ISSN 0798 1015

Vol. 39 (Number 18) Year 2018 • Page 38

Enhancing the Managing of Food Provision for Urban Populated Areas

Mejora de gestión de provisión de alimentos para zonas urbanas pobladas

V. G. BRYZHKO 1; D. V. SEMENOVSKIKH 2; V. P. SHKREBKO 3

Received:20/01/2018 • Approved: 05/03/2018

Content

1. Introduction

2. Methods

3. Results

4. Discussion

5. Conclusion

References

1. Introduction

Meeting the population’s need for food in sufficient quantities and in keeping with rational norms of consumption is what constitutes the primary objective for food provision (hereinafter ‘FP’). Every region, city, and populated locality in a nation is characterized by a certain level of social-economic development, which combines in itself both national and regional characteristics. In this regard, the science of management is currently faced with the need to develop novel methods for exploring, investigating, analyzing, and assessing existing trends in and enhancing the managing of FP for urban populated localities as a significant factor for the nation’s social-economic development.

Without question, a crucial factor for the sustainable social-economic development of any urban populated area is proper FP for it. The food problem dates back to the earliest times, and has been viewed as one of the components of national economic security by many domestic and foreign scholars.

The 1990s witnessed an exacerbation of the food problem in Russia, which was due to a number of negative trends, the most prominent of which were declines in agricultural production and in the output of food, a major slump in people’s purchasing power, significant increases in imports of food products, etc. (Chupina & Mokronosov, 2016, p. 118). However, the primary reason behind the significant difficulties in ensuring food security must have been a number of structural disproportions within the nation’s FP system, which resulted in a major gap between the demand for and supply of food staples. The exacerbation of the food security issue gave rise to a quest for effective ways to resolve it and put in place a solid FP system.

It is worth noting that the term ‘food provision’ has taken on new meaning under today’s novel economic conditions in Russia, and may now need to be interpreted as an economic category within a market economy.

Note also that most researchers do not normally draw a clear line between ‘food provision’ and ‘food security’.

An area’s food security (hereinafter ‘FS’) is viewed as the reliable and sufficient (norm-compliant) provision of food staples to the population, which guarantees that there will be no threat of famine or undernourishment, and can be achieved through ensuring the physical and economic accessibility of food and its safety (Shapkina, 2013; Fedor & Timoshenko, 2012).

It is in the guarantee of providing an area’s population with food that the social component of FS can be traced. Based on this, at the municipal level the economic essence of FS is reflected in the following 3 aspects: firstly, it is the possibility of providing the required volumes of products to consume using mainly the region’s own resources; secondly, it is the possibility of bolstering the economic status of regional agri-producers; thirdly, it is the possibility of reducing the region’s dependence on other regions and food imports.

When it comes to FP, which is believed by most researchers to be an indispensable and the more significant component of FS, it, likewise, may be worth focusing on 3 crucial aspects. The 1st one implies the physical accessibility of food staples for the population regardless of where they live across the nation. The 2nd aspect of FP consists in the territorial accessibility of food, which is measured through comparing retail prices for similar food products in different regions. That being said, while being significant, the physical accessibility and the territorial accessibility of food products are still not sufficient conditions for FP. Therefore, the 3rd aspect of FP implies that food staples must be accessible economically, i.e. can be obtained by all social/demographic strata of the population in keeping with physiological norms for nutrition (King et al., 2017).

Thus, the category of FP incorporates the entire aggregate of reproduction relations: the production, distribution, exchange, and consumption of food. And, in contrast with the category of FS, the term ‘provision’, above all, reflects managing the creation of food resources manufactured within the country and supplemented with imports.

In the view of scholar A.V. Gordeev, FP expresses relationships fostered by the level of FP for the population, which is determined through comparing conventional norms for food consumption per capita with the actual amount of food consumed (Gordeev, 1998, p. 193). The authors believe this definition is not very accurate, as it reflects only the FP physical level for the population and does not factor in the quality and safety of food products, as well as relationships dealing with developing the FP mechanism.

The most accurate and complete, in the authors’ view, is the definition proposed by A.I. Altukhov, whereby “food provision is an organizational/economic system that … involves organizing a sales network concerned with advancing both domestic and imported food from the manufacturer to the consumer, as well as organizational/economic relationships formed among participants in that process” (Altukhov, 2006, p. 3).

