By Renfrey Clarke
MOSCOW — As Russian agriculture continues to collapse, President Boris Yeltsin has tried to salvage rural support by ordering drastic changes in the country's land tenure system. A decree of March 7 sets in place a new Land Code which for the first time in nearly 80 years legalises the sale and purchase of agricultural land.
Former state and collective farms — now mainly organised into joint stock companies or various forms of cooperatives — will be compelled to issue their workers with documents certifying ownership of a share of the farm's land. If shareholders decide to quit the collective, they can sell their shares or apply for them to be handed over in the form of separate land-holdings, which can be sold, rented out or otherwise disposed of. The only important limitation is that the land must continue to be used for agricultural purposes.
Yeltsin signed his Land Code into force knowing that his action was probably unconstitutional. Russia's 1993 constitution sets out the right of individuals to own land, but also indicates clearly that the task of deciding the legislation that is to govern land tenure rests with the parliament. Opponents of the president's action plan to challenge it in the Constitutional Court.
Yeltsin's decree was also in direct breach of an undertaking given to the parliament only a few days earlier. In a meeting with the speaker of the State Duma, the lower house of parliament, the president had promised that no land decree would be issued if the Duma passed its own version of the Land Code by April.
Drafted mainly by deputies of the Agrarian Party, and backed by the Communist Party of the Russian Federation, the Duma's version would ban private ownership of agricultural land, allowing it to be parcelled out only on a rental basis.
Yeltsin is known to disapprove strongly of the Duma's draft, and can be expected to veto it if it is eventually adopted. Meanwhile, his decision to break his pledge and proclaim his own code contained a strong element of electioneering for the presidential poll on June 16.
Years of agricultural crisis, and a catastrophic fall in rural living standards, have made the president an unloved figure in the countryside. Somewhat improbably, Yeltsin now appears to reason that if he gives the peasants the chance to relieve their poverty by selling their land, they will reward him with their votes.
The decreeing of the Land Code was also undoubtedly aimed at helping to rebuild the president's standing among liberal democrats. Although most Russian liberals rarely set foot outside major cities, they have traditionally had very definite views on land ownership. In particular, it has been an item of faith in liberal circles that no progress will be made in agriculture until collective forms are abolished and land is "put in the hands of those who will use it effectively".
The problems of the Russian countryside, however, cannot be reduced to the supposedly poor quality of the peasants, or even to irrational holdovers from the Soviet epoch. The difficulties which the rural sector inherited from Soviet times have been dramatically worsened as a direct result of the government's liberal economic policies. Whether people know how to use land effectively or not, their chances of making a reasonable living out of agriculture are now almost non-existent.
Already in the first years of "reform", the terms of trade within the Russian economy were being turned heavily against agriculture. In order to purchase necessary inputs, farms were forced to sell ever-increasing quantities of produce. Ill-conceived price liberalisations allowed monopolised industries to raise prices almost at will, while the ability of agricultural producers to raise their prices was limited by competition.
In more recent times, the price war on agriculture has been continued through the government's "strong rouble" policies. By dramatically increasing the ability of Russian consumers to buy imported goods with their rouble wages, these policies subsidise importers of foreign agricultural produce. Imports now account for some 40-45% of the foodstuffs consumed in Russia, up from about 10% at the end of the Soviet period. In major cities, the proportion is reputed to be as high as 70%.
Agrarian lobbyists who complain of unfair competition are lectured on the poor quality of Russian agricultural produce and the low productivity of the rural work force. Modernisation, however, would require large-scale credits at reasonable interest rates — and cheap centralised credits to agriculture were ended in 1994. The commercial bank credits that were supposed to take their place are prohibitively expensive. Subsidies to agriculture remain a major item in the state budget, but they are paid erratically, and often too late to allow vital schedules to be met.
In these circumstances, putting money into agriculture becomes an act of financial self-mutilation. Starved of investment, output in the rural sector has continued to decline. Production in various categories in 1995 was barely half the levels of 1990. Gross agricultural output in 1995 fell by 8%, and unofficial government figures predict a further decline of 7% in 1996.
Meanwhile, the government's efforts to convince peasants to take up private farming have come up against a dead end. During the first half of the 1990s, about 5% of Russia's peasants leased land from the collectives and set up private farms. But in 1995, the number of these operations began to decline. Of the private farmers who remain, most are practising hand-to-mouth subsistence agriculture.
Where it is almost impossible to make money out of farming, there is little reason to buy agricultural land. Sellers trying to take advantage of Yeltsin's new provisions will usually receive only derisory offers. Accordingly, banks show little interest in accepting agricultural land as security for mortgage credits.
Whether or not Yeltsin's Land Code remains in force, the promised "lively market in agricultural land" will not eventuate for a long time to come. Nor will farmland play its hoped-for role in fostering the rise of "civilised" credit mechanisms.
Still, the insistence of Russia's liberals on the need for a free market in agricultural land has at least a certain logic, for some of the population. Not all of Russia's agricultural land is worthless to seekers after quick profit. When land is close to large cities, it can attract intense interest as the potential site for anything from golf courses to ornate three-storey "cottages".
A great deal of desirable suburban land, however, remains controlled by collective farms. Now, Yeltsin's Land Code promises to open up these areas to speculators as well. The prohibition on removing land from agricultural use presents an obstacle to the land developers. But where big money is at stake, the scruples of local administrators usually melt away.
The passions of big-city suburbia, however, have absolutely no resonance in most villages. There, news of another state campaign to transform the basis of agriculture is more likely to be met with alarm. If land can now be bought and sold, many rural dwellers will conclude, that means their land is liable to be bought — behind their backs.
Quoted on March 8 in the English-language Moscow Times, political analyst Alexander Konovalov observed that in some regions, "people are afraid that big, dirty money will come ... to buy up their land".