Russian Federation - Land reform and farm restructuring in Russia

During the course of 1992, major changes were made in the ownership of Russian agricultural land and in the rights of farm employees. These changes were accomplished through farm reorganization, during which most farms registered land in collective ownership and affirmed the rights of members of collectives to claim individual ownership. Yet the agricultural sector is still predominantly collective: 90 percent of agricultural land registered to a designated user on January 1, 1993 was still in the collective sector. Farm reorganization accordingly brought little change in behavior of collectives. Managers reported little change in internal operation of the farms, little intention to change production patterns or input use, and little perceived financial pressure. In order for the collective sector to become more productive, the restructuring accomplished in 1992 and early 1993 will have to be deepened through changes within the farms. Financial pressures, in the form of reduced price subsidies and cessation of preferential credits, will have to be increased so that collective enterprises are induced to change their inherited product mix and input use. Output prices will have to rise to world or border levels so that farms receive clear signals about which products are profitable and which are not. Information and advice on how to restructure internally, how to evaluate alternative business plans, how to manage farm finances, and how to devise a marketing strategy will have to be made much more intensively than in 1992.