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Books by Grigory Yavlinsky
Economics and Politics in Russia
The Center for Economic and Political Research (EPIcenter)
Nizhni Novgorod-Moscow, 1992

4.1 Entrepreneurship and Property

4.1.6 Projected Privatisation of Collective and State Farms


Orientation of the privatisation of collective and state farms

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In accordance with existing legislation, the owner of a land or property share in a collective farm, state farm, joint-stock company, or cooperative may voluntarily quit that organisation and set up an independent peasant farm or other enterprise. Propert y owners who cannot independently engage in farming owing to a lack of qualifications, health conditions or other reasons, may transfer their property via the inheritance, sale, or leasing of shares to other employees, and are entitled to compensation for the value of the land and means of production.

The partitioning of land and assets into shares, and the provision of the right to quit a farm while retaining one's shares, creates the requisite legal and economic basis to reform the collective and state farms. This transformation may be implemented in two ways:

- a gradual division of individual peasant farms, cooperatives, and small businessess, from a public farm, based on applications by the holders of land or property shares; or

- a one-off reorganisation of a public farm into a system of peasant farms, production and service cooperatives, and private and joint stock companies.

The first method (allocation of private farms from the remaining collective and state farms) is prevalent at present. However, it cannot be considered more effective. Currently, even in regions with undeveloped agricultural production and a low proportion of employees in that sector (as, for instance, in Nizhni Novgorod oblast, where they constitute only 5% of the population), an average of 5-7 hectares of arable land are available per agricultural worker or pensioner.

In addition, given that the number of cattle on public farms is virtually the same as that on private farms, then in some circumstances, the current collective and state farms will not be replaced by large-scale, highly marketable private farms, but rathe r by several million peasant households with an average area of 10-15 hectares, 4-5 head of cattle, one tractor for every 6 farms, and one combine harvester for every 20. The division of collective and state farms into small peasant farms leads to a situation, where the departure of individual workers disrupts the existing technological links. Consequently the amount of land is reduced after such departures, and therefore it may not be possible to fully provide the cattle remaining on the farms with fodder. The new individual private farms are frequently cut off from the production infrastructure of the collective or state farm (e.g. workshops and storehouses), or problems of mutual relations arise over the usage of that infrastructure, the supply of seeds, young animals, fodder, etc. Private farms are often deprived of the possibility of using the social infrastructure (kindergartens and communal facilities). Finally, the departure of many workers may cause instability and irritability among those who remain.

This path resembles a return to the situation at the start of the 20th century. At the same time, it reflects the major (albeit short-term) viability of the small-scale commodity production of the peasant way of life, owing to the predominance of cheap ma nual labour, and significantly less use of expensive technology, fuel, and mineral-based fertilizers. Consequently one should be prepared for such developments in the agricultural sector and in privatisation. In this case, one must imagine the development of small businesses in the agricultural sector, and the stimulation of the process of cooperation an d growth in marketability.

Given the existing shortage of land, one must at all costs prepare and adopt legal standards for the redistribution of land, and create state structures (along the principles of the Land Bank during the Stolypin Reforms). The goal is to promote accelerate d formation of optimal private farms and agricultural cooperatives (from the viewpoint of modern science and technology, as well as investment potential).


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