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Russia: Farms--Still Collective And Far Less Productive

Washington, 27 March 1997 (RFE/RL) - A private non-profit organization devoted to the problems of land reform in countries in transition says Russia's farms have only gotten worse since the days of heavy subsidies when they were already far below agricultural systems in similar agro-climatic settings.

The Urban Development Institute in Seattle, Washington, in a report entitled "Prospects for Peasant Farming in Russia," says Russia's 26,000 giant agricultural enterprises, "still collectives in all but name," produce even less today than they once did. And the old Soviet yields were terrible, says the report, producing 35 percent less grain per hectare than Canadian farms and 60 percent less than Finnish family farms.

The 1996 Russian grain harvest of 69 million tons was up from the 63.4 million tons in 1995, but the report says that at Finnish yield levels, the Russian harvest would have been 150 million tons, not 69 million.

Despite the great benefits to be expected from a system of peasant farms, says the report, "there has been no net increase in the number of peasant farms in Russia since the beginning of 1994.

The report says that although most collective and state farms have been privatized and re-registered as joint stock companies and in other forms, they "continue to function as inefficient behemoths whose hundreds of members have little incentive to maximize production, reduce production costs or preserve capital assets."

Based on an on-the-ground survey conducted by three experts from the institute, along with two experts from the Agrarian Institute in Moscow, the report says that prospects for the growth of peasant farming are now "substantially more encouraging than at any time in the past three years."

At present, only about six percent of Russia's agricultural land is in peasant farms, but those farms are already producing far better yields than the large collectives.

The land of the old collectives and state farms is being distributed as land shares, but in most places it is being leased back to the collective at rates equal only to the amount of land tax. Even at the least productive, the report says, this land yields 100 times more than that value. It says this availability of cheap rental land depresses the lease value of land shares and interferes with the emerging land share rental market.

Still, there is a potential positive aspect of this, says the report, and that is that peasant farmers are paying "about four times as much per hectare in land share lease payments as agricultural enterprises." Even though Russian lease payments per hectare are "quite low" by world standards, the peasant farmers higher payments may force agricultural enterprises to offer better leasing terms to compete successfully.

For example, the report says, while Russian peasant farmers are paying 11 to 15 percent of total yield in rent, and large enterprises are paying around three percent, similar rents in the U.S. are equivalent to 25 percent of yield.

At the same time, the report says, lease payments are a valuable income supplement for land owners -- especially pensioners -- and it urges the Russian government to undertake an intensive program to inform pensioners and other land owners about their rights and options. Now, it says, most continue to lease back to the old enterprises because it seems the least risky and they want to make sure they don't offend old leaders who might cut their pensions.

However, the report says, this is merely a continuation of collective farming and the government should make sure land owners know what they are legally allowed to do with their property and set rules that make their rights clear.

The report says there is a potential for "very substantial growth of peasant farming" in Russia, but that much remains to be done.