Driving  Forces in Russian Agrarian Policy in 1990-ties

R.Yanbykh, Agrarian In-t

Eu.Serova, Analytical Centre AFE (IET)

Abstract

The article deals with the major official and non-official institution impacting the agri-food policy in Russia. It describes the legislature and government bodies elaborating agricultural policy. Also the agrarian programs of the major political parties in Russia are briefed. The process of emerge of business associations in agri-food sector is reflected. The research and consulting organizations have also influence on the agri-food policy; therefore several most important institutes are presented in this article.

1. Introduction

During the Soviet era the main and absolute driving force in agrarian policy was the Communist Party of the Soviet Union (CPSU). All decisions were made, implemented and controlled by CPSU through its republic, regional and local branches. The situation was radically changed with the reforms. Since the introduction of the new Russia’s Constitution (1993) the agrarian policy is formulating with the participation of different driving forces: (1) the President, the Federal Assembly and the Government; (2) Political Parties and Blocs; (3) Social Organizations; (4) Business and Producer’s Associations; (5) Research and Consulting Organizations.

2. Legal Power

The Federal Assembly has begun to play quite important role after its introduction in 1993. Main political parties have been struggling for the State Duma (Lower House of the Federal Assembly) and Federation Council (Upper House) seats (Table 1). The State Duma consists of 450 MPs elected for a term of four years. The Federation Council has 178 MPs, two from each constitutional member of the Russian Federation. Both Houses contribute to the Russia’s agrarian policy notably. The State Duma has special body - the Committee on Agrarian Issues led by the member of the Agrarian Party Alexey Chernyshev and which consists of 20 members. The Federation Council has the Committee on Agrarian Policy led by the Governor of Belgorod oblast Valery Savchenko and which consists of 13 members. (The Governor of Tula region and the leader of Agropromsoyuz, the participant of military coup in 1991 Vasily Starodubtsev and the Head of Altay Regional Legislative Body, ex-Minister of Agriculture and Food of Russian Federation Alexandr Nazarchuk are members of this Committee).

According to the Article 19 of the State Duma Regulations the main tasks of the Duma’s Committees (the Committee on Agrarian Issues is 1 of 28 Duma ’s Committees) are the following:

- to expertise the drafts of legal acts;

- to prepare resolutions on laws and amendments to laws;

- to initiate the parliament’s discussions on specific issues;

- to comment the corresponding articles of draft federal budget.

According to the Article 13 of the Federation Council Regulations the main tasks of the Council’s Committees (the Committee on Agrarian Policy is 1 of 11 Federation Council’s Committees) are the following:

- to comment the draft federal laws and amendments to the Constitution approved and recommended by the State Duma;

- to make proposals on legal acts of Parliament of Russia and Belarus Union and on model legal acts approved by inter-parliament Assembly of the CIS-countries and Inter-Parliament Committee of Belarus, Kazakhstan, Kyrgyz republics and Russian Federation;

- to initiate and expertise the drafts of laws and other legal acts;

- to initiate the parliament’s discussions on specific issues.

All issues concerning agrarian policy are used to be broadly discussed by both Committees separately and in some cases jointly. The views of these two Committees not necessarily coincide. The Committee on Agrarian Policy is considered to be more liberal and market-oriented (very slightly however) since it’s members combine the legislative work at the Federation Council with the practical work as the regional Governors and Heads of regional parliaments and tend to be more realistic. Several times it stopped the most odious legal acts inspired by the State Duma such as the most conservative version of the Land Code and decision to increase the share spending for agriculture in the federal budget up to 15 %.

There is the Agrarian Faction (Agrarian Deputy Group) within the State Duma, which consists of 35 MPs mainly from the Agrarian and Communist Parties. The members of this Group mainly participate in the work of the Agrarian Issues Committee. The Agrarian Faction used to vote jointly with Communist Faction (100 % level of solidarity). The Agrarian Faction also demonstrates the high level of solidarity in voting with Faction of Liberal Democratic Party of Russia (86,7 %) and the Faction of the People Power (Narodovlastie) (98,8 %). The leader of the Agrarian Faction, former kolkhoz chairman Nikolay Kharitonov, is one of the most active anti reformer amidst the MPs. His Faction provides the strong opposition to any market oriented decisions in agrarian sphere.

