Stimulating Investments in Human Capital in the Agro-Industrial Sector as a Factor in Ensuring Food Security

Tikhonova Anna Vital'evna ORCID: 0000-0001-8295-8113 Doctor of Economics Associate Professor; Department of Taxes and Tax Administration; Financial University Leading Researcher; Financial University 127083, Russia, Moscow, Verkhnyaya Maslovka str., 15, office 507 samozvanka_89@bk.ru Other publications by this author

Introduction. Problem statement

The need for changes in agriculture and the food system is widely recognized worldwide, as modern challenges such as climate change, loss of biodiversity, environmental pollution in agriculture, or food supply instability result in the inability to provide a growing population with sufficient quantities of high-quality food that can be produced sustainably and sustainably. Many aspects of modern food production systems lead to a decrease in land productivity, deterioration of water resources and soils, as well as loss of biodiversity at different spatial levels, which ultimately threatens the sustainability of food production systems ^[1]. Today, there is a global call for the transformation of agriculture and the food supply chain ^[2]. In Russia, the issues of further provision and development of food systems have been further exacerbated by egregious sanctions, which have affected both the direct ban on the import of a number of food products, as well as seeds, planting materials, fertilizers, and animal protection products.

Improving the nutritional outcomes of food systems requires understanding the underlying drivers, as well as how they interact and reinforce each other. Transformation means fundamental changes that occur over time and must begin with a forward-looking vision of the future in order to strive for regenerative systems, people-centered management, and achieving or even surpassing the Sustainable Development Goals. The development of the food system is possible only with the effective operation of the agro-industrial complex (hereinafter referred to as the agro-industrial complex) of the country, in this aspect, special attention should be paid to the factors that most affect the national agro-industrial complex. Transformation is systemic in nature and depends on technological, political, informational, environmental, social and cultural factors ^[3].

Traditionally, scientists identify the following set of main factors:

· Development of rural areas and their infrastructure ^[4];

· investments ^[5];

· Human capital ^[6];

· Innovation ^[7].

In the context of this study, we have paid special attention to the most important factor of agricultural production – human capital. Human capital is the use of knowledge to create goods, skills, abilities, and creative ideas that people invest in and accumulate throughout their lives. However, without erudite and qualified human capital, it is impossible to achieve sustainable growth in agricultural productivity. The willingness of society to introduce environmentally friendly and efficient technologies in agriculture is stimulated by human capital, which is why this factor is closely related to productivity growth. The development of human capital can contribute to more efficient and rational production processes, which lead to an increase in farmers' incomes and the introduction of environmentally friendly technologies ^[8]. Several studies conducted in developing countries have identified a positive relationship between human capital and the agricultural sector in Iran ^[9], Senegal ^[10], and Ghana ^[11]. More importantly, modern technologies and state financial support for the industry will not be effective until the level of human capital development in the agricultural sector reaches a certain critical value ^[12].

In the context of this study, it is important to note that human capital is crucial for ensuring food security, both at the individual and at the societal level. At the individual level, human capital allows people to make informed choices about nutrition and farming practices. As noted above, an educated workforce is more productive, which contributes to an increase in agricultural output and economic growth, which are fundamental factors for food security at the national and global levels. In addition, at the societal level, investments in human capital can enhance a country's ability to address food security issues such as food distribution, policy development, and food crisis response. Human capital is a link in a complex system of factors affecting food security and determining the ability of a State to produce, access and sustainably manage food resources in an ever-changing world.

The problem of ensuring food security is global, it affects the planet as a whole. By 2050, 10 billion people will need to be fed on Earth, who will need 1.5 times more food than they currently do, which will put a strain on the agricultural sector. Of course, this will not create a serious precedent within the Russian Federation (taking into account the expected growth rates of the country's population), however, Russia is one of the leading exporters of certain types of agricultural products (for example, grain), which generally leads to the need to increase agricultural production.

In the framework of this study, the following systemic problems are identified related to the low efficiency of the use of human capital in the agro-industrial complex of the Russian Federation:

1) low level of qualification of personnel in the field of agriculture;

2) unfair distribution of the results of live agricultural labor.

Thus, the article will present options for stimulating the development of human capital that contribute to solving these problems.

Materials and methods

The purpose of this study is to develop proposals for the development of a system of state support for stimulating human capital in the agro–industrial complex of the Russian Federation, focused on the use of financial methods. In this context, the following research objectives are defined:

1) to develop a scheme for the introduction of a new concept of agricultural education, contributing to the effective accumulation of human capital;

2) to present financial mechanisms that promote a fair distribution of workers' wages in proportion to the formation of food value chains.

