Product manufacturers are not ready to implement AI to receive subsidies
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The Ministry of Economy’s plans to oblige large recipients of subsidies and buyers of equipment under preferential leasing to implement artificial intelligence (AI) technologies have caused concern among businesses. Product manufacturers ask the Ministry of Agriculture not to extend the measure to the agricultural sector; machine builders and participants in the transport industry see risks in the initiative. The authors of the idea themselves believe that this should stimulate demand for Russian AI solutions. But market participants emphasize that the introduction of such technologies often does not make economic sense, and the topic is “simply promoted by analogy with the ESG agenda.”
The National Union of Milk Producers (Soyuzmoloko; includes GC Ekonova, H&N, PepsiCo, Viola, Hochland, etc.) reads the Ministry of Agriculture not to oblige agricultural enterprises to implement AI technologies to receive subsidies. Kommersant has a copy of the letter from the head of Soyuzmolok, Artem Belov, dated October 16.
The Ministry of Economy published a draft government resolution obliging recipients of a number of subsidies to implement AI technologies from 2024 on October 10. The measure should affect companies with revenues of RUB 800 million or more. in year. The list of subsidies includes preferential loans, preferential leasing of machinery and equipment, compensation for part of the costs of producing agricultural machinery, compensation for losses from discounts on leasing of public transport, etc.
As Soyuzmoloko notes, the introduction of AI requires investment, and agricultural enterprises are still adapting to “unfriendly actions of foreign counterparties,” replacing suppliers of equipment, machinery, materials, and IT solutions. This is accompanied by an increase in production costs, and preferential loans and leasing help stabilize the situation, the letter says. Restricting access to state support can create difficulties in the implementation of new projects, increase business operating costs, the cost of products and lead to a decrease in their availability to consumers, Soyuzmolok warns.
A top manager of a large agricultural holding says that the introduction of additional indicators for receiving existing subsidies violates the current rules of state support. According to a Kommersant source in the market, two or three years ago services for precision farming, accounting and control cost 100 million rubles. for one company, now the figure may be higher. Such technologies reduce costs, but computer vision, for example, is tied to unmanned vehicles, the flights of which are prohibited in many regions, he clarifies.
The head of the National Meat Association of Russia, Sergei Yushin, says that to implement AI in the agricultural sector there must be economic feasibility, but many companies do not have such a need. “The topic is now simply being promoted in a similar way to the ESG agenda,” he believes. Deputy Chairman of the Board of Rusprodsoyuz Dmitry Leonov confirms that the economy of food enterprises is already “difficult”, and the decrease in the availability of subsidies threatens an even greater increase in production costs.
Participants in other industries are also wary of the Ministry of Economy’s initiative. The Rosspetsmash association, which unites machine builders, said that it is unknown to what extent the annual mandatory implementation of AI technologies will correspond to the capabilities of companies and the tasks they solve. The implementation of AI is already underway and can continue to be successful, not necessarily, but due to the need dictated by the conditions of high competition in mechanical engineering, they note.
The State Transport Leasing Company (STLC) and the Ministry of Transport declined to comment. First Deputy Chairman of the Public Council under the Ministry of Transport Boris Laurent points out that preferential leasing programs for urban passenger transport have been launched for regions with high wear and tear of their fleets, which are unable to renew their fleet without support. Most of the users of such programs are enterprises that will not be able to carry out additional modernization without increasing tariffs for passengers, he points out.
Kommersant’s interlocutor among AI developers says that there are requests for the implementation of technologies from the agricultural sector, as well as successful examples of the implementation of AI in the industry. But, he explains, the deployment of AI is necessary only after solving basic problems: acquiring equipment, servers, sensors, communication channels. “In any case, the request should create a market,” Kommersant’s source is confident. CEO of the development company Ingry.Tech Georgy Banchikov says that the agro-industrial complex is one of the conservative industries, so the potential for improving the use of automation systems here is very high. There are Russian solutions for managing sowing and harvesting equipment, accounting and choosing the optimal recipe for gaining animal weight, milk yield and milk fat content, he points out.
The Ministry of Economy told Kommersant that the goal of the initiative is to encourage demand for the development of solutions with AI, and small businesses for which the measure would be burdensome will not be affected. Despite the sanctions, the turnover of the Russian market for AI solutions in 2022 grew by 18%, to 650 billion rubles – these include unmanned vehicles, facial recognition, computer vision, field condition monitoring, crop forecasting, the ministry points out.
The Ministry of Agriculture told Kommersant that it is “categorically against” additional requirements for farmers in terms of receiving preferential loans. “Attracting preferential loans and leasing equipment is directly related to seasonal field work, and a decrease in their financing will negatively affect the achievement of food security indicators,” they said. The ministry added that they are working to exclude such measures from the draft resolution.
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