Table 1. The number and share of different political parties representatives in the State Duma

The Government of Russian Federation is the main executive body that is formed by the Prime Minister appointed by the President and approved by State Duma. Prime Minister used to have from two to eight deputy Prime Ministers (so far the number is 4) one of which is responsible for agrarian issues. The Ministry of Agriculture and Food of Russian Federation, the State Committee on Land Policy of Russian Federation, the State Committee on Fishery of Russian Federation, the Federal Service on Forestry of Russia, the Federal Service of Russia of Hydrometeorology and Environmental Monitoring are under it’s direct supervision.

In addition to the listed above governmental bodies there is the Government administration consisting of the various departments, which objectives are to prepare the issues for the Cabinet meetings. Thus, the Department of Environment and Agro-Industrial Sector Reforming within the Government administration supports the work of the corresponding Deputy Prime Minister.

The Ministry of Agriculture and Food is the major governmental body responsible for the agrarian policy in Russia. The Minister appointed by the Prime Minister leads the Ministry. He used to have 1-2 first deputies and several ordinary deputies dealing with the various fields of ministerial activities. The major departments of the ministry deals with economics and finance, land tenure issues, farms structure, state property, markets and food consumption, trade and foreign relations, education and research, and so on Also the Ministry includes the state inspections: veterinary, crop protection, machinery control and so on.

Ministry of Agriculture and Food is the major administer of the federal agricultural budget. It elaborates the main annual programs in agri-food sector and presents them to the Cabinet for approval. It coordinates its activity with the Ministry of Economics and Ministry of Finance, which both have their own agri-food sector departments. Together with the Ministry of Trade the Ministry of Agriculture and Food participates in the WTO process.

Under the umbrella of the Ministry there is an Advisory Agri-food Council consisting with the leading agricultural people in Russia – academia and business. This Advisory Council considers the major drafts of regulations issued by the Ministry and makes its comments, amendments, and recommendations. The objective if this Council is to take to consideration the broad public opinions on agri-food policy.

The agricultural bodies of the constituent members of the Federation are administered by both the federal Ministry of Agriculture and Food and regional governments. It can be regional departments of agriculture or regional ministries. These regional bodies are financed by the regional budgets and so far are not very much responsive for the federal Ministry.

The Land Committee is responsible for the land legislation, land engineering and monitoring. By now this body is in charge for land registration (while several other bodies register non-land assets). However, in accordance with the federal Law, since 2000 the real estate registration will be shifted to the juridical system. The Land Committee has its branches in every constituent member of the Federation and in every rayon. The federal budget set up the spending for this land committee network. Land administration in Russia is only governmental body whose finance is tied to the special tax: land tax is used for the finance of land committees’ functions.

State Committees on Fishery and Forestry are in charge with the corresponding issues. In different periods they were in the framework of the Ministry of Agriculture and Food.

In the Cabinet of Sergey Stepashin Vladimir Shcherbak has been appointed as a Deputy Prime Minister in May 1999. He also was appointed as a Minister of Agriculture and Food. Before his appointment since 1992 he used to the first deputy to the Minister of Agriculture and Food. In his previous governmental work he demonstrated good managing skill and political neutral position.

There are several bodies under umbrella of the Ministry of Agriculture and Food participating in the forming of agri-food policy. One of the most dubious is the Federal Agency on Food Market Regulation (FAFMR) has been created at the end of 1997 instead of the analogous body (Federal Food Corporation. FAFMR was created in a legal form of state unitary enterprise for the following tasks:

- monitoring and evaluation of agricultural production and food market conditions; creation of informational environment and support; market prognoses;

- promotion of competition in sphere of purchase and trade of agricultural production and food;

- preparation of proposals on food market regulation for the Ministry of Agriculture and Food;

- trade and purchase interventions for market stabilization; participation in formation and functioning of wholesale markets; providing with guarantees in transactions with food and agricultural production; implementation of the functions of state customer on food deliveries to the governmental operational reserve and to the ecologically damaged territories.

One can forecast that using of FAFMR could be the easy and reliable way to present ideas directly to and on behalf of Ministry of Agriculture and Food. No wonder that on the position of the first director of FAFMR has been appointed Vladimir Loginov - the president of Sugar Union of Russia.