The author's theses are based on official statistics collected by Rosstat.

The research methodology uses an integrated approach that includes three main methods of qualitative analysis.: comparative analysis, graphical modeling, and interpretive research. Comparative analysis was used to identify factors influencing the development of the agro–industrial complex and the Russian food system, graphical modeling was used to visualize the main parameters of the E-STEM education system concept, and interpretive research was used to describe the interaction of system elements, as well as to develop mechanisms for financial support of investments in human capital.

Tabular and graphical methods of data representation are used as information visualization tools. Numerical data processing (the number of graduates by profession, graduate students and doctoral students, the average monthly nominal accrued salary by type of activity) was carried out using quantitative tools: dynamic series analysis and structural analysis. The methodological limitation of the study is the impossibility of a more accurate calculation of the parameters of the tax system using classical extrapolation methods, in the future it is possible to carry out mathematical modeling, as was done in the author's earlier studies ^[13].

Results

1. Solving the problem of low qualification of personnel in the agro-industrial complex

Education is one of the main components of the overall human capital ^[14]. However, statistics show that there is a negative trend in this area (Table 1).

Table 1 - Number of graduates by profession in Russia, thousand people

Source: Social status and standard of living of the Russian population (2021) Statistical collection / Rosstat - M.: 373 p.; Social status and standard of living of the Russian population. 2023: C69 Statistical collection / Rosstat - M., 2023. – 284 p.

According to table 1, the number of graduates of higher education has decreased by 15.8% in 6 years, including by 7.6% in agriculture, forestry and fisheries, and by 7.4% in industrial ecology and biotechnology. A similar trend is typical for graduates of advanced training and professional retraining programs, the number of which has decreased by 11% since 2017, including in the field of agriculture, forestry and fisheries - by 18.1%, in industrial ecology and biotechnology - by 92.4%. The latter category may include specialists who "came" to agriculture from other industries. A number of foreign studies have shown that the use of such "overflows" is a driving mechanism for identifying new opportunities for doing agricultural business ^[15]. For example, people with experience in healthcare and finance may see opportunities in agriculture ^{[16, 17]}.

At the same time, the positive dynamics is highlighted by the graduation of secondary vocational education, which increased by 25.6% in agricultural specialties, while the share of the total number of graduates was 3.5%. In this regard, the direction of the development of the human capital of the agro-industrial complex, aimed at improving the national food system and solving the first identified problem, is the formation of transformative and inclusive education in the field of artificial intelligence, based on the principle of E-STEM education (Fig. 1).

Source: compiled by the author.

Figure 1. The structure of E-STEM education

Interdisciplinary analysis of STEM practices and standards makes it possible to increase the effectiveness of learning and make it better, meeting the needs of 21st century students. If E-STEM events are properly organized, rural youth can become an "untapped potential" ^[18] for the formation of a highly qualified workforce capable of contributing to economic recovery in rural areas with developed infrastructure, seeking to use their recreational resources. Modern agriculture is impossible without the development of artificial intelligence technologies, the use of biotechnologies, qualitative analysis of production factors, and the establishment of "economical" and efficient logistics. The application of the E-STEM concept makes it possible to train practitioners for the industry who possess non-traditional new comprehensive knowledge and are able to perform the tasks mentioned above.

Another important component of the national education policy is the training of postgraduate and doctoral students. As the data in table 2 show, the number of studies in the field of food system development is quite low.

Table 2. Graduate and doctoral students in the Russian Federation in 2019-22

Source: Social status and standard of living of the Russian population. 2021. Statistical collection / Rosstat - M., 2021. – 373 p.; Social status and standard of living of the Russian population. 2023: C69 Statistical collection / Rosstat - M., 2023. – 284 p.

Statistics show that in 2019 and 2022, an extremely low number of PhD theses were defended in the most promising areas of food system development – biotechnologies (the share of the total number of defenses was 1.2% and 1.1%, respectively, including industrial ecology). In the field of biotechnology, more than 20% of the graduate students who have entered the defense field, that is, 4/5 of the research is not completed. In the agricultural field, the proportion of graduate students who defended themselves from those who entered is slightly higher (around 256%). Doctoral dissertations involving fundamental research in the field of biotechnology and agriculture were not defended at all. During the analyzed period, only 1 dissertation was defended for the degree of Doctor of Science in food technology and none for the degree of Candidate of Science. To solve this problem, it is necessary to involve academic, interested and public audiences through educational, awareness-raising events (for example, round tables, seminars, panel discussions) conducted by graduate students and doctoral students on the development of the food system. To form a system for conducting scientific research in postgraduate and doctoral studies according to the principles of E-STEM education, that is, to conduct experimental research on the basis of and with the sponsorship of entrepreneurial practice (business).

