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ж-л Право и Экономика № 05/2008

REFORMS IN RUSSIAN AGRARIAN SECTOR & THEIR INFLUENCE ON THE AGRICULTURE ECONOMY (Author: Natalya D Vasyuk /Journal: Law & Economics - May, 2008)

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        Traveling through Russia, we can observe pretty much the same picture: abandoned villages with uncultivated fields, overgrown with huge weeds. Even though Russia has such a huge amount of agricultural land, it is still not able to provide enough food for own people. In summer-the height of crop-yield season, Russia has to import fruits and vegetables that could be traditionally grown on its fields. If you go to any of the Russian stores, you will see potatoes and carrots from Israel, cheese from Germany, meat from Brazil and butter from Finland. With all modern agricultural technology, Russia still cannot effectively manage its vast fertile lands, and small Israel or Northern Finland help to feed Russian people.
       The history of Russian economy shows that over the time of its existence all the attempts to introduce agrarian reforms and raise agriculture failed. Why for several decades Russia was unable to settle the problem? In order to answer this question we are going to analyze the most significant reforms and their impact on the economy of the country within over- 150- year-period in Russian history.
       Serfdom in Russia was similar to slavery. It hindered the development of the country and by the middle of the nineteenth century it proved to be the main reason for introducing the radical agrarian reform. The first legal agrarian reform ever carried out by Russian authorities was Manifest of Emperor Alexander the Second on liberation peasantry from serfdom. This Manifest ended with the following words: "Bless us God, for free labor- the pledge of domestic and national prosperity". However, "domestic and national prosperity" have not been reached to this day. According to the Manifest the land, fields and forests were still the property of the landowners; peasants could get only a portion of the land for ransom, the land after this deal belonging to rural community. The rural community council in its turn allocated holdings among peasant courtyards on the number of male population souls. Peasants had no other choice but join the community. Conditions of compulsory redemption of land proved extremely difficult for peasants. Therefore, the government granted them a loan under 6 percent annual. The debt should be returned in the form of redemption payments within 49 years. This law was only abolished in 1906.
       This "peasant" reform was valid in Russia for 45 years. It is difficult to assess it unambiguously.
        On one hand, this reform:
was a heavy economic burden for peasants because of the high ransom payments
strengthened the domination of the community instead of landowners
did not let peasants manage their allotment (sell, inherit)
excluded peasants' interest in keeping the soil fertile because of the frequent repartition of the land by the community council
increased the land shortage, four million of serf peasants being left landless
Russia remained technically backward and for 45 years, peasants still used wooden plough to process the soil.
       On the other hand, the reform led to emerging a new class of wealthy peasants, who owned a few thousand-land desiatinas. Such large households began to work with external markets. This led to a regional specialization in producing crops and cattle breeding, significantly increased the level of agriculture development in Russia, and resulted in steady demand for new technology, fertilizers, and livestock. These new tendencies provoked market increase and development of other branches of agriculture.
        The agrarian question in Russia still stood up in capital letters, and the reason for that was the incomplete reform of 1861. It became necessary to change certain laws, that were passed 40 years ago, and the only way to do that was to carry out a new reform. This reform came to be known as the famous Stolypin reform, introduced in 1906, which left a vivid trace in Russia's history. 
       The legal basis of the Stolypin reform was stated in the decree: "About some Amendments to the current law, concerning peasants' landownership and their rights to it", dated November 9, 1906. According to the Amendment, every house owner could leave the community and demand land allotment as personal property. Those who left the community received all kinds of aid. There were set up offices for rental and hire of agricultural equipment, special training courses teaching "new farmers" to new methods of farming. The Peasant Land Bank played an important role as well. It was granted a right by the government to buy land from landowners and to lease it to peasants for a cheaper price. Many peasants who had less land (below average), had a right to take a loan from the bank for 55, 5 years. At the same time, the Peasant Bank was strongly prohibited to sell or lease the land to non-peasants or foreigners.
       The Stolypin reform focused on land shortage in central regions of Russia, behind the Urals. To solve this problem the government created profitable conditions for 3,5 million peasants to move there between 1906 and 1913. The peasants obtained large privileges: their arrears were liquidated, railway fares were lower, and they were freed from taxes for 5 years and given the interest free loans. The government took care of new regions: they laid the roads and built the reservoirs.
During the years of Stolypin's reforms Russia witnessed rapid growth of industry and agriculture, and it resulted in formation of bourgeois structures in agricultural Russia.
        On the eve of the First World War Russia experienced a comprehensive economical and technological growth. According to the statistics, the consumption of agricultural machinery and equipment increased 3,5 times during 1906-1913. The first 152 tractors were bought abroad Just before the war broke out.