At the same time, the authors are inclined to believe that the above definition may need to be supplemented, for, under conditions of a nascent socially oriented market economy, it is crucial to ensure high levels of food production. Therefore, attention should be given to not just the physical and economic accessibility of food products for the population but also to the quality and safety of food, which has been substantiated by major research institutions internationally (United Nations General Assembly, 2001).

Thus, firstly, the level of FP is largely determined by the relationship between the demand for and supply of products in the food market, with the key factors influencing the formation of demand being the size of the population, its age composition, national household income, the territorial and national characteristics of food consumption, and the prices for products in the food market. Among the key factors shaping food supply, in the authors’ view, are the level of development of the nation’s agriculture, food industry, and agricultural output processing sector, the level of development of the nation’s food market and its infrastructure, and the level of foreign economic activity by business entities within the food market. Secondly, the FP process is continuous, and it requires active management, regulation, and stimulation with respect to the organization and operation of the mechanism underlying it. The organization and management of FP are based on what kind of regulatory framework is in place and predicated on the use of a system of performance indicators, including the nation’s volumes of food production and imports, the structure and indicators of food quality, and indicators of the level of infrastructure – storage, means of delivery, the             distribution network, and marketing technology used to explore products, consumers, and markets (Hidrobo, Hoddinott, Kumar, & Olivier, 2018).

Consequently, FP for urban populated areas is a complex of economic, technological, and organizational activities that are undertaken by the state and other entities within the market at the level of the country, regions, and municipalities with a view to meeting the need of the urban population for food products, stimulating the production and processing of agricultural output, and ensuring the quality and safety of food products and their affordability price-wise.

The primary purpose of FP for urban populated areas is to provide the population with quality, balanced, and rational nutrition, which, in turn, will facilitate sustainable social/economic development.

2. Methods

To achieve the study’s goals, the authors pursued the following objectives in its practical part: to summarize the goals and objectives for FP and come up with a classification thereof.

The summarization of goals and objectives for FP was carried out based on the findings from an expert survey which engaged staff at the administrations of urban municipalities (a total of 45 individuals) concerned with issues related to FP for urban populated areas.

3. Results

The findings from the expert survey helped summarize the goals and objectives for FP for urban populated areas and come up with a classification of them, which is provided in Table 1.

Table 1
Classification of Major Goals and Objectives for FP for Urban Populated Areas

4. Discussion

The issue of putting in place an efficient FP system is a significant social/economic objective in state policy, which requires conducting a set of activities on resolving the issue of providing the population of the nation and its regions with sufficient physical amounts of food in accordance with norms for its energy composition and the structure of dietary intake. It will be impossible to resolve this issue without having in place an efficient organizational/economic mechanism for FP consistent with today’s social/economic conditions of the nation’s development.

The actual term ‘organizational/economic mechanism’ is not new to the economic literature. As part of the process of integration of domestic and foreign economic science, this category has gradually replaced the concept of ‘economic mechanism’. Note that, even though the meaning of the term ‘organizational/economic mechanism’ seems to be narrower at first glance, it has the same signification here as ‘economic mechanism’.

There are a plethora of views today on issues related to the operation of the organizational/economic mechanism. Most economists believe that the basis of the organizational/economic mechanism is formed by the entire system of production relations: the nature of ownership, general consistent patterns in distribution, exchange, and consumption. The mechanism underlying economic management incorporates a wide spectrum of relationships related to, forms of, and methods for programmed regulation and management, which incorporates management and planning (forecasting), a system of cost accounting, a system of economic stimulation, a regulatory/legal system, and the use of social/psychological factors. The mechanism underlying economic management is, in essence, a mechanism associated with the use of economic measures in practical activity related to managing the economy.

Thus, the organizational/economic mechanism is a complex, multiaspect concept. Most scholars rightly believe that, as an economic category, the organizational/economic mechanism is a collection of forms of, methods for, and tools for economic management – planning, state regulation, cost accounting, economic controls and incentives, and organizational (management) structures, i.e. it is “a collection of ways of, methods for, and means of managing public production that are aimed at achieving high end-results with the least expenditure of labor, material, and financial resources possible” (Abalkin, 2002, p. 64). There are authors who view the organizational/economic mechanism as one that ensures the interaction between “a subsystem that manages and one that is managed”, and it is formed from “a collection of specific forms of and methods for influencing the economy in a deliberate manner” (Prokof'eva, 2017, p. 25).