An example of the application of this approach is the policy of the Institute of Artificial Intelligence for Next-Generation Food Systems, funded by the US Department of Agriculture (AIFS). The main mission of AIFS is to develop artificial intelligence technologies for a sustainable food system and to nurture next-generation talents to produce and distribute nutritious food using fewer resources. AIFS brought together researchers from six higher education institutions with proven expertise in artificial intelligence and food system science, engineering, outreach, and education. The organization acts as a national link for joint efforts of higher education institutions, federal agencies, industry and non-profit organizations/foundations ^[19]. To teach students the skills and knowledge needed for high-tech agricultural innovation, AIFS has developed 21 educational modules that include topics in data science, machine learning, and modeling technologies. At the same time, these modules were developed by the institute for end-to-end learning and include a curriculum covering secondary school, college, 4-year bachelor's degree programs, postgraduate and doctoral studies.

A similar approach can be implemented in the Russian Federation (Figure 2).

Source: compiled by the author.

Figure 2. The author's approach to building an E-STEM education system in the agro-industrial complex

The proposed application of the E-STEM education concept is based on the simultaneous participation of three levels in the process of education and training: educational institutions, scientific institutions and business. The main task of educational institutions is the theoretical training of transdisciplinary personnel, which means people with competencies in several fields of knowledge. In this context, the current policy of the state to expand the number of budget places in agricultural universities in IT specialties seems justified. The practical training of such personnel and the consolidation of theoretical skills are implemented in business through internships, training, production and pre-graduate practices. Research institutes are the basis for postgraduate and doctoral students to practice (it is assumed that it is expedient to legislate it). The E-STEM concept also includes the constant interaction of science and business through the approbation and testing of the results of scientific developments in enterprises in order to subsequently introduce the most effective of them both into real production and into the educational process.

2. Solving the problem of labor equity in the agro-industrial complex

The issue of labor equity in the context of food systems concerns how workers' pay is distributed in proportion to the formation of food value chains. It is directly related to the accumulation of human capital in agriculture, since low incomes in agriculture are not an arbitrary consequence of nature; they are a consequence of the inadequacy of human capital. Low valuation and payment for agricultural work, as well as increasing price pressures on agricultural products, affect rural livelihoods and make farmers particularly vulnerable to climate and economic shocks. It is also undeniable that significant professional migration from agriculture and geographical migration from rural to urban areas are a characteristic feature of most, if not all, economies of the 20th century. At the same time, it is important to note that in the context of solving the problem of food security, it is extremely important to maintain a balance between the needs for agricultural land and urban expansion. In this regard, it is necessary to develop a policy of state stimulation of wage growth in the industry through the use of both administrative and financial instruments. At the same time, fiscal mechanisms can be an effective tool. The rationale for this provision lies in the significant differences in wages across sectors of the economy, which is presented in more detail in table 3.

Table 3. Average monthly nominal accrued salary by type of activity, thousand rubles.

Source: Social status and standard of living of the Russian population. 2021. Statistical collection / Rosstat - M., 2021. – 373 p.; Social status and standard of living of the Russian population. 2023: C69 Statistical collection / Rosstat - M., 2023. – 284 p.

According to Table 3, wages in the types of activities that ensure the effective functioning of the food system are lower than others throughout the analyzed period: in agriculture – 61 thousand rubles (or 73% of the average in Russia); in food production – 63 thousand rubles (or 75%), in beverage production -78 thousand rubles. rubles (or 94%). It is important to note that the latter type of activity also includes higher-paying production of alcoholic beverages, which is not the basis of the food system. The wage gap in agriculture with the most profitable type of activity (financial) in 2017 was 68% (that is, almost 3 times more), in 2023 – 66% (2.9 times more). Thus, the problem does not change globally, which requires working out its solution.

As one of the solutions to this problem, we can propose an industry-specific personal income tax deduction for employees employed in organizations recognized as agricultural producers in accordance with the Tax Code of the Russian Federation. Tax legislation assumes that an agricultural producer is an organization or an individual entrepreneur whose share of revenue from the sale of agricultural products, services and products of its own processing is at least 70%. The deduction will be provided monthly by the tax agent for employees who are directly employed in production (including engineering and technical personnel, but not including administrative and managerial personnel) and who received income in the last tax period below the average monthly nominal accrued salary in Russia. The amount of the tax deduction will be the minimum subsistence level for the working-age population in the Russian Federation as a whole (19,329 rubles in 2025). In the context of the parallel operation of the progressive personal income tax rate (13-22%) from January 1, 2025, such a mechanism will make it possible to even out the imbalance in the distribution of wages and increase the attractiveness of the industry.

