2. PUTIN'S AGRARIAN POLICY
SOURCE. Stephen K. Wegren, "Russian Agrarian Policy Under Putin," Post-Soviet Geography and Economics, Vol. 43 (2002), No. 1, pp. 26-40.
Professor Wegren (Southern Methodist University, Dallas) is the leading American specialist on Russian agriculture. His account of the changes that Putin has introduced into agrarian policy is based on the new program "Basic Directions of Agrofood Policy to 2010" presented in July 2000 by deputy prime minister and agriculture minister Alexei Gordeyev.
The author identifies two main trends:
-- Under Putin agriculture has been recognized as an important sector worthy of state attention and support. In line with the idea of "food security" that has won increasing support since 1995, the revival of food production is considered a strategic policy direction.
-- The Yeltsin-era policy of trying to break up the large formerly collective and state farms into small family farms has been abandoned. The future of Russian agriculture is now seen to lie in large farms vertically integrated with the food-processing industry.
Specific policy initiatives include:
* The creation of a special division within the agriculture ministry to provide crop insurance for grain, oilseed, sugar beet, and flax against pests, bad weather, and natural disasters, with half of the premiums paid by the government
* State intervention in the grain market to prevent prices from falling below 2,300 rubles per ton (R2bn were allocated in the 2001 federal budget for this purpose; Gordeyev may seek to increase this to R5-6bn.)
* Greater use of tariffs and quotas to restrict food imports in the interest of the domestic producer. So far sugar producers have acquired the best protection (annual import quota of 3.5m tons and tariffs up to 45 percent). A similar quota is being considered for rice. The banning of food imports from both Europe and the Far East on sanitary grounds also serves protectionist as well as public health purposes.
* Relief of debt accumulated by farms during the 1990s. However, blanket forgiveness of debt (as in the past) is not envisaged; instead, debt is to be restructured on certain conditions.
* Unprofitable farms with good prospects will receive financial support subject to their fulfillment of agreed terms. Unprofitable farms with poor prospects will be disbanded and their land and property distributed among neighboring farms.
* A "new" system of agricultural credit (actually an old system that has been restored) was announced by Gordeyev in 2000 and put into effect in 2001. State credits are transferred to the Russian Agricultural Bank (Rossel'khozbank), the Savings Bank (Sberbank), and other Moscow banks, which then provide loans to farms at subsidized interest rates for the purchase of needed inputs or to fund operations. Professor Wegren questions whether such arrangements can create an effective market infrastructure in the countryside.
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