page 1page 2page 3page 4page 5page 6page 7page 8page 9page 10page 11page 12page 13page 14page 15page 16page 17page 18page 19page 20page 21page 22page 23page 24page 25AGRARIAN POLICY UNDER PUTINStephen WegrenSouthern Methodist UniversityThe National Council for Eurasian and East European Research910 17thStreet, N.W.Suite 300Washington, D.C. 20006TITLE VIII PROGRAMProject Information*Sponsoring Institution:Southern Methodist UniversityPrincipal Investigator:Stephen WegrenCouncil Contract Number:816-14gDate:July 22, 2002Copyright InformationScholars retain the copyright on works they submit to NCEEER. 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Neither NCEEER, nor the U.S.Government, nor any recipient of a Contract product may use it for commercial sale.* The work leading to this report was supported in part by contract or grant funds provided by the National Councilfor Eurasian and East European Research, funds which were made available by the U.S. Department of State underTitle VIII (The Soviet-East European Research and Training Act of 1983, as amended). The analysis andinterpretations contained herein are those of the author.iiAbstractThis article addresses the orientation of the agricultural policies carried out by the Russiangovernment under Vladimir Putin, since he assumed power in January 2000. It examines the followingaspects of agrarian policy: food import policy, agricultural debt policy, policy toward unprofitable farms,and agricultural credit policy. This particular focus begins from the premise that the period of radicalreform is over, and agrarian policy is no longer intended to remake the agricultural system. Earlieragrarian policy concentrated on the reorganization of large farms, the privatization of farm land andproperty, and the attempt to supplant large farms with private family farms. Unlike the convulsive andturbulent agrarian change attempted by Boris Yeltsin, Putin's agrarian policy is pragmatic, consisting ofmeasured steps that are intended to rebuild agricultural production and reduce reliance on food imports.iiiIntroductionIn the early 1990s, Russia undertook an agrarian transition that was expected to lead to increasedfood production and greater farm efficiency. The goal was to make agriculture operate on marketprinciples which in turn would lead to less dependence on foreign imports, improved domestic foodproduction and quality, and a healthy agricultural sector that would contribute in significant ways toeconomic growth. As is known, during the 1990s, these goals and expectations were largely frustrated.Food production fell precipitously, farm productivity declined, farm debt and unprofitability soared, foodimports increased, and domestic output from the agricultural sector contracted, leading to a reduction in itscontribution to GDP from about fourteen percent at the beginning of the decade to about seven percent atthe end (in a significantly smaller economy). Although largely overlooked by analysts, declines in animalstocks during the Yeltsin years exceeded those of Stalin's collectivization. The amount of agriculturalland under cultivation declined, land reclamation virtually ceased, and harvests fell. By the latter Yeltsinera, the combination of extraordinarily bad harvests and the financial collapse of the ruble in 1998 led toregionally-imposed price controls on food products.Resulting from this combination of economic disasters, food aid was provided by the West inorder to prevent starvation in some regions of Russia. However, this aid was bitterly contested by bothconservatives and liberals in Russia. Conservatives argued Russia had lost its "food security," whileliberals were dismayed by food aid which allowed the federal government to re-intervene in the domesticfood market, thereby reversing progress from the early reform period when the government largelywithdrew from regulation of the domestic food market. Eugenia Serova, an agricultural economist andformer advisor to Viktor Khlystun when he was minister of Agriculture, argued that food aid and, with it,federal control, threatened Russia's fledgling market system. "Eight years we have been waiting for thismarket system to emerge, and now we try to destroy it," she stated.1Thus, while not neglecting the very real accomplishments in farm and land privatization during the1990s, one could reasonably argue that several aspects of Yeltsin's agrarian policies were dysfunctional.It is hard to imagine how the agricultural situation could have been worse when Vladimir Putin assumedthe post of acting president in January 2000. This article focuses on two main questions since Putin1assumed leadership in Russia: (1) what have been the orientations of Putin's agrarian policy?; and (2) whatpolicy changes are evident in comparison to the Yeltsin period?To address these questions, I will examine the following aspects of agrarian policy: food importpolicy, agricultural debt policy, policy toward unprofitable farms, and agricultural credit policy. My focusis on policy issues that concern food production directly, and for this reason, land privatization, landlegislation and the land market are excluded from this analysis.2This particular focus begins from thepremise that the period of radical reform is over, and agrarian policy is no longer intended to remake theagricultural system. Earlier agrarian policy concentrated on the reorganization of large farms, theprivatization of farm land and property, and the attempt to supplant large farms with private family farms.Unlike the convulsive and turbulentagrarianchange attempted by Yeltsin, Putin's agrarian policy ispragmatic, consisting of measured steps that are intended to rebuild agricultural production and reducereliance on