ECONOMIC POTENTIAL OF THE KRASNODAR TERRITORY
Social and Political Stability
The Krasnodar Territory is a wonderful place to live and work. According to the Russian agency Expert, in 2006 the Krasnodar Territory was among the 6 regions of Russia (St. Petersburg, Moscow Region, Moscow, Sverdlovsk Region, Khanty-Mansiyisk Autonomous Area) with the best investment potential and moderate investment risk.
In 2007, the region’s GRP stood at 598.7 billion roubles. Over the last three years, its GRP has grown faster than the Russian average. The share of the Krasnodar Territory’s regional product in Russia’s GDP is about 2%, the positive dynamics of the GRP being driven by the growing output of goods and services in the main sectors of the economy. Agriculture accounts for 16.5% of the GRP.
Transport and communications account for 18.5% of the GRP, industry for more than 17%, agriculture and trade for at least 13% each, and construction for 11%.
Industrial complex
The region’s industrial complex includes three types of economic activity: mineral extraction, manufacturing, and production and distribution of power, gas and water. These sectors include more than 9200 registered organisations, 900 of them being in the large and medium-sized category. Industrial output in 2006 topped 232 billion roubles.
Mineral extraction
The region produces oil, natural gas and building non-ore materials. These industries account for 6.1% of industrial output.
In the extraction of hydrocarbons, exploration and development of new fields is the strategic policy.
The known reserves of building materials, expanding construction of housing, roads and other facilities augur well for investments in this sector.
The output of the manufacturing industry is more than 135 billion roubles or 76% of the total industrial output.
Extraction of natural gas has topped 3 billion cubic metres, having grown by 24% since 2000. Between 2001 and 2006, gas supplies were brought to about 150,000 apartments and detached houses in the region and nearly 5000 km of intercommunity and distribution gas pipelines were laid.
Processing industries
In the processing sector, production of foodstuffs, petroleum products, building materials, machines and equipment are at the fore, accounting for over 78.5% of total industrial output.
Production of foodstuffs, including drinks
Among processing industries, food production is in the lead, with 2,200 facilities and about 50% of total output.
The territory is the top producer of sugar, grape wine and coffee, the second biggest producer of bread, confectionery and vegetable oil, in third place in the production of dairy produce and fourth in that of meat and meat products.
The biggest enterprises in the sector are: OAO Butter and Fat Plant Krasnodarsky, ZAO Tikhoretsky Meat-Packing Factory, OAO Sochi Meat-Packing Factory. OAO Medvedkovo Meat-Packing factory and the Timashevsky District Dairy Complex, ZAO Kaloria firm, OAO Bonduelle-Kuban, OAO Abrau-Durso, and branch No.1 of ZAO Moscow Beer and Soft Drinks Factory Ochakovo.
Production of Petroleum Products
More than 15% of the processing industry output is accounted for by oil refining, its output having increased by 70% between 2001 and 2006) (against a national average of 26%). The rising output of most products is driven by the 90% increase in oil refining 9.2 million metric tons. The production of petrol increased by 7% and of diesel by 80%, while that of fuel oil doubled. The region has three oil refineries, the biggest being OAO Rosneft-Tuapse Oil Refinery.
Production of Other Non-Metallic Minerals
About 9% of total output consists of other non-metallic minerals (mainly building materials), production of which has gone up by 50% (versus a Russian average of 40%) since 2000. There has been a rise in output of virtually the entire range of materials, many of which (cement, gypsum, gypsum-cardboard sheets, ceramic brick and tiles, gravel) meet the highest standards.
More than 50 big and medium-sized enterprises in the sector put out products that have international quality certificates and are exported to many countries (cement, gypsum-cardboard, special reinforced concrete and metal structures). Among them are OAO Novorostsement, OAO Kubangips-Knauff, OAO Novokubansky Ceramic Wall Material Plant, and ZAO Reinforced Concrete Structures Plant.
Production of machines and equipment
Machine building accounts for over 9% of the manufacturing sector. More than 90 big and medium-sized enterprises produce a wide range of machines, including metal-cutting, foundry and press machines, oil extraction, drilling, geological prospecting equipment, compressors, pumps, grain combine harvesters, electric motors, instruments and automation equipment, TV sets, and various equipment for agriculture and forestry.
The production of photo-energy equipment (solar batteries and solar modules) is growing fast.
Production and distribution of power, gas and water
In the production and distribution of power, gas and water, recent years have seen a narrowing of the energy gap owing to the construction of the gas turbine Thermal-Electric Power Plant in Krymsk and Yuzhnaya Thermal Power Plant in Novorossiysk. The 55-km-long 500 kV Tsentralnaya-Psou (Adler) power transmission line and the Sochi power plant with a 76 megawatt capacity were built with money provided by RAO UES to supply the Sochi area with heat and power.
Small business
Kuban is among the top five Russian regions in development of small business. Over the last three years, the number of small businesses has increased by 35,000 and their output of goods and services has more than doubled. Small enterprises in the Kuban area contribute 14% of taxes to budgets of all levels and today employ a third of the able-bodied population, about 600,000 people. There are 229,000 small businessmen and private farmers.
Agriculture
Agriculture is the key component in the region’s economy, accounting for more than 13% of the gross regional product. While the region has 2.3% of Russia’s total arable area and 3.4% of its ploughland, it produces 7% of the gross national output of farm produce. About 100 different crops are grown and the average grain harvest exceeds 8 million metric tons.
The agricultural sector includes nearly 1,900 enterprises (of which 492 are big and medium-sized) and 17,300 private farms. Agriculture provides jobs for 20% of the entire gainfully employed population.
Gross output from all categories of farm reached 116.4 billion roubles in 2006, which is a 40% increase over 2000 (the average growth in Russia is 20%).
The region is the country’s biggest agricultural producer in the country, boasting the biggest harvests of grain, sugar beet and meat production. It is among the leaders (2nd-4th places) in the production of sunflowers, vegetables, milk and eggs.
The region has all branches of livestock, with meat and dairy cattle and pig-breeding predominating.
The Krasnodar Territory is the key region ensuring Russia’s food security.
The agro-industrial complex has diversified agricultural and industrial enterprises with a developed infrastructure and is Russia’s largest producer and supplier of agricultural produce and raw materials.
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