Given the issue this paper is focused on, the definition of the organizational/economic mechanism the authors find the most accurate and comprehensive is the one proposed by A.I. Golubeva and I.V. Mantsevich, who view it as “a system of organizational, technical, economic, and legal controls and methods employed in the areas of supply, production, and sale of products that is aimed at achieving high end-results with the least expenditure of labor, material, and financial resources possible” (Golubeva & Mantsevich, 2011, p. 26).

The effectiveness and efficiency of the organizational/economic mechanism for FP is overall determined by how effective and well-coordinated in the end the operation of these subsystems is. Therefore, a major role in developing the FP system is played by the state’s regulation of the process, which requires coordinated action across state, regional, and municipal authorities.

The wide implementation and use of a market mechanism for economic management, which is beneficial for the continual stimulation of efficient production, sparing use of all types of resources, and the most complete satisfaction of consumer needs, is a conceptual link in the nation’s economic transformations. Market economic management is a complex system of interaction that involves economic establishments, economic activities, legal support, economic policies, and other components.

Economic theory and practice attest that one of the key controls in a market economy is state regulation. Note also that sustainable market systems, which have achieved equilibrium, are characterized by effective self-organization. Weaker regulation under market conditions, especially under conditions of uncertainty, may lead to a destabilization of economic activity in society (Rivas Aceves & Amato, 2017).

An economic encyclopedia defines the term ‘state regulation’ as “a collection of forms of and techniques, employed by state institutions and organizations, for exerting purposeful influence on the development of public production with a view to stabilizing it and adapting it to changing market conditions” (Abalkin, 1999, p. 364). There is another definition, whereby it is “the state’s influence on reproduction processes within the economy for the purposes of achieving the objectives of economic policy” (Vorob'eva, 2014, p. 36).

The essence of the state’s management and regulation of the economy consists in its influence on reproduction processes within the national economy using market and structural policy and denationalization and privatization as components in structural policy, investing, legal and economic regulators, the system of state orders and contracts, etc. (Raizberg, 2009).

State regulation of FP is a system of economic, financial, legal, organizational, and social activities aimed at ensuring the stable and effective development of agricultural production and agricultural by-product production, as well as providing the population with sufficient amounts of food that is both high-quality and affordable.

The state’s management of the FP process may have to incorporate the following areas: analyzing and forecasting the situation in the food market; developing and implementing state and regional special-purpose programs for the development of the food complex; performing control functions. Under market conditions, the state is an active participant in the food market both as a purchaser of agricultural products and byproducts (putting together state reserves and meeting the needs of low-income consumers) and as a regulator of the balance between production and consumption volumes concerned with maintaining proper levels of profitability in the sector which will suffice for its self-funding ability.

Evidence from the experience of other nations (Dick & Wang, 2010; Rausser & Zilberman, 2014) suggests that, regardless of which economic regulation model is employed, the state should always provide support to agriculture so as to ensure the FS of nation and meet its population’s need for food. When it comes to regulating wholesale and retail trade and providing the actual consumer with produced food, it may help to consider the following methods of government intervention:

1) the ideal market model (Germany and France), which presupposes:

- creating, developing, and implementing a set of uniform rules for the operation of the agricultural commodity exchange and standardizing food products as much as possible;

- administering tight control over any attempts to monopolize the food market;

- giving up on government participation in direct food purchases;

2) the controlled market model (the US, Canada, Australia, and New Zealand), which presupposes:

- regulating the food market through taking part in market infrastructure (distribution centers, stores for low-income citizens, etc.);

- maintaining control over the quality of food products in a continuous and regular manner;

- encouraging “targeted purchasing” through the futures contract mechanism with a view to supporting competition and stabilizing the prices;

- making active use of indirect stimulation (tax concessions, etc.);

3) the active intervention model (Belarus and Kazakhstan), which presupposes:

- providing targeted financial assistance to agricultural manufacturers (leasing, purchase of equipment, seeds, and young stock, state loans, etc.);

- placing state orders with enterprises within the agro-industrial complex;

- creating a network of food stores and warehouses funded from the state budget.

Of major significance in the overall system of state regulation of the economy is maintaining proper price levels and price equilibrium. There is hardly a nation today where pricing issues are resolved without government intervention. The need for government regulation of pricing in the area of production and sale of agricultural output under market conditions of economic management is associated with that, through pricing, the state can steer in the right direction all relevant exchange relationships dealing with food production, as well as prop up the purchasing power of the various strata of the population and ensure their social protection. The primary objective of government regulation of pricing in the area of FP overall across the nation is carrying out relevant activities on remediating the disparity in prices for agricultural and industrial output and intervening in marketing activity associated with the movement of food products from the manufacturer to the end-consumer.