        In seven years of the operation of the Decree (since 09.11.1906), Russia made essential achievements in the development of agriculture, i.e.:
planted areas increased in 1.5 times;
The productivity of agricultural crops increased by 10%;
The amount of fertilizers used on the fields doubled;
Gross yield of grain in 1913 increased by 40% compared with the beginning of the century;
during 1911-1913 the country produced grain by 28 percent more than Canada, USA and Argentina taken together;
Siberia became the basic exporter of butter and that brought twice as much profit as did the gold production in Siberia;
The bread export increased by 30%, this composed 25% of world grain export.
         Stolypin assumed that the realization of his reform would take a long period, during which other related reforms could take place. He intended to create effective farming like American one, which will result in appearing a new society layer of prosperous peasants. However, the Stolypin's reforms were doomed to fail. First, the Reforms were interrupted by the war and later in June 1917 were cancelled by the Provisional government.
The next agrarian reform was brought about in Russia in 1917 by October Revolution. The new Decree adopted on October 27, 1917, called "Decree of Land" and "Law of land socialization" of February 19, 1918, caused large changes in agriculture. According to these two legal documents, land relations in Russia appeared as follows: 
the right to own land was abolished forever, with the former land owners not getting a ransom;
the government was the single owner of the entire land;
peasants were just users of the land, and could not be bought or sold;
The right to develop land was granted to each Russian citizen, who wanted to use his/her own labor.
         The first agrarian reforms under the Provisional Government were carried out by eliminating all landowners' lands and redistributing them amongst peasants. Agrarian reforms influenced Russian food policy and as a result, the law on bread monopoly was passed on March 25, 1917. Now peasants had to give all their surpluses to the government for prices, which barely covered expenses involved in bread production.
Bolsheviks were too busy with their political problems to conduct a full-scale agricultural reform. They could only introduce some changes when the situation needed. Therefore, they issued more and more Decrees to overcome current problems:
Central Executive Committee's (CEC) Decree of May 13, 1918, introducing Food Procurement;
Central Executive Committee's Decree of may 27th,1918, stating food rationing;
Central Executive Committee's Decree of June 11th, 1918, on setting up committees for the village poor;
CEC's Decree of 02.12.1918 abolishing the committee for the village poor;
Soviet National Commissars's Decree of 11.01.1919, stating "prodrazverstka" (surplus-appropriation system in Russia);
10th Bolsheviks Party Congress of 03.20.1921 stating the shifting to a new economic policy (the replacement of the surplus-appropriation system by tax in kind)
         1928 - Introduction of emergency measures to confiscate bread surpluses, illegal house searches, prohibition of bread sale in the markets.
         The way the Soviet government handled agriculture problems destroyed its economic basis. During first years of Soviet rule, the whole agrarian policy involved only confiscation of bread. As a result, economic methods were replaced by the administrative, violent, and extreme ones.
Bolsheviks' policy on agriculture was based on creating a cult of poverty. The poor were given loans, equipment, and livestock. However, no steps helped in recovering the agriculture because seed and stock were often used as food instead of agricultural products. On the other hand, the government restricted activities of wealthy peasants. The government took their land away and divided among the poor, which caused splitting the property and decreasing their power and influence. As a result, weak peasant households had low technical machinery and in 9 years after the revolution about 40 % of the land was still tilled with a plough, the level of crop yielding being one of the lowest in Europe.
Thus, the first soviet reforms did not succeed and Russia's agriculture stayed on the same low level.
In 1927 the "bread storing crisis erupted", which foiled the government's plan to export cereals abroad. The country did not get enough currency and many agricultural programs were stopped. For the liquidation of the crisis, the country needed another agrarian reform, which would transform old and backward farming into new one with modern technology. Collectivization of agriculture was the next Russian agrarian Reform in the 1930s that was supposed to solve the problem.
           The grand industrialization of the country also required the radical restructuring of agriculture. Whereas capitalist countries used their colonies to bring up their industrialization, Russia did not have any colonies and had to use its peasantry instead. Collectivization created all needed conditions to wring out the money from peasantry and to pump it into industry. This idea of collectivization was officially approved by the 15th Communist Party Congress in December of 1927. This decree stated that the collectivization would be voluntary, but when it came to fulfilling the decision, the government violated all the rights and rules. On January 1, 1930, the Central Committee passed a Decree on Harsh Measures against Kulaks. By this law, the Kulaks had to be eliminated as a class: they were usually shot or transported to the North of Russia or beyond the Urals.
          This policy of violence led to terrible results: in 1928-32 gross grain product decreased by 10%, livestock decreased by 1/3, export of cereals ended up with 2 million tons, compared with 9 million tons.
