROE 43.33%, ROS

7.88%, ROI 44.69%). The low rate of profitability

of fixed assets in large organizations indicates the

capital intensity of the production of organic crop

products (for large enterprises ROFA is 6.02%).

In the livestock industry, medium-sized

enterprises are significantly inferior in terms of

return on equity not only to large enterprises but

also to small organizations (for small enterprises:

ROE 19.90%, for medium enterprises ROE

15.53%, for large enterprises ROE 30.22%).

According to Table 1, it can be seen that efficiency

indicators increase with an increase in the scale of

production and the value of indicators of

enterprises of large sizes, and also comply with the

standards.

In the processing industry, small enterprises

stand out slightly in terms of return on fixed assets

(39.75%) and return on investment in core

activities (40.29%), which indicates a low total cost

of fixed assets and the cost of processed products.

It should be noted that for the rest of the indicators

presented in the table, the efficiency of the

processing and canning industry is generally worse

than in the crop and livestock industries. Indicators

of Return on Equity (ROE), Return on Assets

(ROA), and Return on Sales (ROS) for all groups

of enterprises are below normal values and do not

exceed 3-10% on average.

It can be seen that, in general, producers of

organic livestock products conduct business more

efficiently exclusively at the level of large

organizations. In the horticulture industry, medium

and large-sized organic producers show the same

level of economic efficiency. The worst results in

terms of performance efficiency are shown by the

industry of processing production and canning of

organic products.

Figure 3 presents a comparative analysis of the

efficiency of organic production sectors by

business scale.

Small enterprises

Medium enterprises

Big enterprises

crop production

animal husbandry

processing industry and canning

Fig. 3: Comparative analysis of the efficiency of organic production in Russia, for 2021, %. Source: compiled

by the authors based on the analysis of data from the State Information Resource for Accounting (Financial)

Statements of the Russian Federation, [14].

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Table 2. Comparative analysis of average values of indicators of business activity of organic producers,

differentiated by the scale of activity and industries, for 2021.

Source: compiled by the authors based on the analysis of data from the State Information Resource for Accounting

(Financial) Statements of the Russian Federation, [14].

As you can see, enterprises in terms of the

efficiency of production of organic livestock

products are significantly inferior to other areas of

production of organic products, not taking into

account return on equity, as well as return on

assets. processing industry and canning. In the field

of crop production in this differentiated group, the

best performance indicators are observed.

Analysis of business activity allows us to

evaluate the effectiveness of the use of the means

of production by the enterprise, as well as to

characterize the effectiveness of current activities.

For the analysis of business activity, turnover

indicators were selected, which reflect the

efficiency of using all the resources of the

enterprise, and measure the rate of repayment of

receivables and payables (Table 2).

According to Table 2, it can be seen that with an

increase in the scale of production, the period of

turnover of assets, receivables, and payables

decreases for producers of organic crops and

livestock products. In crop production for small

enterprises: asset turnover ratio 0.88, accounts

receivable turnover ratio 2.76, accounts payable

turnover ratio 1.47; for medium enterprises asset

turnover ratio 1.62, accounts receivable turnover

ratio 5.48, accounts payable turnover ratio 2.64. In

animal husbandry for small enterprises: asset

turnover ratio 0.36, accounts receivable turnover

ratio 1.62, accounts payable turnover ratio 1.12; for

large enterprises: asset turnover ratio 1.42, accounts

receivable turnover ratio 10.97, accounts payable

turnover ratio 18.68. However, the turnover rates of

accounts payable in all groups are much worse than

those of accounts receivable, which indicates an

excess of outflows over inflows and a shortage of

financial resources (for example, accounts

receivable turnover period in small enterprises of

crop production is 132.89 days, in medium - 67.93

days, in large enterprises - 98.69 days; accounts

payable turnover period in small enterprises is

303.06 days, in medium - 140.69 days, in large

enterprises - 285.57 days).

In the group of processing production and

canning of organic products, with an increase in the

scale of production, the period of turnover of

assets, receivables, and payables decreases (for

example, in the processing industry and canning

asset turnover ratio for small enterprises is 1.11, for

medium enterprises - 1.80, for large enterprises -

2.27), which indicates that at the level of large

organizations, there is a shorter operating cycle and

fewer risks of insolvency of organizations.

