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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


4.3.4. Grain bond


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Nizhni Novgorod relies on grain imports (both domestically and from abroad). In 1991, local production accounted for only 1,625,000 tons of grain out of the 3,363,000 tons required, meeting a mere 48% of regional needs.

Owing to a low grain yield in the region, social and economic stability in Nizhni Novgorod are to a considerable extent determined by the availability of sufficient grain to ensure the uninterrupted provision of bread and bakery products for the population, and combined feed for producers of livestock products.

As in the past, grain is bought at fixed prices throughout Russia on a centralised basis via low-interest credits provided by the Central Bank of Russia. Owing to high inflation rates, such a purchasing mechanism requires massive budget funds and at the same time fails to meet the grain requirements of the region.

To stabilise the region's grain supply, the purchasing mechanism must be radically revised. Grain should be bought with regional funds by the Nizhni Novgorod administration, which thereby becomes the actual owner of the grain.

Funds are obviously needed to buy the grain.

Consequently the administration will issue grain bonds in conjunction with the regional Soviet. Subsequently the Nizhegorodkhlebproduct (Nizhni Novgorod Grain Products) system will buy the requisite grain. Grain bonds will be distributed among the population via the sale of corresponding bonds.

The bonds will be sold to the public at a nominal price, equal to the annual cost of a minimum set of basic foodstuffs, calculated at the time of issue of the grain bonds.

Each month, holders of grain bonds may partly redeem them against resources from a special fund, at the current value of the monthly minimum set of foodstuffs. Individuals may cover virtually all their current monthly food expenses (within the minimum set).

Enterprises of the Nizhni Novgorod Grain Products system will preserve and process the purchased grain. They will not own the grain. The grain will be sold throughout the year on order by the administration, at contractual prices for flour, bread and combined feed production. These products will also appear in shops at unrestricted prices and be sold to the public at large. Consequently the administration will periodically receive funds from grain processing and retail trade sales.


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