#9 - JRL 7063
Russia: Farmland Reform May Prove Putin's Lasting Legacy
By Gregory Feifer
Critics of Russian President Vladimir Putin accuse him of eroding some of the last decade's major democratic gains, but they praise Putin in one key area of reform: farmland privatization.
Moscow, 14 February 2003 (RFE/RL) -- A cow moos over the drone of mechanical milking machines at the Kommunarka dairy. The farm stands near tall, snow-swept pine forests and summer-cottage plots just south of the capital Moscow.
The Kommunarka enterprise, with more than 2,500 cows, is a relative success story amid tales of decay in Russia's stricken agriculture sector. It sells half its 41-ton daily output to Belgian dairy-product company Danone.
But deputy director Vasilii Voichik said the future of the dairy is uncertain. The government has so far failed to push ahead with key reforms. "We don't see any [progress] yet. There are only discussions, because there's no help from the agriculture administration, just promises and assurances, but no help," Voichik said.
Some hope that may soon change. This year, Russia is embarking on a series of unprecedented reforms that will allow for the privatization of agricultural land. The historic step may prove to be one of the most significant legacies of Vladimir Putin's administration.
The law took effect in January after being passed by the Duma last June. It allows the sale of farmland for the first time since the tsarist era.
Duma Deputy Viktor Pokhmelkin is co-head of the Liberal Russia party. He said the Land Code's main achievement is guaranteeing private farmland ownership. "Before its passage, everything was basically regulated by presidential decrees and old Soviet-era land legislation. That's why there were huge gaps and loopholes for bureaucrats to abuse power. On the other hand, there wasn't a firm guarantee of private land ownership or a legal basis for production from that land. That's all been done now," Pokhmelkin said.
But Pokhmelkin criticized the Land Code for not being liberal enough. He said that it allows room for meddling by officials and might encourage corruption, in part because it sets out the rights of authorities more clearly than those of landowners.
Russia has about 221 million hectares of farmland, almost a quarter of the country's land mass. Agriculture Minister Aleksei Gordeev has estimated the country's farmland to be worth $80 trillion to $100 trillion, about a third of Russia's net worth.
Most of that land is now controlled by Soviet-era collective farms: inefficient, debt-laden behemoths struggling to survive. Many are reportedly plundered by their managers, who are often holdovers from communism with reputations for running their farms with iron fists.
Collective-farm directors generally oppose land reform and have tried to keep their enterprises intact. Raisa Fedorova, director of Dubrovitsa, a former collective farm in the town of Podolsk, near Moscow, said she will do everything possible to preserve the enterprise. "We're not going to allow a bazaar here," she said.
Such directors have backed a powerful antireform lobby that includes regional authorities who stand to lose de facto control over land. The Communist Party has also protested privatization bitterly, saying criminal groups and foreigners would snap up agricultural land and squeeze out the country's farmers.
But supporters of reform say failure to privatize farmland in the 1990s put the brakes on development and encouraged massive corruption.
In theory, 137 million hectares have already been privatized according to the country's 1993 constitution and additional presidential decrees calling for farmland privatization. Around 12 million Russians are said to own land, much of which consists of small plots allocated to collective-farm workers.
But few landowners understand their legal rights. In many cases, regional and local officials have been able to keep land in the hands of collective-farm managers and other cronies.
Vladimir Kuchin lives in the Serpukhov region about 100 kilometers south of Moscow. He said regional authorities and managers at the Zaoksk collective farm, where he worked as an economist, have cheated him out of his land.
Kuchin currently works for the private Vesna farm, which grows cabbage and other vegetables on Zaoksk farmland that it leases. Vesna is unusual in that it is waging a legal battle to formally take over its land. Kuchin accuses Zaoksk's director of cheating former employees. "According to a presidential decree, the land belongs to us, but [the director] wrote a letter to the head of the region and went to Moscow. [The] Serpukhov [regional authorities] are more cunning in the registration chamber [than we are]. [The director] registered the land in Moscow, and he was given the rights, illegally, we believe. That's why we're suing in court," Kuchin said.
The Zaoksk management, for its part, said that dividing the land would make it unattractive to potential investors, such as oil giant LUKoil, which is said to be interested in buying the land. Like most Soviet-era collective farms, Zaoksk needs massive investment to replace rusting machinery and rebuild decayed infrastructure.
Duma Deputy Pokhmelkin said that in most such cases, courts have decided in favor of authorities and not private citizens.
Nikolai Dyazhur heads an organization that defends the claims of more than 2,000 would-be small landholders in the Serpukhov region. He said the Land Code might help lay the groundwork for real change. "On the one hand, the document is generally necessary and beneficial in many ways. On the other hand, of course, the document is very dense, and it will be hard to work with it to effectively realize our rights. But we have to set out our rights in court, first of all," Dyazhur said.
Dyazhur said battling for ownership is only the first step. Another major obstacle to development is lack of investment.
One of the major points of the new law is that foreigners are not allowed to buy farmland, a concession to local officials and populist parties like the Communists and the Agrarians. Foreigners are, however, allowed to hold 49-year land leases.
The law also says agricultural land may be used only for farming. It leaves the actual privatization process to the country's regions, including timing and sale procedures.
Agriculture Minister Gordeev told reporters last month that the work has only just begun. "The work is not simple. It's moving forward. A number of regions have already passed such legislative bills. I think it's important that we have created a unified legal space within the country. As of today, we have strengthened the rights and responsibilities of all property owners, users, and managers of land plots," Gordeev said.
Pokhmelkin said land reform is only a first step and that other major changes, like the development of an independent legal system, are needed.
The behavior of authorities, he concluded, still makes investment in agriculture a risky business.