State of Russia in the surrounding world. Analytical book 

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Is Russia at the threshold of finding a solution for the food problem?

Petrikov A.V.

In Russia 14.9% working resources employed and 17.2% of main industrial funds is accumulated in the agriculture (1996). The share of agriculture in the gross national product constitutes 8.9% (1995). The area of agricultural territories is very large, but it steadily decreases. During the period from 1970 to 1996 it decreased from 222 to 208,4 million ha.

Starting with 1990, the agriculture underwent significant change in structure of ownership and the form of agricultural territory usage. By 1997 the share of state-owned agricultural territories decreased from 56% to 13.4% and the share of private (collective and individual family-owned farms) increased from 40.3% to 70.9%. The number of agricultural farms continues to grow (mainly by fragmentation of large farms), and their size declines so now the farms with area from 1000 to 5000 ha dominate.

A new for Russia type of agricultural production - individual farms -appeared in 1990. Their number reached maximum number of 280 100 farms in 1996 and then decreased in 1997 to 278 600. The average area of individual farms slightly increased. Most farmers grow crops, thus avoiding less profitable stock raising.

Traditionally, so called personal supplementary farms (kitchen gardens) make an important contribution to agricultural production (mainly in production of potato and vegetables). Limited to an average area of 0.353 ha per family, they supply up 90% of potato, 76.8% of vegetables, and 51.6% of meat production. Limited efficiency of the supplementary farms is related to their low technological capacity, fragmentation, lack of cooperation, and the uncertain legal status of this farming type. As a result, during the last three years gross production of personal farms did not increase and their proportion in total agricultural production increased due to general decline of production in other agricultural sectors.

Generally, a significant decline in the efficiency of the agriculture is observed in the country. During the period from 1990 to 1996 the crop production declined by 18%, sowing areas were reduced by 15%, production in stock-raising sectors and life stock production decreased by 51% and 41% correspondingly. In total, agricultural production decreased by 37% during these years.

A complex of extrinsic and intrinsic reasons determines the agricultural crisis in Russia.
The extrinsic causes of the crisis include:

1. Deep economical crisis in the country, inflation, budget deficit, increase of credit rate, and non-payments.

2. Political instability, disruption or breakdown of commercial and territorial cooperative links, relaxation of the state regulation of agriculture, and fast legislative and economical changes.

3. General decrease of the income level and paying capacity of the population and the resulting decrease of demand for food products.

The intrinsic causes include:

1. An asynchrony between property reforms (privatization) and changes in general economical conditions. Relaxation of state regulation resulted in disparity between prices on agricultural and industrial production, reduction of agrarian chapters in the state budget, and breaking of state purchase guaranties. The manufacture industry and commerce increasingly dictate their conditions to the food producers. The share of producers in retail milk price dropped from 83% in 1991 to 33% in 1995, in the bread price from 32% to 11%, and in the meat price from 84% to 49%. More than 80% of farms came to the end of 1997 with financial losses. Volume of capital investments into agriculture declined by more than 18 times from 1990 to 1996.

2. Low efficiency in creating of new types of agricultural organizations. In the beginning of the reforms the priority was given to development of individual farms. Three thirds of individual farmers came from cities and one third included those who left collective farms. Collective farms so as personal supplementary farms uniting 14 million families lack modern technologies. Rural community splits into two camps. Reorganization of collective farms that started in 1992 turned into spontaneous process of public privatization. As a result, most working and retired people were devoid of information regarding their own rights and responsibilities. The employees of formally reorganized farms carry out non-authorized privatization. New farms turn into the conglomerates consisting of remnants of communal property and personal supplementary farms.

3. Narrow social basis of agrarian reforms and paucity of social groups supporting reforms. It is related to general decline of living standards of the majority of population and to lack of dependable political mechanisms that would guarantee participation of all groups of the society in decision-making.

As a result, new problems appeared in addition to exacerbation of traditional rural social problems:

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