Old Roots Trip Russia's Farms

Land is last bastion of deep Russian misgivings over property

The collective farm here used to be known for its plump strawberries and cattle, which graced the tables of the Soviet elite. Its abundant honey and apples were sought after in Moscow a half-hour drive away.

These days, the fruit fields are choked with dandelion weeds. Pigs are dwindling because they serve as payment to workers in lieu of overdue wages. Orchards have been cut down to build villas for three rich pop stars.

"It's not profitable to produce anymore," says farm director Nikolai Ovcharenko. "We're slowly dying."

He holds out a worn ledger cataloging 10 years of decline. With a grimace, he points to a drop in cattle from 900 head to 350 and a 520-member work force cut to 170.

The Kyokshino farm is symbolic of the decay in Russian agriculture. And it is the last thing the country needs as it experiences a financial crisis.

The Soviet Union may have collapsed seven years ago, but the reforms that swept banks and businesses missed agriculture. The Communist opposition has blocked ambitious plans for private ownership of farmland. And even farmers with entrepreneurial streaks find credit hard to come by, what with 60 percent interest rates and no collateral, since they don't own the land.

The result is that most collective farms, or kolkhoz - half of Russia's 50,000 farms - set up under the Soviets continue as they have for six decades, despite much-heralded plans to restructure them.

Subsidies have dried up, and they are unable to compete in the new market economy. Equipment is grossly outdated, with the Agriculture Ministry estimating that half of the tractors are not working.

Russia imports one-fourth of its food. An estimated 80 percent of farms are in the red - and most peasants feed themselves with small subsistence plots.

With a severe financial crisis looming across Russia, Western economists say it is imperative that the government begin to manage its farms better and raise revenue by selling off land.

"The lack of private ownership severely hampers an efficient agricultural system," says Chris Williams, agricultural program manager for the International Finance Corp., the private lending arm of the World Bank.

Clash over privatization

President Boris Yeltsin heads the advocates of private land ownership, who argue that tax revenues and land sales would offset the troubling state deficit, which is more than 5 percent of gross domestic product. Farmers would manage farms better when faced with competition, they say.

Indeed, the US-based Rural Development Institute estimates that billions of dollars are lost by not selling off state lands.

"The difficulties in agriculture today are due to great extent to wrong state policies" in the past, said the new agricultural minister, Viktor Semyonov, in a recent newspaper interview.

But resistance is strong from the Communists, for whom land has been an emotional and ideologically loaded issue since even before the 1917 Bolshevik Revolution.

Since the Soviet Union's collapse in 1991, Russians can own land in urban areas. But no mechanisms exist for transferring agricultural land ownership, although in theory anyone can buy land.

On May 20, the upper house of parliament approved a draft land bill that prohibits many forms of land sales, including inheritance and grants. President Yeltsin's aides say he will veto it.

Under Stalin in the 1930s, countless thousands of people were forced to relocate to collective farms and were told what and how much to produce. The kolkhoz became synonymous with horrendous inefficiency. Farm bosses falsified production figures and treated workers as little more than serfs.

The kolkhoz never could entirely feed the population, so peasants survived by tilling their own gardens. Even today, some 50 percent of farms are self-sufficiency plots that exchange goods by barter.

Despite whatever suffering they have undergone over the ages, many small farmers are psychologically unprepared to buy or run their own farms, argues Yuri Chernichenko, leader of the Peasants' Party, which for years has sought to mobilize peasants politically.

"People are used to being told what to do. So they are scared to take the risk to deal with the banks, taxes, and decisionmaking," Mr. Chernichenko says.

There is another problem: the difficulty of getting credit. With interest rates at 60 percent, only the rich can afford to buy land - and operate farms. And the law now precludes using land as collateral for loans.

This gives fuel to the argument by the Communist-dominated Duma, or lower house of parliament, that says the chief beneficiaries of land auctions would be wealthy land grabbers.

Seeking banks' help

Financial aid is the main issue, not land ownership, say farmer activists. They say disparities between the high costs of fuel and low prices for produce make farming unprofitable. And they want banks to give credits at low interest rates.

"Farmers are unable to increase production without profits. Everything depends on state support for farmers," says Nikolai Kharitonov, chairman of the agrarian faction at the Duma. He and others agree that something will have to be done about the $20 billion debt to the state owed by the agrarian sector.

But what to do is a matter of debate that so far seems unlikely to be resolved.

In the meantime, Yeltsin has decreed that local authorities in the 89 Russian regions can make their own land laws.

The first one has done that: Saratov, on the banks of the Volga River, has had mixed results.