In addition, with the increase in the scale of

activities of producers of organic livestock products

and processing production, conservation of organic

products accounts payable turn around faster than

accounts receivable, which is associated with an

excess of accounts receivable over accounts

payable. This confirms the earlier conclusion about

Enterprise

groups

Asset

turnover

ratio

Accounts

receivable

turnover

period, days

Accounts

receivable

turnover

ratio

Accounts payable

turnover period,

days

Accounts

payable

turnover

ratio

Crop production

Small enterprises

0.88

132.89

2.76

303.06

1.47

Medium

enterprises

1.62

67.93

5.48

140.69

2.64

Large enterprises

0.57

98.69

3.68

285.57

1.37

Animal husbandry

Small enterprises

0.36

225.44

1.62

325.42

1.12

Medium

enterprises

1.22

405.11

0.91

69.15

5.27

Large enterprises

1.42

33.27

10.97

19.54

18.68

Processing industry and canning

Small enterprises

1.11

115.61

3.15

169.74

2.43

Medium

enterprises

1.80

109.07

3.38

74.38

4.9

Large enterprises

2.27

71.66

5.14

65.80

5.55

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the excess of outflows over inflows and the deficit

of financial resources.

4.2 Analysis of the Financial State of

Organic Producers

To assess the efficiency of activities and the

resource potential of the development of producers

of organic products, a comparative analysis of

financial indicators for individual groups of

organizations was carried out.

Based on financial analysis data, it is possible to

assess economic opportunities and the potential for

further business development. An analysis of the

financial condition reveals the ability of the

organization to repay its obligations, the ability to

maintain solvency, as well as the ability the

enterprise to remain market stable in cases of

turbulence in the economic system and instability

of counterparties (Table 3 and Table 4).

At the level of small producers of organic crop

products, the indicators of medium-term and long-

term solvency are higher than those of other

producers in the same industry. At the same time,

the excess of the upper threshold of the current

liquidity value by more than 3 times indicates the

inefficient use of current assets or the irrational

capital structure of the enterprises of the noted

group.

For the group of producers of organic livestock

products, there is a low level of absolute liquidity

indicators for all types of enterprises (for example,

worst indicators in animal husbandry: small

enterprises - 0.08, medium enterprises - 0.01, large

enterprises - 0.05) this indicates their low solvency

in relation to short-term obligations. An unbalanced

structure of assets and capital is noted among

medium-sized producers of organic livestock

products.

For the group processing production of organic

products, it is noticeable that the value of the quick

liquidity ratio decreases with an increase in the size

of producers, which is associated with an increase

in the share of borrowed funds in liabilities. The

situation with the indicators of current liquidity is

reversed - there is an increase in the values of the

current liquidity ratio with the growth of business

scale (current ratio: small enterprises – 1.88,

medium enterprises – 3.24, large enterprises –

3.89), which is explained by a significant amount

of reserves in the asset structure.

It can be noted that in general, all industries are

insolvent in the short term, while this phenomenon

does not depend on the scale of production and can

be assessed as a low financial potential of organic

producers. Liquidity indicators for the group of

producers of organic livestock products (excluding

the absolute liquidity ratio) are higher than for

other industries. Paying attention to the dynamics

and value of the current liquidity ratio, it can be

seen that the value of this indicator increases with

the increase in the scale of production. However, a

significant excess of the upper threshold of the

normative values of the current liquidity ratio may

indicate an inefficient use of current assets or an

irrational capital structure.

Table 3. Comparative analysis of the average values of the liquidity indicators of producers of organic crop

products, differentiated by the scale of activity and industries, for 2021.

Enterprise groups

Сash Ratio

Quick Ratio

Current Ratio

Norm

0.2 – 0.5

0.7 – 1.0

1.5 – 2.5

Crop production

Small enterprises

0.13

5.15

7.90

Medium enterprises

0.25

0.83

1.43

Large enterprises

0.02

1.18

1.99

Animal husbandry

Small enterprises

0.08

1.48

3.78

Medium enterprises

0.01

3.98

4.28

Large enterprises

0.05

1.96

5.90

Processing industry and canning

Small enterprises

0.74

3.31

1.88

Medium enterprises

0.07

3.60

3.24

Large enterprises

0.05

1.30

3.89

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Source: compiled by the authors based on the analysis of data from the State Information Resource for Accounting

(Financial) Statements of the Russian Federation, [14].

