Russia:The Dismally Slow Pace of Agricultural Reform

AGRICULTURE TODAY IS RUSSIA’S MOST antiquated and unreformed sector. Dominated by the inefficient behemoths Josef Stalin created during his sweeping collectivization, the agricultural sector is falling further and further into crisis. At least half of Russia’s farms, both state and private, are losing money. The country’s total farm revenues fell by 75 percent in real terms in 1994.1 Output is 26 percent lower than at the time of the Soviet Union’s collapse in 1991.2 Meat and milk production have dropped 30 percent in the past four years,3 and further declines are expected this year. In rural regions of Russia, the average income for farmers in 1994 was 100,000 rubles a month,4 barely a third of the average income in larger cities. Presumably the peasants can buy more with their salaries and have greater access to fresh produce than city dwellers, which might help balance out the discrepancy in income. Russian Agriculture Minister Alexander Nazarchuk said in March that the farm sector could face a complete and final collapse if the situation does not improve.5 Farmers – state, collective, and private – have suffered the worst effects of Russia’s recent market reforms, inflation, and price liberalization. Costs have increased for farm supplies such as fertilizer and diesel fuel, while the prices of farm products have failed to keep pace.