When establishing an industry-specific personal income tax deduction, the gaps noted above with the average salary level after deducting personal income tax will decrease by 4 percentage points. The calculation was carried out taking into account the minimum subsistence level for the working-age population in Russia on average for 2025 (formula 1).

R = (x _x0/x _cp - x _x1/x _cp)*100, where

R is the difference in the wage gap after the introduction of the tax deduction (percentage points);

x _cp is the average monthly salary paid for all types of activities (defined as the average monthly nominal accrued salary in economics minus 13%, RUB).;

xh1 is the _average monthly salary paid for the type of activity "agriculture, forestry, hunting, fishing and fish farming" after applying the tax deduction, RUB. (defined as the average monthly nominal accrued salary for this type of activity minus 13%, RUB.);

x _x0 is the average monthly salary paid for the type of activity "agriculture, forestry, hunting, fishing and fish farming" before applying the tax deduction, RUB (defined as the average monthly nominal accrued salary for this type of activity minus 13%, RUB).

An additional effect in comparison with the most profitable industries can be obtained by applying a progressive personal income tax scale. The maximum amount of shortfall in budget revenues per year will be (determined based on the number of people employed in the industry in 2023 - 4,407.9 thousand people) 133 billion rubles (or 1.9% of personal income tax receipts for January-November 2024).

Discussion

The study noted that government programs to stimulate income growth in the agricultural sector, as well as the financing of such expenditures by the state (in full or in part) is one of the priorities for the development of human capital in agriculture. At the same time, it is not always possible to attract high-wage personnel in the absence of equipped healthcare, education and cultural institutions in rural areas. After all, an important tool for state support of investments in the human capital of the agro-industrial complex is the formation of infrastructure in rural areas, which, as noted earlier, is an independent factor in the development of the agro-industrial complex and the country's food system. It is no coincidence that A.E. Syuvaeva suggests using investments in rural social and engineering infrastructure, including on the basis of public-private partnership, as one of the main tools for the development of the industry ^[20]. An equally important role is played by the transport infrastructure ^[21], which creates the basis for mastering the volume of state support and the logistical basis for the functioning of food systems.

Thus, the effectiveness of the measures proposed by the author of this study will be achieved only with an integrated approach to state regulation of the food system. It is no coincidence that Sharipov S.A. and Kharisov G.A. note that the development of an effective human resources system for the agricultural sector of the economy can be ensured through the creation of an institutional environment ^[22], which includes, among other things, educational infrastructure, youth support, the development of healthcare and social protection ^[23]. In the context of this study, the effectiveness of government support measures will be achieved when the growth rate of gross value added exceeds the real inflation rate (that is, real production increases), and the increase in tax revenues from the industry exceeds the total amount of additional budget expenditures for its government support.

Conclusions

Human capital plays an important role in the modern agro-industrial complex, helping producers to effectively use a selected set of resources and improving their ability to choose between different sets of resources, results and technologies. In turn, this ensures the successful functioning of national food systems. Thus, in order to ensure the effective operation of the agro-industrial complex and agriculture, in particular, government actions should be aimed primarily at increasing their human capital, rather than interfering in the market or using subsidies to change the impact of market forces.

The author identifies two areas of government participation in the mechanism of stimulating the development of human capital in the agro-industrial sector. The first is represented in the direct financing of education through the provision of subsidies to educational and scientific institutions. The second is the indirect financing of citizens directly employed in the industry through the provision of a special tax deduction for personal income tax in the amount of the subsistence minimum for the working-age population in the Russian Federation. The development of state financial support tools will help solve the problem of fair distribution of labor results, as well as make the agro-industrial complex more attractive to specialists from other industries.

It is important to note that the positive reaction of human capital to the proposed mechanisms for its development will have a multiplier effect aimed at ensuring food security in Russia and countries importing Russian agricultural products. Thus, food security in this context goes beyond meeting the basic needs of the Russian Federation's population; it is closely linked to the modernization of the country as a whole. High-quality human capital ensures sustainable food production, which can not only meet current food needs, but also protect the environment, as well as ensure food security and sustainable development in the future.