Table 4. Comparative analysis of average values of indicators of financial stability of producers of organic crop

products, differentiated by the scale of activity and industries, for 2021.

Source: compiled by the authors based on the analysis of data from the State Information Resource for Accounting

(Financial) Statements of the Russian Federation, [14].

According to Table 4, producers of organic crop

products are not financially stable for all

differentiated groups (all indicators are below

standard values). There is insufficient provision of

own working capital, negative values of the

indicator indicate the excess of non-current assets

over equity capital. Despite the fact that the ratio of

net debt to profit before tax for large organizations

also exceeds the normative value, a positive trend

can be seen - this indicator decreases with an

increase in the scale of production (debt to

EBITDA ratio: small enterprises – 7.97, medium

enterprises – 5.85, large enterprises – 3.56), which

means an increase in the possibility of increasing

the financial potential of large businesses.

In the sector of organic production of livestock

products, small and medium-sized enterprises are

equally financially stable, as evidenced by the

indicators of the coefficients of working capital and

financial independence that do not reach the

threshold values. Large enterprises, despite

exceeding the normative value of the ratio of debt

to profit before tax, are the most financially stable.

The negative value of the net debt to profit before

tax ratio (-10.98) for medium-sized enterprises is

the result of the unprofitability of organizations in

this group.

In the group processing production of organic

products, problems with financial stability

indicators are observed in a group of small

organizations, as evidenced by indicators of

financial stability that do not reach threshold

values. Apart from the ratio of debt to EBITDA,

medium and large enterprises are financially stable.

A significant deviation from the general trend of

the value of this indicator in all typical groups of

organizations indicates an overestimated debt

burden, and its growth with an increase in the scale

of activity of commodity producers is due to the

possibility of increasing external capital.

An analysis of financial stability indicators

confirms the conclusion that with an increase in the

scale of activities, the financial condition improves

and the financial potential of organic producers

strengthens.

According to the results of the analysis of

indicators in Table 4, the largest financial potential

is observed in large producers of organic livestock

products, as the most financially stable. The

indicators of this group of enterprises not only meet

all the standards but also have a certain growth

reserve. A group of medium and large processing

enterprises also has a high financial potential.

According to the majority of indicators of financial

stability, this group of producers reaches the

normative values. Producers of organic crop

products are noticeably inferior to the other two

industries and have low indicators of financial

stability, which is confirmed by the lower values of

the indicators: the ratio of current assets to own

working capital, financial stability ratio, financial

independence ratio, current ratio, quick ratio.

Enterprise

groups

The ratio of current assets to

own working capital

Financial

stability ratio

Financial

independence ratio

Debt to EBITDA

ratio

Norm

> 0.1

> 0.75 – 0.8

> 0.5

< 3

Crop production

Small enterprises

-1.55

0.22

-0.09

7.97

Medium

enterprises

-0.66

0.43

0.25

5.85

Large enterprises

-3.41

0.59

0.29

3.56

Animal husbandry

Small enterprises

-2.07

0.71

0.20

2.46

Medium

enterprises

0.03

0.85

0.44

-10.98

Large enterprises

0.76

0.88

0.82

0.72

Processing industry and canning

Small enterprises

-0.82

0.62

0.32

13.72

Medium

enterprises

0.26

0.82

0.52

16.15

Large enterprises

0.32

0.57

0.60

19.53

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Nina Yu. Tryastsina

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5 Conclusion

Based on the results of the analysis, we concluded

that the activity of organic production as a whole is

not effective enough - income does not compensate

for expenses or does not cover them in full. In this

case, it is necessary to expand sales markets or

significantly reduce costs due to economies of

scale, cooperation, or the organization of closed-

loop production. Data were obtained on the

unprofitability of enterprises implementing organic

technologies in the crop industry. According to the

analysed aggregate, about 20% of such commodity

producers received a loss from sales. While in the

livestock sector, this figure is about 50%, in the

processing industry - 11%. In addition, according

to Federal State Statistical Services, the

profitability of production using traditional crop

and livestock technologies for 2021 averages

11.8%, [16]. At the same time, the profitability of

organic production in these industries, according to

the results of the study for the analysed period,

amounted to only 5.5%.