Another such body under Ministry of Agriculture and Food is the Special Fund for the Privilege Loans for Agri-Industrial Complex. It was set up in 1997 for the providing soft loans to agricultural producers (at 1/4 of the Central Bank interest rate). The Fund was compiled with the budget resources and the previous debts of farms to the state. In 1997, the means of the Fund were disseminated by two commercial banks: SBS-Agro and Alfa-bank. In 1998, there was an open competition for banks during which 12 banks were selected, including two listed above. After crisis of 1998 only two banks actually deal with the Fund resources. The finance distributed through this Fund are comparable with the federal agricultural budget and therefore the decisions in the regard of the Fund are very important for agri-food policy in Russia.

3. Political Parties and Blocs

Political Parties positions on agrarian policy issues are very different. 30 % of all political parties taken part in last elections in 1995 haven’t any position on agrarian problems (Table 2). But 90 % of electorate voted for those parties who had one.

Table 2. The attitude to the agrarian policy in the pre-election programs and platforms of political parties, movements and blocs have taken part in the elections to the State Duma on the 17^th of December 1995

The left parties such as Communist Party of Russian Federation (CPRF), People Power and Agrarian Party insist on the increase of the state role in regulation of the agrarian sector assuming that the crisis in Russian agro-industrial sector is the key reason for the macroeconomic crisis. On the contrary the right parties such as Russian Democratic Choice, Yabloko, Our Home is Russia and Forward, Russia! come out with the idea to liberalize the agrarian economics and trade and in a such way to strengthen the sector position in the new market conditions. Congress of Russian Communities takes the centrist position (Table 3).

There are two most discussible basic issues between the parties in the State Duma: position on the land ownership and the agrarian budget. CPRF has the orthodox communist attitude to the question of private ownership on land: communists consider that people have not to have the right of private ownership on land even on the household and dacha plots (they permit only  «personal» ownership). This specific position of CPRF is the main reason why the new version of the Land Code which just repeat the corresponding articles of the Constitution about the private ownership on land, is still pending. Even their closest allies from the Agrarian Party do not support the opinion of CPRF on land ownership.

The Agrarian Party of Russia (AP) is the most influential party among the rural population. The program objectives of the AP are formulated in the following way:

- rebirth of Russian villages;

- protection of political, social and economic rights and legal interests of Russian farmers (peasantry);

- protection of food market and domestic agricultural producers;

- development of agrarian sector on the base of multifaceted economic structure;

- promotion of true sovereignty of people – these are the program goals of the AP.

The constitutive forum of the AP took place on February of 1993. Agrarian Union of Russia, the Union of Agro-industrial workers of Russian Federation, Russian Council of Kolkhozes and the former MPs of the Supreme Soviet of the Russian Soviet Federate Socialistic Republic were the initiators and cofounders of the AP. The leader of AP Mikhail Lapshin - the former sovkhoz director - is a very successful agrarian lobbyist. The backbone of the AP consists of the former soviet and communist nomenklatura worked in agrarian sector, directors and their deputies of kolkhozes and sovkhozes, local administrators. The strata of the representatives of ordinary employees of agricultural enterprises, private family farmers, owners of private household plots and other rural population is very thin in the AP. The AP has 3-tier structure in federal, regional and local \ primary levels. It has 80 regional branches (out of 89). The Cabinet of Evgeny Primakov (appointed in fall of 1998) had two AP members - deputy Prime Minister on agrarian policy Gennady Kulik and Minister of Agriculture and Food Viktor Semyonov. The AP has its regular newspaper «Russian Land» published since April 1996, there are also some regional AP newspapers. The AP keeps contacts with foreign allies - Rural Party of Ukraine, Agrarian Democratic Party of Moldova, Farmer Party of Poland, Bulgarian Peasant Union, German Peasant Union and others. In August 1996, the AP has entered the electing block «People’s Patriotic Union of Russia».

Table 3. The comparative characteristics of agrarian programs of political parties, movements and blocs having the representatives in the State Duma

1)    Agrarian program of Yabloko Bloc was presented in May 1999. There was neither agrarian program nor special agrarian issue in the political program before.