The pricing process is influenced by a variety of factors, like the demand and supply relationship, price and non-price competition, taxes, expenditure, the average income, the degree to which pricing is regulated by the government, product quality, the terms and volumes of supply, the system of channels for the sale of ready-to-go products, the market’s structure and dynamics, the rate of inflation, the impact of international processes on the economy and the internal market, etc.

The effective operation of the FP system both at the level of municipalities and across the nation as a whole will largely depend on the state’s ability to create favorable macroeconomic conditions for the activity of entities engaged in agrarian and industrial production.

An efficient financial/economic tool for driving the development of enterprises involved in FP is optimizing the nation’s taxation system. The effectiveness of state regulation is largely dependent on tax policy and the ability of taxes to perform both the fiscal and regulating functions.

In implementing its tax policy, the state must factor in the characteristics of the various forms of economic management, for without this it is hard to speak of creating proper conditions for economic activity. In particular, with respect to agricultural manufacturers and enterprises within the food industry it may help to factor in the special conditions in which these business entities are operating.

An objective for foreign-trade policy in the area of regulating FP is either softening or tightening the foreign trade regime for national food exporters and importers, creating either favorable or discriminatory conditions for foreign investors, and carrying out either liberal or protectionist measures in transforming the system of tariff and non-tariff regulation of international trade with a view to protecting the national manufacturer and admitting high quality and safe food products into the food market.

The formation of an FP system at the municipal level is largely influenced by the systems of regulatory/legal regulation, information support, monitoring, and marketing. The system of regulatory/legal regulation incorporates a collection of statutes and regulatory/legal acts (laws, decrees, resolutions, ordinances, and directives), that determine a set of key principles underpinning FP, regulate the activity of state and local authorities on regulating FP and the food market, and create favorable conditions for the effective development of the agro-industrial and food complexes.

Information on a particular segment of the food market ought to be official, objective, clear-cut, and veracious, which is crucial for agricultural manufacturers and other entities within the food market. At the state level, it will help to have in place special information centers concerned with monitoring the situation both in the food market and in the spheres of food production and consumption. Also, free access to this kind of information should be provided to all interested persons.

A crucial element in the development of FP strategies is marketing monitoring, which implies continually observing the market based on gathering, classifying, analyzing, evaluating, and disseminating marketing information to enable its use in making managerial decisions.

Marketing monitoring in the area of FP at the municipal level ought to be aimed at:

- the comprehensive development of FP subsystems (food production, food consumption, and formation and distribution of food resources);

- expanding the product mix and improving the quality of food products;

- boosting the competitiveness of local food manufacturers;

- stimulating, providing support to, and providing protectionist protection to food manufacturers who could occupy relevant positions in the world market;

- tracking the movement of food products in the local and regional food markets and keeping track of price dynamics;

- processing data obtained and effectively getting this information to those who will use it;

- ensuring the scientific level of analyses of and forecasts for the state of and prospects for the development of FP across the nation at the municipal and regional levels.

Of relevance is also the state’s policy on protecting certain categories of consumers of food products, which is one of the key areas for implementing the nation’s social policy. Social policy presupposes protecting the population’s low-income strata, boosting their purchasing power, as well as meeting people’s need for food and ensuring the safety and proper quality of food products supplied into the food market.

A major reason behind incomplete and low-quality nutrition among certain population groups is, definitely, a lack of money to buy food. A lack of access to food may occur during the time of a natural disaster, when people are cut off from sources of food supply. However, this kind of situation may also take place when one is unable to personally obtain food products one needs (e.g., disabled individuals and elderly people). Most people lacking proper knowledge about food products may lead to their income being spent on food irrationally and spent on less nutritious and worse-quality food products.

To resolve the issue of providing the nation’s population with food that is both sufficient and healthy, nations with an advanced market economy are implementing special-purpose FP programs aimed at providing help to low-income and other categories within the population.

In characterizing the present-day structure of food assistance in the US, it, above all, is worth noting the nation’s significant number and variety of methods used in this regard, with food assistance provided to the population across 15 different food programs, some of which (normally, large ones) come in special modules – subprograms. This kind of variety of instruments and mechanisms for providing the population with food assistance is quite well-substantiated, as it makes it possible to factor in some of the distinct characteristics of certain groups of citizens, engage relevant assistance channels, and administer effective specialized control (Ovchinnikov, 1999, p. 414).

