Family farms in the аgro-industrial production of the Russian Federation: the institutional aspect

Family farms represent a business pattern of mixed agricultural production, and are a determining subject of food security in the current conditions of the Russian economy. The specifics of agro-industrial production (videlicet, heavy dependence on natural factors) determine the difference between theoretical approaches to defining the essence of farming, its place in the institutional structure of agricultural production. Economic literature does not fully cover the analysis of the institutional bases and the mechanisms of family farms functioning. The research is focused on the analysis of a family farm as an institution of the system of agricultural production and the identification of the institutional foundations for its development in the Russian economy. It is found that the personification of family members' relations determines the formation of a small economy with following determining characteristics: commitment to traditions, localization of transactions, high degree of flexibility and stability, social orientation of investments, propensity for innovation. The basic rules and mechanisms of family farm functioning are determined based on the methodology of institutional design. The major factors (videlicet, legal system governing the agro-industrial production, including the land code; specification and protection of property rights; obstacles to entering the factor markets, distribution of their products, credit markets; price disparity; public policies model, et cetera, environmental conditions) and methods (excessive labor intensity of family members (mostly unpaid labor because of the inability to hire workers due to low income and an underdeveloped local labor market), reduced capital costs due to the relatively low earning capacity, emphasis on the efficient use of land resources, ecology, secondary employment outside agro-industrial production in order to ensure optimal use of the human capital of the family) and the implementation of the family farm business model. The paper presents the author's interpretation of the definition of the family farm, which is identified as a self-developing mobile form of family organization of labor in the system of agro-industrial production in order to realize the entrepreneurial ability of rural producers and maximize the income through the production of eco-friendly products in line with the current needs of the population. The study also reveals demand for improving the institutional environment of family farms: implementation of the effective agricultural state policy and formation of inclusive business models.

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