2)    Considering the private ownership on land, Yabloko insists that «land question» has to be decided in the regional level.

*   Consider that private ownership on land should be restricted to the household, dacha and garden and orchard plots

**  Consider that purchase and selling of land should be restricted to the household, dacha and garden and orchard plots

*** Consider the purchase and selling of land with very heavy restrictions.

4.Social organizations

Social non-commercial organizations have no political purposes in their charters. One of the most influential is the Agro-Industrial Union of Russia (RosAgroPromSoyuz) successor of Agrarian Union of Russia. There are representatives of agricultural enterprises, processors, storage and transport enterprises, machinery stations, producers of fertilizers and agricultural chemicals, service and scientific organizations among the members of RosAgroPromSoyuz. However, the majority consists of representatives of large agricultural enterprises (there are only two private farmers in it).

The predecessor of RosAgroPromSoyuz - the Agrarian Union was created in 1990 for lobbying the interests of «red» agricultural directorate in Government and for the preparation to the first Parliament elections. It consisted of legal entities in agri-food sector. The role of the Agrarian Union (AU) have been decreasing since the Agrarian Party establishing in 1993 to whom the Union has gradually delegated most of the political functions. RosAgroPromSoyuz was created in April 1997 instead of the AU because the Charter of the AU has begun to contradict the Civil Code passed in 1995 where was clearly outlined that social organization should consist only of physical persons. Vassily Starodubtsev was elected as a Chair of RosAgroPromSoyuz (he is also the Governor of Tula region, see division Legal Power). The main chartered goals of RosAgroPromSoyuz are as follows:

- to promote the creation of economic, social and legal conditions for the agricultural sector successful development;

- to develop financial and credit infrastructure for agro-industrial complex (AIC);

- to support price parity between agriculture and other branches of economy; to improve the tax system in favor of agriculture; to develop the scientific support of AIC and so on.

Annually RosAgroPromSoyuz signs the Agreement with the Government of the Russian Federation. This agreement has a declarative character, however, and RosAgroPromSoyuz has never achieved one of the goals - to receive budgetary funds for its activity.

RosAgroPromSoyuz has branches in all constituent members of the Federation except Chechnya. The main body of RosAgroPromSoyuz is the Forum that is called no less than once in a three years.

The other influential social organization is AKKOR (Association of Private Farms and Cooperatives of Russia) created in 1990 by the initiative of newborn strata of private farmers. In distinction with RosAgroPromSoyuz AKKOR has a very progressive and democratic image. It was considered one of the most market-oriented organizations in agriculture since perestroyka times lobbying the private ownership on land. The leader of AKKOR Vladimir Bashmachnikov is supported by 850 first-tier local organizations in 68 regions of Russia. Bashmachnikov is a MP of the State Duma. The major goals of AKKOR are to protect civil, political, economic and cultural rights and freedoms of private farmers; to promote the agrarian reform and private initiatives in agrarian sector development; to support legal power in designing of land and agrarian legislative base and so on. In order to achieve these goals AKKOR takes part in launching of proposals for the Government; participates in discussions on agrarian budget; keeps contacts with political parties and movements, religious and other social organizations on questions of social and economic development of Russia, continuation of economic reforms, sovereignty of Russia. The main body of AKKOR is the Forum that is called no less than once in a year. AKKOR is a member of different international organizations, for instance, it is a member of International Federation of Agricultural Producers.

In the beginning of it’s existence AKKOR practiced also some economic activities: the first financial support for the private farmers was disburse via its branches; the attempt to organize cooperative banks and insurance company was undertaken. These attempts failed and now AKKOR minimized its economic activity. AKKOR is the initiator of annual agricultural fair of family farms «Russian Farmer» that takes place in St. Petersburg every last week of August since 1992. This fair is considered to play quite important role since many top governmental officials as well as representatives from the governments of other countries and international organizations are used to participate in it. Usually a lot of decisions and announcements used to be done during this fair.

There exists a number of other agrarian social organizations (Agro-Industrial Union, Russian Union of Rural Women, Russian Agrarian Union of Youth, Russian Peasant Foundation, Union of Landowners, Movement of Women-Farmers, Union of Small Agricultural Producers, Union of Rural Credit Cooperatives etc.) that were organized to fit current political ambitions and had no much impact on social and political life in Russia.