Financial analysis using a grouping by the scale

of activity of commodity producers made it

possible to determine that the production of organic

products is effective mainly at large enterprises

with an annual revenue of more than 1 billion

rubles. Similar conclusions that small farms, on

average, did not cover the total production costs

and were low-margin were obtained by R.F.

Nehring, D. Gillespie, K. Green, and D. Low.

Therefore, it is advisable to develop the production

of organic products in large agricultural

organizations. It is proposed to diversify their

activities and gradually replace traditional

production technologies with organic ones.

Medium and small enterprises show the worst

indicators of economic efficiency, which is

associated with high production costs and

significant non-production costs.

When analysing the financial potential in the

context of groupings by type of activity, producers

of organic livestock products show high-

performance indicators. The livestock sector is

characterized by the best economic parameters of

activity due to the presence of enterprises with a

closed production cycle and a wide variety of

livestock products. Crop production is less efficient

and has lower values of indicators of financial

stability and solvency due to a long production

cycle. The processing industry cannot exist without

a raw material base, and therefore it is also less

efficient in terms of the studied population. Thus,

in order to increase the financial potential,

vertically integrated structures with a closed

production cycle should be created.

It should also be taken into account that only a

small part of the enterprises in the analysed sample

showed a sufficient level of financial stability,

while the ratio of net debt to profit before tax also

significantly exceeds the normative values.

In addition, organic production also has a

number of disadvantages that reduce the

attractiveness of organic production in Russia:

1. Organic production uses crop areas less

efficiently and requires their increase;

2. Organic production is less competitive than

traditional agriculture;

3. The price of organic products is higher

compared to products produced using traditional

technologies. In a stable economy, this fact is not a

disadvantage, but in times of crisis, consumers will

tend to cheaper traditional products.

Due to the universality of the statistical methods

used, financial ratios, and typical groupings, the

results of the study can be used to determine the

performance efficiency and investment

attractiveness of organic producers not only in

Russia but also in world practice.

Thus, the study analysed the financial state and

performance of organic producers. It was

concluded that in Russia the production of organic

crop products prevails, although this industry is

inferior in terms of financial potential to other

branches of agriculture. The most financially stable

and solvent can be called the production of organic

livestock products, processing, and canning of

organic products. This trend is most noticeable at

the level of large enterprises. It should also be

taken into account that, in general, only a small part

of the enterprises in the analysed population has

reached the standard level of financial stability

indicators, which may indicate, in general, the low

financial potential of organic producers in Russia

and the need to attract financial resources from

external sources.

We agree with the conclusions obtained by S.A.

Dobrokhotov and A.I. Anisimov that organic

agriculture in Russia is less efficient than

traditional one. The results of our study are similar

to the opinion of D.U. Crowder and D.P. Riganold

that the formation of an economically efficient

level of organic production at the stage of

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Anna S. Tikunova, Alexander Yu. Usanov,

Nina Yu. Tryastsina

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Volume 20, 2023

development of the industry is impossible without

state support and external financing.

The practical significance of the study lies in the

development of proposals for improving the

efficiency of organic production.

Further research will be aimed at assessing the

impact of various state support mechanisms and

green financing programs on the efficiency of

organic producers.

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farming - the direction of transition to the

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[2] Seregina, T.A., Zhilnikov, A.A. &

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Migunov, R.A., Telegina, Z.A. & Grudneva,

A.A. Directions and prospects of sustainable

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[14] State information resource of accounting

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[15] Kisseleva, N.A. Рeculiarities of Functioning

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[16] Federal State Statistics Service 2021 URL:

https://rosstat.gov.ru/.

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Anastasia S. Babanskaya, Zhanna A. Telegina,

Elena S. Kolomeeva, Victoria M. Minaeva,

Anna S. Tikunova, Alexander Yu. Usanov,

Nina Yu. Tryastsina

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Contribution of Individual Authors to the

Creation of a Scientific Article (Ghostwriting

Policy)

The authors equally contributed in the present

research, at all stages from the formulation of the

problem to the final findings and solution.

Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

This study was supported by Russian State

Agrarian University – Moscow Timiryazev

Agricultural Academy.

Conflict of Interest

The authors have no conflict of interest to declare.

Creative Commons Attribution License 4.0

(Attribution 4.0 International, CC BY 4.0)

This article is published under the terms of the

Creative Commons Attribution License 4.0

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Anna S. Tikunova, Alexander Yu. Usanov,

Nina Yu. Tryastsina

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