          In 1929, the setting-up of motor-tractor stations (MTS) allowed collective farmers to use new technology. These MTSs were the fastest and most radical method of providing agriculture with industrial technology. In 1932 there were already 74 thousand tractors working on fields. In 1935, many new agricultural areas were developed, the harvest increasing respectively.
           During the World War II collective farms had a huge responsibility. They were to provide army and population with food and technical support. For this purpose, the government passed a decree (April 13, 1942) placing agriculture under war conditions. For instance, teenagers who reached the age of 12 had to work on collective farms at least for 50 days each year. All city citizens had to do some agricultural jobs.
           The after-the-war agriculture experienced huge difficulties. There was a shortage of technology and labor, and all the jobs were done mainly by women. However, despite all the problems, emergency war measures were cancelled in 1948.
           In March of 1954, the government held a Party conference, which was supposed to solve the agrarian problem. As a result, 42 million of vacant land has been actively tilled. This reform helped to decrease the food problem in a way.
           However, this program of cultivation of vacant lands was not properly prepared: there were no railways or any other means of communication, not enough trucks to remove crops, no granaries. As a result much of the grain produced was left on the fields for almost a year. Nevertheless the development of new lands brought about positive results as well: the amount of agricultural products produced increased significantly, during 1953-1958 the increase constituted about 34%.
           On 27-31 of March 1958 at the Party Conference a law was passed: the law of development of collective farming and reorganizing MTSs. Unfortunately, this law did not bring any significant or positive changes. By the law, the MTSs were cancelled and the machinery was sold to the kolkhozes. Lack of funds did not allow collective farms to buy new machinery, and the shortage of specialists in collective farms led to a lower level of service. Hence, the government had to set up new organizations instead of MTSs, which would assist farmers. The new organizations were called "selkhoztechnika" (agricultural technology). On the other hand, the lack of funds in collective farms resulted in decrease of productivity. Even though the government tried to decrease the prices on gasoline and transportation, it did not improve the situation.
            So, the problem of agriculture persisted. In order to solve the grain problem Khrushchev put forward an idea of growing corn as a new crop and fodder for livestock despite different climate conditions all over the country. It was obvious that this idea would not work. In 1962, when 37 million of land has been sown with corn, only 7 million has actually gave results. Moreover, producing corn was much more expensive than producing simple grasses. Two years later, the corn campaign ended. The corn was only now grown in the southern parts of the country.
          For several reasons the harvest in 1963 was very low - 107,5 million tons compared to 140 million tons in 1962. For the first time the USSR imported bread from other countries. The import constituted 13 million tons, which was a shame for Russia, as the country owns the most arable land in the world. The reasons for such a low harvest in 1963 were not just bad weather conditions, but also depleted soil all over the country. The soil needed some rest, but it needed fertilizers as well. In 1963 the government decided to implement a new program: "chemization of farming". It was impossible to carry it out because this program was not well worked out, in terms of inadequate conditions of chemical industry. The production in 1963 did not exceed even 20 million ton of fertilizers, and it certainly could not produce 80 million tons of fertilizers by 1970, as was planned.
         During these 20 years after the war ended, the results were not satisfactory and the reason was overall backwardness of the country. For example, in the USA only 3% of the population was involved in agriculture, compared to 25% in the USSR.
         During 1966-1980, 400 billion rubles were invested into agriculture that was equal to 680 billion dollars at that time and constituted 78% of all investments directed into agriculture for 47 years. This was a huge investment into the agriculture. Thanks to the investment, many new plants and factories were built, lots of modern machinery was bought abroad, and the infrastructure in villages improved dramatically, overall mechanization and the electrification of the agriculture, improvement and the chemicalization of the soil were carried out. Unfortunately, all these measures were done irrationally, because of the command economy in the country. This again did not let Russia's agriculture to step up in a new phase. The food problem was still the problem number one in the country.
         During years (1958-1978) farmers did not become well-to-do farmers; they still did not achieve world standards, in terms of wealth. Russia was still an active importer of grain.
         In view of the above, the government of the USSR had to take serious actions to solve food problem. Therefore, another unreal program was introduced In May of 1982 "The Food Program of the USSR for the period until 1990 and Measures for its realization". This program was also unable to feed the population, the reason being certain political motives. As a result, the richest country in terms of arable land appeared to be the biggest importer of grain. Russia imported grain from many countries including the USA, Canada, Argentina, Australia and many others. Amazingly, the USA grain was cheaper for Russia to buy than to grow it on her own land.