5. Business and  Producer’s Associations

Business and Producer’s Associations (BPA) have begun to emerge after privatization of food processing sector.

Grain Union of Russia organized in 1994 was the first one by the federal corporation «Roskhleboproduct», joint-stock company «Exportkhleb», corporation «Mosoblkhleboproduct», trading company «OGO», Russian Grain Exchange, Moscow Trade Exchange and others. Alexander Jukish is the president of the Grain Union and Arkady Zlochevsky (the president of «OGO», one of the first private grain trade companies in Russia) is the head of the Board of Directors. The main chartered goals of the Grain Union are to interact with the Government on the issues of the grain market regulation; to elaborate and control of the laws and instructions concerning grain business; to provide members of the union with market information on grain market trends, etc. The Grain Union is open for new members who are the legal entities in grain purchase, storage, processing and trade, commodity exchanges, other organizations dealing with grain trade.

Sugar Union was organized in 1996 for «... the effective solving of the problems of sugar industry and sugar market of Russian Federation; presentation and protection of sugar plants and operators of sugar market interests in governmental structures, social and other organizations including foreign; strengthening of united actions and mutual assistance.» Corporation «Russian Sugar», joint-stock companies «Lipetsk Sugar», «Tula Sugar», «RosSakhar», «Alfa-Eco» are the main co-founders. Vladimir Loginov (former director of «Russian Sugar», so far the Director of Federal Agency of Food Market Regulation) is the president of the Sugar Union since 1997. The target goal of the Sugar Union is to establish sugar regime in favor of domestic sugar producers. The introducing of high import tariffs in 1997 was the direct result of Sugar Union lobbying at the Government. Sugar Union has agreements with many international sugar unions including the most important one with Ukraine - the first competitor of Russia in cheap sugar production. Sugar Union unites 96 sugar plants in all over a country.

Meat Union was organized in Russia in November 1998 by the initiative of the Committee of economic security of  meat and meat-products market under the auspices of Trade and Industry Chamber of Russian Federation, the Association of Meat Processors of Russia, the Veterinary Association of Russia, trade-industrial companies «Rosmyasomoltorg» and «Rosmyasomolprom», agro-industrial enterprise «Cherkizovsky» (Moscow), share company «Samson» (St. Petersburg) and other well-known organizations. The total number of members of the Meat Union is 272 enterprises representing 72 regions. The Ministry of Agriculture and Food of Russian Federation supported the idea. Iosif Rogov, - the rector of Moscow State University of Applied Biotechnology, academician of Russian Academy of Agricultural Sciences, - was elected the Chair of the Meat Union. The main task of the Meat Union is to promote favourable conditions for domestic producers, processors, to develop infrastructure of meat market, to eliminate unscrupulous competition between domestic and foreign companies. Meat Union is intending to present it’s proposals to the Russian Government regularly. Among the first proposals of meat Union to the Russian Government were to reduce import tariffs on raw meat for processing industry since import has become critical after August financial crisis.

Some other business associations’ formation is under way (Tea Union, Alcoholic beverages producers association and so on).

6. Research and Consulting organizations

The research and consulting organizations have a certain influence on agrarian policy development. Research institutes on agricultural sphere work under auspices of Russian Academy of Agricultural Sciences (the presidium of RAAS plays the role of nest of ultra radical left opposition, most of its members are the members of CPRF). RAAS unites 199 research institutes, 24 experimental agricultural stations, 47 selection and biotechnological centres, central agricultural library.

The Institute of Agrarian Issues and Informational Sciences (the Agrarian Institute) formed in 1991 by the liberal oriented President of Soviet Union Academy of Agricultural Sciences Alexander Nikonov is the most liberal research institute where basic concepts and legal acts initiating agrarian reform in Russia were drafted. Two other institutes of economics of RAAS – BNIESKh and BNIETUSKh – represents the views of agrarian opposition and facilitate the RAAS memos to the Government on the agi-food policy issues.

The RAAS has a network of economic institutes in the regions. Some of them have a notable impact on the regional agrarian policy. Thus, Novosibirsk, Rostov, S.Petersburg institutes of RAAS participate in the formation of the regional agrarian policy.