Boosting the quality of food products is among the most crucial objectives for enterprises within the food industry. Note that boosting the quality of food products implies not just improving the quality of a particular batch of a certain food product, but enhancing the caliber of the entire system of organizing production, work, services, and marketing activity and boosting its ability to promptly react to changes in the consumer market, while ensuring the continuous competitiveness of food products. Today, a relevant issue is domestic manufacturers shifting to food production that is in keeping with requirements set by major international standards for quality assurance, certification, and standardization, which promote the following (Herzfeld, Drescher, & Grebitus, 2011):

- being oriented toward the consumer. The key focus with the above standards is the consumer as opposed to the manufacturer. Activity by the latter may be recognized as effective only provided that it meets the consumer’s needs as much as possible;

- striving to prevent mismatches, i.e. aspiring to harmonize all structures and processes, enhance reliability in manufacturing high-quality products regardless of external and internal factors, and fulfill all contracts to the highest standard and in full;

- deferring to the role of the chief executive. In employing international standards for quality assurance, companies must be clearly aware of that international standards regulate what has to be in a quality assurance system, while how that will be done has to be up to each individual executive, who will have to factor in the characteristics of the company’s production activity.

Based on the above, much significance is expected to be attached in companies to cultivating their system of marketing, exploring food markets, and studying the needs of consumers, their income levels, and their capacity to purchase certain food products.

Also, there is significant amount of importance and relevance in enhancing veterinary/sanitary and quarantine requirements, establishing tight restrictions on the importation and sale of transgenic and other types of products banned from entry into the country pursuant to current legislation. A clear line needs to be drawn between food products that are natural and have not been subjected to chemical treatment, genetic modification, and supplementation with chemicals that help extend a product’s expiry date and enhance its taste and appearance and those that are produced without these techniques being used. Implementing the above concept should result in boosts in the competitiveness of food products turned out by domestic manufacturers and sold in the internal market, and enable the nation’s population to consume high-quality affordable food.

FP is a nationwide issue, and must be resolved at the nationwide level, although it is worth taking into account that the nation’s regions develop differently from each other, which is caused by a number of various factors (natural/climatic, social, economic, etc.). Therefore, a major role in resolving the issue of FP for urban populated areas effectively is played by local authorities (Bryzhko & Shkrebko, 2011).

Some of the key controls and instruments for municipal policy in the area of resolving the FP issue include:

- ensuring guaranteed access to food in local markets for all social strata of the population, including through the creation of a mechanism for targeted assistance for low-income residents;

- implementing a policy aimed at supporting the local manufacturer of food products and stimulating the production of ecologically safe and healthy products;

- conducting monitoring of the region’s agriculture, its food industry, its local food markets, and the current nutrition of its population;

- carrying out the FP indicative planning in the urban populated locality;

- creating an effective system of information support for local manufacturers and end-consumers of food products;

- encouraging the conduct of research and development in the area of FP and enhancing the quality of food;

- creating municipal food funds and reserves, as well as regulating processes related to the use of food from this kind of funds and reserves;

- controlling, regulating, and promoting the passage of food flows to consumers through the local food market;

- working out a strategy for FP for urban populated areas in alignment with the regional strategy, having in consideration local interests, strengths, and weaknesses.

5. Conclusion

The success of the process of putting in place an efficient system of FP for urban populated areas, above all, depends on the level of agro-industrial production in the region (agricultural production and agricultural output processing), the degree to which the regional food market is formed, and the size of the population’s purchasing power, and has to do with the actual economic situation in that region. Consequently, the FP process ought to be aligned with the core ideological objective in the nation’s social/economic development program – improving the population’s standard of living and quality of life.

Managing the organizational/economic mechanism underlying FP is one of the key conditions for its effective operation. Functions related to managing the FP process ought to include a system of control and a system of determining sets of powers and economic controls required for the effective coordination of actions by its participants, i.e., apart from coordination and reconciliation functions, there also ought to be functions related to the stimulation and funding of activities aimed at resolving the FP issue. 

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1. Perm State Agro-Technological University, 614990, Russia, Perm, Petropavlovskaia St., 23. E-mail: bryzhko@bk.ru

2. Perm State Agro-Technological University, 614990, Russia, Perm, Petropavlovskaia St., 23. E-mail: denis.semenovskikh@yandex.ru

3. Perm State Agro-Technological University, 614990, Russia, Perm, Petropavlovskaia St., 23. E-mail: zemproekt@pgsha.ru