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NEW FARM RESOLUTION (From RUSAG conference)
Dear Conference participants,
We decided to start our conference with the hotest information, where you will
find the modern agricultural policy in Russia description. This material is
from RUSAG conference. We shall present our analytical commentaries later.
D.Durmanov
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NEW FARM RESOLUTION
Under pressure from a newly elected State Duma, Prime Minister Viktor
Chernomyrdin finally signed a resolution on state support of the
agro-industrial complex. The new recovery plan for farming includes several
interesting provisions. First, as Deputy Prime Minister Alexander Zaveryukha
noted, the government is sticking to its plan to spend the 13.1 trillion
rubles already allocated in the farm budget for 1996. Second, the plan
targets the following for 1996: a goal of 77 million tons of grain, 20
million tons of sugar beets, and 4.5 million tons of sunflower seeds. (The
figures for 1995 were 63.5 million tons, 19.1 million tons, and 4.2 million
tons respectively). In addition, the authors of the resolution argue, that
with increased government backing, farmers will be able to produce 9 million
tons of meat and chicken, 34 million tons of milk, and 32 billion eggs. The
later figures are noteworthy because they are less than the production amounts
recorded in 1995, i.e. 9.4 million tons of meat and chicken, 39.3 million tons
of milk, and 33.7 billion eggs.
In order to achieve the goals set out in the resolution, the government
intends, not only to demand more efficiency from farmers, but also to increase
their support. According to Zaveryukha, the government plans to distribute
subsidies more "rationally" and introduce new ways of helping farmers. For
example, the resolution allows for 5.5 trillion rubles in fertilizer, as a
credit against crops. 2.8 trillion rubles of that money will come from the
federal budget. Plus, farmers will get $100 million to import fertilizers and
crop protection chemicals.
Other provisions in the document include: (1) a plan for the government to
spend 3.5 trillion rubles on a leasing scheme so farmers can buy machinery in
installments. (2) the government will cut rail freight charges for
fertilizers and their ingredients. (3) the government will ship to the
regions crude oil from which they can refine the petroleum goods farmers need
locally. (4) drought-stricken regions will have until January 1, 1998 to pay
the 4 trillion rubles they owe for fuel and fertilizer. (5) some of the farm
money will be spent on spare parts to bolster the federal insurgent seed
stockpile and to finance its soil fertility and other urgent programs and (6)
the government will continue to subsidize pedigree livestock, elite seeds,
wool, hemp and flax, as well as 50 percent freight compensation for farmers in
drought-stricken areas saddled with importing feed from other regions in the
first half of 1996.
The resolution also envisions lower procurement targets, but the Federal Food
Corporation argues that this policy is not simply a reflection of government
financial problems. Lower procurement targets will supposedly allow smaller
regional structures and private firms to play a fuller role in the food
markets.
Zaveryukha contends President Boris Yeltsin has given his full support to
provide more backing to farmers. Yeltsin approved the resolution, and,
according to Zaveryukha, showed considerable concern for spring field work.
To that end, the government will purportedly release 60 percent of annual farm
spending in the first half of the year. Zaveryukha said Yeltsin's parting
words were "ensure that this is fully implemented." Time will tell if this
farm resolution has any bite or if it is just another in Russia's latest
annual attempts to salvage something from its declining farm sector.
The above information was taken from Interfax Food and Agriculture Report,
February 2-9, 1996, Vol V, Issue 6, pp. 6-7.
LAND REFORM
As the Russian State Duma prepares to debate the Land Code inherited from the
old State Duma, Russian officials have begun to raise concerns about the
legality of owning and selling land. According to Nikolai Komov, chairman of
the Russian Committee for Land Resources and Use, Russia must have a full and
comprehensive land code in order for land to circulate. Komov warned that the
"legal vacuum" surrounding land acquisition pervades on every level, from the
federal government down to individual companies and people. Alexander
Zaveryukha, deputy prime minister in charge of agriculture, also voiced his
concerns. Zaveryukha said he feared the Land Code would turn into a political
bargaining chip and would not be passed. He said it would be left up to the
regions to settle their own land issues. Zaveryukha went on to say that the
government should not manage land, merely ensure that it is properly used.
Nevertheless, Russians and Russian companies have begun to claim deeds to
their land. By the beginning of 1996, 93 percent of farms and 75 percent of
other companies had reportedly taken receipt of the formal deeds to their
land. For example, 96 percent of private farmers; 80 percent of yard owners;
63 percent of garden and dacha; 42 percent of home or garage owners, and 95
percent of collective stakeholders (those who remained members of "reformed
collective farmers") had taken receipt of deeds.
Last year, Russian officials raised 3.3 trillion rubles in land taxes.
Authorities will be expected to raise even more money from land taxes this
year, approximately 5.5 trillion rubles. However, the system for collecting
taxes is very inefficient, as is the method for monitoring land use. Russians
sold each other a lot more land last year, but the values were often
understated on paper in order to avoid stamp duty. The Land Resources
Committee plans to draft legislation to discourage such tactics, but it may be
awhile before any legal standards are codified. The Russians also have a new
computerized cadaster on line, which was drawn up last year with financial
help from the World Bank and Hermes, a German government credit insurance
company. The funding, however, will only provide 10 percent of the cadaster
capacity Russia needs.
Unfortunately, Zaveryukha's warning about the Land Code becoming a political
bargaining chip rings far too true. Moreover, Russians cannot continue to
acquire and distribute land without some kind of legal code. If the current
State Duma fails to procure a viable land code for Russia, the land issue will
continue to squeeze the life out of Russian reforms.
This information was taken from: Interfax Food and Agriculture Reform, Vol V,
Issue 6, February 2-9, 1996, p. 8.