Staunton, April 11 – The emergence of enormous agricultural holding companies in the Russian Federation is not only destroying much of the social infrastructure of the rural portions of that country but also threatening Russian society as a whole, according to a leading Moscow specialist on rural economics.
In an interview to “Svobodnaya pressa,” Aleksandr Nikulin, the director of the Center of Agrarian Research of the Russian Academy of Economics and State Service, explains how this situation has come about and why it threatens the Third Rome just as Pliny the Elder warned that it threatened the First (svpressa.ru/society/article/41718/).
As Nikulin’s interviewer Kirill Zubkov says, the recent tragic events in Kushchevskaya, “where a local criminal community created ‘a state within a state,’” highlight some of the most obvious dangers of the emergence in Russia of “an analogue of Latin American latifundia with the total lack of rights of the peasants and the death squadrons.”
But the Moscow expert provides a less sensationalist but far more disturbing picture of what is going on, one that positions what is taking place in rural Russia today not just in terms of the Russian and Soviet pasts but also relative to certain international trends in agricultural economics and organization.
Nikulin notes that there are “two basic types of agrarian production:” the amily farm and the agrarian enterprise where “production is achieved through the use of a hired workforce.” Latifundias are “a special case” of the latter and represent a kind of “super-large agrarian enterprise.”
At the end of the Soviet period, there wer approximately 25,000 kokhozes and sovkhozes, and reformers wanted “entirely” correctly Nikulin says to create a more diverse agriculture that would include family farms as well as larger agrarian enterprises as part of a plan to overcome “the multitutde of problems” of rural people.
Two decades later, there are now “approximately 260,000 farmers” in the Russian Federation. And their appearance led many “ideologues of liberal reforms” to believe that “after a few years” there would be a Stolypin-style rural population at the center of which would be strong individual family farms.
That has not happened, Nikulin says, and such farmers “produce only about seven percent of the total of agrarian production.” Worse, many new social problems in rural areas have emerged, and “tens of thousands” of supposed farmers do not engage in agricultural activities at all.
Indeed, the Moscow expert continues, “only about 20,000 farmers (of 260,000) are farmer-entrepreneurs in the Western sense,” while “more than 100,000” of these people are involved in subsistence agriculture rather than production for sale. Consequently, one must look elsewhere for the major producers.
Part of the reason for the failure of these reforms lay in the difficulties of the 1990s, the lack of the kind of institutions and assistance the transformation the reformers wanted required, Nikulin says. And part of it lies with the fact that collective forms of agriculture “displayed a surprising vitality” over this period.
Not only were these institutions larger and thus capable of using mechanization more effectively, but they “were not agrarian enterprises. Instead, they were means of organization of rural communities” which provided “all the social infrastructure – schools, roads, water supplies, and hospitals.”
Until 1998, Russian capitalists showed little interest in rural areas because agriculture did not appear to be a profit center. But the default changed that by making Russian farm products more attractive to the domestic market and even to the international one. As a result and because almost everything else had been privatized by then, investors moved into the rural aras.
Beginning at that time, however, investors began forming large agro-holdings of as much as 400,000 hectares, holdings that dwarf all other forms of agriculture. There are now “more than 700” of these, and as in many other countries, these “farms” are setting the weather for all the others, including family farms.
Until the economic crisis hit in 2008, investors around the world engaged in a speculative race to buy enormous amounts of rural land, sometimes in their own countries but often in others. Thus, The Chinese have bought land in Africa and the Russian Far East, European and US concerns in South America, and European and American firms in Ukraine
As a result of these various trends, Nikulin says, “over the last decade, a land and property redivision has taken place in rural Russia, one analogous to that which took place in the 1990s in the industrial and raw materials sectors.” And as in both of them, “colossal, vertically integrated” corporations have emerged as the dominant players.
But in agriculture, these entities have proved much less successful because they have ignored the local conditions and the specific requirements of farming. As a result, the Russian landscape is littered with a cemetary of these ‘agro-dinosaurs,’” institutions that existed a few years and then declared bankruptcy.
The latifundia which remain, however, are having serious “social and political consequences,” Nikulin says. The big firms have little interest in maintaining the collateral institutions like schools and hospitals on which rural life depends. As those institutions perish because of a lack of support, so too will the rural portion of the country.
The short-term, profit-driven approach of the agro-holdings means that their managers consider those who work for them not individual farmers but “a faceless wage work force.” To keep such people in line, these firms use “private security companies” and are lobbying for various means to hold workers to the land much as under serfdom.
“Historical experience shows,” he continues, “that there were rural places completely fall under the control of latifundia owner oligarchs, the entire society tends toward decline and emptying out.” That is what Pliny the Elder warned about in Rome, and unless Russia adopts “a tough social and economic policy” for its rural areas, the same could happen to it.