Fundamentals of foreign economic activity of agricultural enterprises and agribusiness

The foreign economic activity of an agricultural enterprise develops within the system of foreign economic activity of the agro-industrial complex.

Foreign Economic Activity (FEA) is viewed as a complex of production, scientific-technical, and credit-monetary ties between the economies of different countries, based on the international division of labor and ensured through the execution of currency, customs, financial, and other mechanisms.

Under the conditions of globalization of world agriculture, the role of FEA is significantly increasing both for the industry and for individual agricultural enterprises. The development of FEA by the enterprises themselves in Russia began in the mid-1980s in connection with the transition from interstate to direct foreign economic relations at the level of business entities. Within the framework of FEA, agricultural enterprises perform a set of functions, developing strategies, forms, and methods of operation in foreign markets. In a market environment, FEA is carried out by enterprises independently and is based on entrepreneurial activity. Agricultural enterprises (organizations) of the Russian Federation are gaining experience in both entrepreneurial and foreign economic activity for the first time.

The following types of FEA are distinguished:

• foreign trade activity;
• production cooperation;
• investment cooperation;
• financial and credit operations;
• currency operations.

A transaction is the main stage of conducting commercial operations within the framework of FEA. Transactions can involve the purchase and sale of goods (works, services), information, and results of intellectual activity (intellectual labor), including exclusive rights to them, which have applications in agriculture and other types of production in the agro-industrial complex.

Transactions in FEA consist of operations:

• export — sale and export outside the country for transfer into the ownership of a foreign partner;
• import — purchase and import of foreign goods for subsequent sale within the country.

Export-import operations can be direct or indirect — through intermediaries, which include dealers, brokers, commission agents, agents, etc. The ratio between exports and imports constitutes the balance of trade.

Foreign economic activity is a broader concept than foreign trade activity, because in addition to foreign trade, FEA includes international cooperation, the creation of free economic zones, and state activities to develop economic cooperation, which implies the establishment of most-favored-nation regimes in trade, visa or visa-free regimes, and the conclusion of agreements on the creation of customs unions.

The main regime for carrying out foreign trade activity is border trade and free economic zones.

Free economic zones are territories that have been granted preferential regimes for economic activity and trade compared to those generally accepted in the country. Such zones are created for the purpose of:

• favorable conditions for the active development of individual territories and specific sectors of the economy;
• growth of foreign exchange earnings;
• saturation of the country's domestic market with high-quality import-substituting products.

Within the territory of a free economic zone, enterprises are granted benefits:

• foreign trade — including the reduction or abolition of export-import duties, simplified procedures for conducting

◊ tax — involving the reduction of tax rate levels or exemption from certain types of taxes; ◊ financial — provision of preferential loans, benefits on rent for land, property, and buildings, and reduction of utility payments; ◊ administrative — simplification of numerous procedures

Promising types of FEA are: ◊ foreign trade activity; ◊ production cooperation, carried out on the basis of the division of labor and representing cooperation in the joint production of final products, which allows for fuller utilization of the potential of all participants in joint production and reduces unit costs per product; ◊ investment cooperation, carried out for the purpose of developing high-tech intensity through the attraction of new technologies; ◊ currency and financial-credit operations, serving foreign trade payments and the domestic currency market.

The basis of FEA, like any entrepreneurship, is the ownership of movable and immovable property.

the following groups of its participants: 1) producer-exporters without intermediaries: ◊ direct producer-exporters, producing competitive export products, selling them independently on the foreign market and being the recipients of foreign currency funds. To carry out export-import operations, producer-exporters often create subsidiary foreign trade companies; ◊ joint ventures created by pooling the capital, labor, intellectual, and other resources of Russian and foreign enterprises; ◊ consortia, uniting on a contractual basis manufacturing enterprises and foreign trade, design, and financial organizations, created for the implementation of large-scale projects that require the pooling of re

The entry of an agricultural enterprise into the international market requires interaction with a developed infrastructure. It is not necessary to cover all processes of foreign economic activity (FEA) independently: an extensive network of service and intermediary organizations operates in the market. They take on logistics, pre-sale preparation, searching for counterparties, and legal support for transactions.

For the effective conduct of export-import operations, agricultural producers can engage specialized structures of different levels. Depending on the tasks and scale of the business, these include:

• Transport and leasing companies focused on logistics and technical support for export and import shipments;
• State foreign economic associations servicing foreign economic activity at the level of intergovernmental agreements and providing consultations;
• Sectoral foreign trade companies that independently sell products abroad and purchase imported goods to stabilize the domestic market;
• Specialized foreign trade organizations conducting transactions on behalf of manufacturing enterprises;
• Mixed societies established jointly with foreign partners for sales, pre-sale preparation, and service maintenance;
• Trading houses and foreign economic associations providing trade intermediary operations, business and scientific-technical cooperation;
• Industry unions and international non-governmental organizations coordinating export policy, information exchange, and unification of requirements for market participants.

Additional assistance in developing the export potential of agribusiness is provided by commercial banks, chambers of commerce and industry, specialized institutes, as well as advertising and transport agencies.

Legal framework and key principles of foreign economic activity in agribusiness

The creation and development of an export direction at an agricultural enterprise is directly related to solving basic economic tasks — expanding sales markets and increasing total profit. The current regulatory framework creates conditions for the integration of agribusiness into global trade.

Compliance with regulations and international standards allows for minimizing risks when concluding contracts and building reliable channels for selling produced goods.