Agriculture in Russia

survived a severe transition decline in the early 1990s as it struggled to transform from a command economy to a market-oriented system. Following the breakup of the Soviet Union in 1991, large collective and state farms – the backbone of Soviet agriculture – had to contend with the sudden loss of state-guaranteed marketing and supply channels and a changing legal environment that created pressure for reorganization and restructuring. In less than ten years, livestock inventories declined by half, pulling down demand for feed grains, and the area planted to grains dropped by 25%.

The use of mineral fertilizer and other purchased inputs plummeted, driving yields down. Most farms could no longer afford to purchase new machinery and other capital investments. Following a nearly ten-year period of decline, Russian agriculture has experienced gradual ongoing improvement. The transition to a more market-oriented system has introduced an element of fiscal responsibility, which has resulted in increased efficiency as farmers try to maintain productivity while adjusting the resource constraints. The relatively smaller corporate farms and family farms that have emerged and grown stronger in the new market environment are now producing in aggregate value more than the total output of large corporate farms that first succeeded the traditional collectives.

Ownership and farm structure

A combine in the Rostov Oblast. After the collectivization in the Soviet Union, until the 1980s, most agricultural land in Russia was in state ownership, and the transition to a market-oriented economy had to start with privatisation of land and farm assets.[1] Russia's agricultural privatisation programme can be traced back to 1989–90, when Soviet legislation under Gorbachev allowed, first, the creation of non-state business enterprises in the form of cooperatives; and second, legalized private ownership of land by individuals (the November 1990 Law of Land Reform). While household plots cultivated by employees of collective farms and other rural residents had played a key role in Russian agriculture since the 1930s, legislation enabling independent private farms outside the collectivist framework was passed only in November 1990.

The Law on Peasant Farms adopted in December 1990 was followed by laws and decrees that defined the legal organizational forms of large agricultural enterprises, the legal aspects of land ownership, and the procedures for certifying and exercising ownership rights. Specifically, agricultural land was denationalized, and its ownership (together with the ownership of other farm assets) was legally transferred from the state to the ownership of kolkhozes. But at the same time imposed a ten-year moratorium on buying and selling privately owned land

The new legal environment created expectations among Western scholars and Russian reform advocates that family farms would emerge in large numbers and the large-scale collective farms would be restructured. But as it turned out, few peasants were interested in establishing individual farms, and management and operating practices inside large agricultural enterprises remained largely unchanged despite formal reorganization.[1] The lack of enthusiasm for the creation of private farms was attributed to inadequate rural infrastructure, which did not provide processing and marketing services for small producers and also to the fear that families striking out on their own might lose eligibility for social services that were traditionally provided by the local corporate farm instead of the municipality.

Starting in 1993, privatized kolkhoz and sovkhoz became corporate farms. These farms were legally reorganized as common stock companies, limited liability partnerships, or agricultural production cooperatives and turned over, usually in their entirety, to the joint ownership of agricultural workers and pensioners. These farms continued to operate largely as they had done under the Soviet system. Today, the term "corporate farm" is an all-inclusive phrase describing the various organizational forms that arose in the process of privatisation without involving distribution of physical parcels of land to individuals. In diametric opposition to corporate farms is the individual farm sector, which consists of the traditional household plots and the newly formed peasant farms.

The land-code reform of 2002, advanced by the administration of Vladimir Putin, called for the ownership of real estate objects to henceforth follow ownership of the attached land plot; granted exclusive right to purchase or lease state-owned land to the owner of the attached real estate object; gave to private owners of buildings on land plots owned by other private parties the preemptive right to purchase the land; and prohibited the future privatization of real estate objects without the concurrent privatization of the attached plot. Russian agriculture today is characterized by three main types of farms. Two of these farm types – corporate farms and household plots – existed all through the Soviet period (the former are basically the successors of the Soviet collective and state farms). The third type – peasant farms – began to emerge only after 1990, during the post-Soviet transition. The evolution of Russian agriculture since 1990 shows a significant change of resources and production from the formerly dominant corporate farms to the individual farming sector. During 2006, household plots and peasant farms combined controlled about 20% of agricultural land and 48% of cattle,[3] up from 2% of agricultural land and 17% of cattle in 1990. The share of the individual sector in gross agricultural output increased from 26% in 1990 to 59% in 2005. Producing 59% of agricultural output on 20% of land, individual farms achieve a much greater productivity than corporate farms.

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