The network of academia institutions for economics has several centers for agricultural researches. Some of them have a notable impact on the federal or regional policy. Thus, the agricultural division of the Gaidar’s Institute for the Economy in Transition (with a newly established Analytical Center for Agri-Food Economics) is respected research institution that produces a lot of recommendations for the policy-makers. Saratov In-t for Agricultural Economics is regionally important research body.

In 1997, the Foundation for Support of Agrarian Reform and Rural Development (RosAgroFond) was founded. RosAgroFond is famous for development and dissemination of Land Privatisation and Farm Reorganisation Model in Nizhny Novgorod. RosAgroFond provides legal and economic consultations to federal, regional and local administrations, farm directors and other population participating at the agrarian reforming. The same consulting funds were created in Oryol, Nizhny Novgorod, Rostov-on-Don and Volgograd regions. Funds for agrarian reform promotion are united into the Association of Agrarian Funds «AGRO» founded in 1999.

7. Regional agri-food policy

Russia’s agri-food policy since the beginning of the reforms tends to be more and more regionally based. Thus, at the start of the reforms the federal budget financed around 1/3 of the total spending for agriculture while regional budgets 2/3. In 1998, the share of the federal budget in the total support of agriculture was only 20%.But even when money comes from the federal level, regional governors tend to concentrate their distribution in their hands.

The regional governments since 1993 maintain the livestock subsidies, which are the second large program in agriculture. The regional agri-food reserves which regional authorities collect for “regional purposes” several times exceed the federal reserves. These reserves are the important tool of impact the agriculture and food industries. Many net-exporting regions impose trade ban and barriers for the agri-food commodities in order to maintain their regional reserves. Such activity is against Russia’s Constitution, but the federal power has no forces to stop these inter-regional trade restrictions.

Regions have significant rights in the schemes of privatization in agriculture and food industries. That also has a weighty impact on the over country agri-food policy.

In some regions regional governments keep on price regulation both for the retail and agricultural markets.

Especially regionlaization of the agri-food policy has increased after crisis 1998. Faced with the rash demand for food stuffs many regional authorities introduced the price regulations, trade barriers and retail network control.

So, the regional governors are one of the most important driving forces in Russia’s agri-food policy today. The number of constituent members of the Federation has formed the regional associations and unions, such as Siberian concord, Ural union, Association Center, etc. The major part of these associations has its own agrarian programs. Thus, the former federal Minister of Agriculture and Food, now the governor of Altai kray, is the head of Agrarian committee of the Siberian Concord. The Upper House of the parliament is another forum for governors’ discussions and influence of the agrarian policy. It is especially true with the growth power of this House of the Federal Assembly.

8. Conclusions

So, during the reforms in Russia the new system of formation of agri-food policy has emerged. It is still very complicated and non-transparent, does not fully respond to the request of the open democratic society. However, the major driving forces are emerging: legislature, governmental bodies, and political and public organizations. The establishing of these institutes is not even: for instance, the representations of the interests of the business in agri-food sector just started.

The contradictory process of formulating of agricultural policy is caused by the lack of public consensus regarding the destiny of the agrarian reform what is shown by the diversity of the agrarian programs of the various political parties. The extreme positions are served by the different research and consulting bodies what just enlarges the gap between left and right positions.

Nevertheless the economic process induces more common and agreed understanding of the situation in agri-food economy; practical interests of the economic agents, emerging of the groups of pressure will incline the policy makers towards more concord policy. Also the public interests will inevitably request to make the policy forming process more transparent and straight.

Federal construction of the Russia causes the problem of the balance between federal and regional level of decision making. There is still room for the consensus among regional authorities and federal government in the regulation of the agri-food sector.

Anyway, the process of policy formation in agri-food sector in Russia is in progress, though a lot of unsolved problems still exist and can emerge on the way.

9. References

1.Government Resolution «On organization of state unitary enterprise «Federal Agency on Food Market Regulation» under auspices of Ministry of Agriculture and food of Russian Federation», N 1224, 26.09.97.

2. Monitoring of Agrarian Policy. Russian Federation. Paris:OECD.1998

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