Vestnik OrelGAU, 4(49), August 2014 UDC 331.5 SMALL BUSINESS DEVELOPMENT AS A FACTOR OF HIGHER COMPETITIVENESS OF AGRICULTURAL PRODUCTION Kravchenko T.S., Volchyonkova A.S.*, Candidates of Economic Sciences Esina Y.V., Senior Lecturer Orel State Agrarian University, Orel City, Russia *E-mail: a-erinskaya@yandex.ru ABSTRACT Nowadays, small business plays an important role in assessing the gross domestic product of the agricultural industry. <...> This is possible thanks to the active state support, which is aimed at developing small and medium business. <...> However, its further development is impossible without creating conditions and mechanisms which contribute to the better interaction between small farms and other subjects of the economic relations. <...> The purpose of this study is to spot the factors and priorities for the state agrarian policy that enhance the competitiveness of farms in the agricultural sector. <...> The authors reviewed the results of the farms’ economic activity. <...> The main information source is the Federal State Statistics Service (Russat). <...> To investigate the causes and factors determining the efficiency of their economic activities, the authors interviewed some farm directors of the different administrative districts of the Orel region in the period from 2012 to 2014. <...> The authors determined the role and economic significance of the further development of the small farms in ensuring the competitiveness of the agriculture sector. <...> The detailed analysis of the conditions of their economic activity in the municipal districts of the Orel region revealed the key deterrents: the underdeveloped farming material and technical base, lack of financial resources and unavailability of long-term credits, low-skilled managers, lack of the agricultural service, difficulties of product sales and high risks in the production. <...> It is necessary to develop the organizational and economic mechanism of the state regulation for achieving financial stability and higher competitiveness of small farms in the agricultural sector. <...> KEY WORDS Farms; Economic efficiency; State program; Subsidies; Government support; Russian Federation. <...> Modern agricultural policy of the developed countries sticks to such directions as higher competitiveness of agricultural production, sustainable rural development and ecological safety of products and the environment. <...> As practice shows, the implementation of these directions is possible only in the mixed agrarian economy where farms take their social and economic niche. <...> Despite the active government’s participation <...>