An Experiment in Selling Land Finds Russians Still Wary

What would happen if they called a land auction and almost nobody came?

That's sort of what happened when the regional government of this pretty Volga River city 400 miles southeast of Moscow put agricultural land on offer to private investors in March and April.

Since coming to power in 1996, Saratov's reform-minded governor, Dmitry Ayatskov, has staked his reputation as a pioneer on changing how agriculturalists own and work land.

But a media blitz and fanfare failed to pull off a success. Most sales effected were for urban or suburban land.

"It put buying and selling of land into the public eye," the International Finance Corp.'s Chris Williams says. "But only a very small amount of agricultural land was actually bought."

Farming plots were not popular, partly because people lacked the cash to buy and develop them, government officials admit.

Only 45 of the 83 agricultural lots on offer were sold. These more than 4,800 acres raised a meager 397,754 rubles ($62,000).

"The demand was very low," explains the region's deputy agricultural minister, Valery Belov. "Until the national Russian land code comes into effect, people are very cautious. Besides, a lot of people lack the money to buy."

That kind of resistance to private ownership is exemplified by Igor Kudashev, who heads a collective farm in the village of Stari Burasi, an hour's drive outside Saratov.

The farm has increased output mainly by getting rid of 300 workers and hiring experts. But it still is still run pretty much the way it was in Soviet days: by a boss who has ample caviar on his table and lords over workers who hoe by hand and travel in horse-drawn carts.

More than anything, Mr. Kudashev reflects the old-style passivity that the state should bail farms out. Driving along fields of sunflowers that have failed to flourish, he blames bad rains and old equipment. How, he asks, could he subsist without aid when like other collective farms he is responsible by the state to provide schools, clinics, and roads for his workers.

"We don't receive enough support. Why are people not buying their own lands? They can't afford the tractors to work on them," he says.

A completely divergent view is taken by Vladimir Batrayev, who epitomizes the emerging but rare breed of capitalist-minded agriculturalists.

He runs the highly successful "Demetra" farm 70 miles outside Saratov. He bought a bankrupt collective farm in 1993 with a few credits left over to reinvest into equipment.

He carefully studied the experiences of successful American farms.

Mr. Batrayev paid off the loans within a year. Since then he has built up a highly efficient 13,500-acre operation that processes grain, milk, and sunflowers, and has a bakery and several stores to sell its own produce.

Turnover is a comfortable $1.5 million a year and profits were $250,000 last year. He doesn't need loans anymore.

So what does he say is the secret to his success? "Work hard. Pay workers well. Be your own boss.

"If you want to get ahead," he says, "it's completely up to you."