          In March of 1985, a new era in the USSR history began. It was called: "perestroika", which also made impact on the agriculture. In November of 1985 the government passed another decree "About the future development of agriculture management", which stated that now the owner of all arable land in the USSR was a new organization called AIC - agrarian industrial committee. Billions were spent to cover collective farms' debts and to increase purchase prices. However, neither investments nor new management system were able to solve "food problem". The USSR had to change the basic approach to the problem and the structure of the agriculture, starting with people directly involved in production on the "ground". Many-year experience of the state apparatus proved to be unable to solve agricultural problems.
          In April of 1989, the first reasonable decision was made. This decision let farmers rent land. As a result, new family farms came into existence. They became a new type of agrarian economy. In 1990, the government allowed farmers to leave collective farms and to demand some of the public land for their personal use. In December of 1991, the government passed another decree, which reorganized collective farms. Two years later, 95% of the collective farms were reorganized into "tovarichevstva", which gained juridical and economic independence from the government. However, the above decrees were often violated by local authorities. To this day, the peasants are owners of their land only "on the paper". In reality, they do not have actually their portion of land, as the documents stating that land is the property of this or that man were still not signed. On the other hand, peasants actually are not rushing to sign those documents, as they do not have necessary financial means to create their farms.
          It is necessary to say, that reconstruction of the agriculture between 1989 and 1990 did not bring any positive changes. Food problem had still been a hot issue. In 1990, food stamps for basic products were introduced all over the country including Moscow. In 1991, Russia received first humanitarian aid from other countries. During the next years, foreign countries increased their influence in Russia by winning the food market and ousting the home-produced goods.
          For the past 17 years, Russia has been importing food products from other countries; the Russian agriculture is sinking into oblivion.
          Finally, on December 21, 2005, the new government declared a new program, which was to develop agriculture. The new project included three basic directions: accelerated growth of the stock raising, the stimulation of the small management development in the agribusiness, the guarantee with the accessible dwelling of young specialists (or their families) in the village. This program is also unable to solve the food problem - to liquidate the dependence of Russia on the import of the foodstuffs, since it does not consider actual situation in the agrarian sector of the country and mostly the human factor. First, there are few able-bodied people in villages who can do hard jobs on the fields, and much fewer prepared experts. Second, among the rural population practically there are no people with some property and financial resources. Third, the program does not provide the conditions of their crediting and for the creation of their own farms. The national project is not brought to the rural toiler who must use it.
         Thus, the analysis of basic lawful reforms in the agriculture of Russia since the day of abolishing serfdom, "almost in 150 years", showed that neither of the reforms was successful and according to one or the other of reasons had the logical completion.
         Each reform bore simultaneous particular nature and it was directed toward the solution of the already sore problems which required urgent measures for the specific area. The analysis showed as well that throughout the entire system of agriculture the peasant never enjoyed respect or honor. Therefore, the peasant lived in poverty, possessing innumerable land wealth.
         In western countries, agrarian revolution always preceded industrial one, whereas the USSR had to handle these two problems at the same time due to the economic jamming of village and pumping resources from it for the needs of the industrialization. As a result, Russia became an industrialized country, but for the long 80 years has still the backward noncompetitive agriculture.
         During the time from Czars to nowadays democracy, Russia has never given any aid to the agriculture to the extent the situation demanded. This was not because of the lack of the funds. Russia has never set a goal to reform completely its agricultural sector. The upshot of the situation is the volume of food import is becoming increasingly dangerous and threatening to Russia's security.
         So why is Russia neglecting its agricultural problem, so important for the life? Any normal government that takes care of the citizens considers the food problem as problem number one. Both the policy and the economy of the country must be subordinated to a question of foodstuffs. For how many years is it still possible to postpone the solution of the food problem in Russia?
         Russia has to come up with a very well elaborate long-term agricultural program, which would help to develop agriculture and solve the food problem.
         In order to work out such a program it would be expedient to:
make use of experience of other countries, for example, China
study the demand for land among Russians who are interested in creating their own farms. This idea might be interesting not only for countryside's citizens, but also urban population who left the villages before
sell or lease the land to all citizens who want to till land and to create a farm
give financial aid to young farmers for buying the land and the machinery
give more profitable loans for building domestic constructions
cancel all taxes on agriculture. This experience gave good results in China
         This kind of program should be announced as a national program and maintained at the expense of the country's budget. Russia has all the possibilities to reconstruct agriculture and bring the solution of food problem to the logical completion. All is needed is the wish and will of the government and concern about the Russian people.


Статья из тематических разделов:
Административное право и государственное управление,Гражданское и предпринимательское право,Хозяйственная деятельность
The article brings up a question about Russia's inability to provide enough food for own people using its huge amounts of agricultural land. The article gives a detailed analysis of the most significant reforms within over 150 year-period in Russian history and indicates the impact of those reforms on the economy of the country. The research also gives suggestions on how to solve the existing problem.
Полный текст статьи на английском языкеEnglish Version 

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