A recent article on the New York Times illustrates the challenges post-Soviet Russia is facing in the transition to from collective agriculture to sustainable, entrepreneurial farming.
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Almost two decades after the collapse of the communist system, most of Russia's large agricultural land -35 million hectars (the world's largest) is still operated under a underperforming ecosystem of Soviet-era collective, State-owned farms.
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The raising value of grains has attracted the interest of Russian venture capital, looking to continue their success with oil.
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The main challenge for the new private farms is twofold: organizing production in a sustainable scale -following the model of Argentina, Australia and New Zealand- that allows the required investment in modern technology and organizational methods and changing the Soviet-era culture of low work ethics creating new incentives for farmers.
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Agricultural yields in Russia are very low -1.85 tons per hectare against 3.04 in Canada and 6.36 tons in the United States- but prices of both land and its products are at historically high levels.
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During the Soviet era, agriculture's performance was abysmally low, provoking millions of deaths in famines during the 30s and 40s and forcing recurrent food rationing crises that became a symbol of the failure of soviet collectivization to feed the country. In order to calm the popular unrest created for food shortages and famines, Lenin himself authorized diverse forms of private farming -such as Lenin's New Economic Policy of 1920 -that prevented famines but still kept overall production low and unrealiable. Stalin took the opposite road (collectivization) as part of his "War Communism" policies during the 1928 agriculture crisis-creating through price controls and centralization a dysfunctional system.
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The most daunting challenge for 2008's Russia is modifying 70 years of culture of state owned bureaucracy and neglect that provoked a massive exode of qualified young labor to the cities, rendering the farmland idle or underexploited.
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Other critical challenge is the possibility that Wladimir Putin's administration takes over the old collective farms and keeps them as a state-owned monopoly under a nationalist-fascist model that seems to characterize its approach to economics, veering from the more entrepreneurial policies of previous governments like Boris Yeltsin's.
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This brings about an interesting case of what economists Baumol and Schram characterized as the clash between functional, entrepreneurial capitalism and other dysfunctional forms such as monopoly capitalism and state-owned capitalism.
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- What would you suggest to address the challenge of motivating agricultural workers toward higher productivity and entrepreneurship?
- How could this situation compare to Mexico's and Sonora's agriculture challenges?
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Related reading
Books (red) - Articles (blue) - Videos (green)
- Baumol, Schramm et al (2006) Bad Capitalism, Good Capitalism. Columbia University Press
- Kramer, A.E. (2008) Russia's lazy collective farms are a hot capitalist property. The New York Times, August 31, 2008
- USSR Collectivization. Wikipedia
- Lenin's famine. You Tube documentary
- Russian famine of 1921 . YouTube documentary
- Famine of 1933-34 in Ukraine. YoutTube documentary
- USSR failure and collapse. YouTube documentary
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