Economics

Basic forms of agricultural enterprise associations in the agro-industrial complex

For students

6 min read

ECONOMICS E

Commercial forms of associations in the agro-industrial complex

The choice of the structure of a production or commercial association directly determines the degree of economic independence of an agricultural enterprise, its financial stability, and access to resources. In practice, various types of commercial associations have been established, which are created for specific production and market tasks. Commercial associations include corporations, concerns, holdings, financial-industrial groups, consortia, cartels, trusts, and syndicates.

A corporation functions as a joint-stock company with centralized management and is liable for the debts of creditors with all its property. In the agro-industrial complex, corporations help form state and regional food funds, provide enterprises with material and technical resources, and facilitate the sale of products. A concern links legally independent enterprises through a system of patent-licensing agreements, joint financing, and production cooperation. Due to the high concentration of capital, concerns are resistant to market fluctuations and are capable of effectively redistributing investment resources.

A holding company controls other organizations by owning their shares, capital, or the right to appoint management, while maintaining the legal independence of the included structures and centralizing financial flows. A financial-industrial group includes independent enterprises from different sectors — from agricultural producers to transport, trade, and credit companies. The parent bank of such a group manages the monetary capital and coordinates activities, while participants agree on prices and divide sales markets.

Consortia are formed as temporary voluntary associations to reduce risks when implementing large projects for land management, product processing, or ecology, terminating operations after the tasks are completed. A cartel represents an industry agreement on prices, production volumes, and sales markets while maintaining the full legal and economic independence of the participants. In a trust, enterprises are united into a single production complex and completely lose their independence, submitting to the head organization. A syndicate, on the other hand, centralizes only the functions of material and technical supply and product sales based on a contract.

The form of association determines the level of financial control: from maintaining full legal independence in cartels, syndicates, and associations to its complete loss in trusts.

Non-profit unions and associations in agriculture

To protect property interests and coordinate entrepreneurial activities, agricultural enterprises create non-profit organizations — associations and unions. The activities of these structures are regulated by the Civil Code of the Russian Federation and the Federal Law "On Non-Profit Organizations" dated 12.01.96 No. 7-FZ. A union or association is created without a limitation on the term of operation, unless otherwise provided by the constituent documents, and cannot be established by a single person.

Legislation imposes clear requirements on the status and property liability of the non-profit associations being created. The organization must have an independent balance sheet and has the right to open bank accounts in the prescribed manner. An association or union is officially recognized as established upon the fulfillment of all mandatory legal conditions.

  • passing state registration in the established order;
  • possession of separate property;
  • ability to be liable for one's obligations with this property;
  • possibility to act as a plaintiff and defendant in court.

The supreme management body of an association (union) in agriculture is the general meeting of its members, which is competent to resolve all economic and financial issues with the participation of at least half of the association's members. At the general meeting of members of the association, other permanently operating collegial management bodies may be created.

Currently, a large non-profit organization uniting agricultural producers is operating in the agriculture of Russia — the Association of Peasant (Farm) Households and Agricultural Cooperatives of Russia (AKKOR). Its founders are associations and unions in republics, krais, and oblasts. AKKOR, being more focused on uniting farmers than agricultural cooperatives, carries out work on organizing cooperatives that serve peasant (farm) households, participates in the development and implementation of programs for the development of peasant (farm) households, drafts of regulatory acts, formation of orders for the production and supply of agricultural machinery for them, distribution of state allocations, foreign loans, and other funds.

1. What is understood by a legal entity in accordance with the Civil Code of the Russian Federation? 2. On the basis of which constituent documents does a legal entity operate? 3. Are representative offices and branches legal entities? 4. How do representative offices differ from branches? 5. How does the reorganization of an enterprise differ from its liquidation? 6. What methods of reorganization exist? 7. For what reasons can a legal entity be liquidated? 8. From what moment is the liquidation of a legal entity considered completed? 9. What is understood by an enterprise in accordance with the Civil Code of the Russian Federation? 10. On what grounds are organizations classified? 11. Into what groups are organizations divided according to the method of participation of founders (participants) in the formation of the property of a legal entity? 12. Into what groups are organizations divided according to the purpose of activity? 13. Into what groups are organizations divided in accordance with the organizational and legal form of activity? 14. What principles serve as the basis for the creation and operation of a cooperative in agriculture? 15. What is the difference between a mandatory share contribution and an additional one? 16. What types of cooperatives are distinguished in accordance with the legislation? 17. What restrictions exist in the legislation regarding the number of members and the volume of work of production and consumer cooperatives? 18. What are the differences between business partnerships and companies? 19. How do general partnerships differ from limited partnerships? 20. What is the difference between a limited liability company and an additional liability company? 21. How do open joint-stock companies differ from closed ones? 22. What types of unitary enterprises are distinguished and how do they differ? 23. For what purpose do producers unite in agriculture? 24. Characterize the main forms of organization associations in agriculture.

Read next