THE RUSSIAN FOOD SYSTEM'S

TRANSFORMATION AT CLOSE RANGE :

A CASE STUDY OF TWO OBLAST 'S

Grigory IoffeRadford University

Tatyana NefedovaInstitute of Geography, Russian Academy of Science s

The National Council for Eurasian and East European Researc h910 17th Street, N .W.

Suite 300Washington, D .C . 20006

TITLE VIII PROGRAM

Project Information *

Principal Investigator :

Grigory Ioffe

Council Contract Number :

815-07g

Date :

August 17, 2001

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Abstract

Post-Soviet Russia has begun to resemble an archipelago, with islands of vibran t

economic life surrounded by a sea of stagnation and decay . Closely related to the spatial

fragmentation of the country is the performance of its agricultural system. In particular, the

performance of Russian farms has long stood in inverse proportion to their distance from larg e

cities . This article addresses these issues by looking in close detail at spatial differentiation i n

agriculture in two regions, Moscow Oblast' and Riazan' Oblast' . It begins by describing th e

characteristics of agriculture in the two regions, and then compares regional spatial patterns an d

changes in agricultural ouptut . If goes on to characterize the developing relations between farm s

and food processors in two smaller subdivisions of these regions . and concludes by highlighting

major findings .

Introduction

In previous publications we shed some light on the evolution of Russian farming in the 1990s a s

viewed from the geographical perspective . We specifically focused on the scale and the spatial pattern o f

the decline in output of socialized farms; the surge in subsidiary farming, three major predictors o f

agricultural performance – urbanization, natural setting, and market conversion (Ioffe and Nefedov a

2000a); and the role of cooperation between farms and food processors in the revival of the former (Ioff e

and Nefedova 2001a) .

In a series of related publications we also dwelled upon what we called Russia's growin g

fragmentation . Indeed, due to the combination of population decline, the resumed centripetal (periphery-

to-core) pattern of the population's spatial change, and the highly uneven distribution of wealth, th e

country is beginning to resemble an archipelago, with islands of vibrant economic life immersed in a se a

of stagnation and decay (Ioffe et al 2001) .

These two topics, a) Russia's fragmentation and b) the performance and prospects of it s

agriculture, are related . Russia is in fact a more rural and agricultural country than statistics o f

employment and those of rural-urban population ratio would suggest (Ioffe 2001) . Russia's ecumene,

including its very heartland, was sparsely settled to begin with (i .e ., even before it was subjected to rura l

depopulation) ; and agricultural land uses continues to dominate the peripheral parts of Russia 's regions . I t

is in this periphery where spatial discontinuities now afflict the formerly uninterrupted belt of huma n

colonization and settlement .

It has come to this in part because the performance of Russian farms has long stood in invers e

proportion to distance from major urban clusters, a fact noticed by many authors (Vil'tsyn 1974, Ioff e

1984, Zhikharevich 1989) . Russian farms, ironically, do better when girdled and indeed imperiled b y

non-agricultural developments, as is usually the case in the environs of large cities . The farms do muc h

worse in an exclusively agricultural environment . The ensuing spatial pattern of agricultural land use

intensity inside Russian regions has been interpreted as a quasi-Thunen economic landscape (Ioffe an d

1

Nefedova 2000c) . While output per unit of land. indeed, declines outward from Russian cities (just as i t

did in Von Thunen's isolated state). the underlying causes of this pattern have been spatial population

change and redundant land under cultivation . not spontaneous economic behavior of farmers in respons e

to classic location rent (Ibid. )

To date, we have researched all the foregoing issues, with the exception of Thunian rings, on th e

basis of geographical data matrices with oblasts and republics as their individual entries . We would now

like to amend this work by viewing Russian farming at a closer range . Varying scales have long bee n

shown to benefit geographical analyses . In agriculture, the spatial differentiation within areas is oftentime s

more significant than between them. Findings reported in this article are based in large measure o n

fieldwork conducted in May-June 2000 in Moscow Oblast (MO) and Riazan Oblast (RO), while the

statistics used span 1990-99 ' . Russian media and anecdotal evidence are also invoked .

In what follows, we first introduce MO's and RO's agricultural systems as case studies an d

address their ability to meet local demand in food . We then analyze and compare regional spatial pattern s

and change in agricultural output and characterize contractual links between farms and food processors . In

so doing, we selectively apply an even smaller scale of geographical analysis, that is . we focus on two

selective raions, Ramensky (MO), and Kasimovsky (RO). The final section puts our major findings int o

perspective .

Case Study Regions

Although MO and RO are neighbors, they harbor a significant part of European Russia's

agricultural variance . The specificity of MO's agricultural system lies in its suburban (Russian-style )

nature . To the Western reader "suburban agriculture" sounds like a contradiction in terms . Not so in

' Though statistical totals for the generally successful 2000 are available, the spatially disaggregated agricultura lstatistics are available only for as recently as 1999, even at this writing (January 2001) . The most recent data book ,Sel'skoye Khoziaistvo v Rossii 2000, was released in late January 2001 and contains time series up until 1999 . Basedon our knowledge of the subject, we do not expect that adding 2000 oblast-level statistics would produce anysignificant changes in our analysis .

2

Russia, where the very connotation of "suburbia" or rather its Russian-language equivalent prigorod, i s

strikingly different from its Western counterpart and . alongside residential and recreational components ,

invariably involves a strong agricultural one (Ioffe and Nefedova 2000a) . In Russia. "suburban

agriculture" typically means two things : heightened land use intensity and concentration on perishabl e

produce, primarily milk and vegetables (Mineyev 1962). And although the term, itself, does not

necessarily invoke this, suburban farming in Russia also means high density of livestock, which is a

principal component of land use intensity .

In Russian agricultural literature, suburban agricultural specialization is typically contrasted wit h

zonal specialization (Rakitnikov 1970 : 256-57, Kriuchkov 1978 : 8-9) . The latter refers to types o f

produce that fit a local natural setting. The available variety and pattern of biomes is thus viewed as th e

main factor of specialization conducive to inter-regional exchange . Biomes in Russia more or less

resemble latitudinal bands stretching from the northwest to the southeast; and the so-called agricultura l

zones, roughly speaking, coincide with them . Suburban enclaves, branded as azonal, disrupt thi s

continuity, as they emphasize more or less the same staples regardless of the dominant biome . Azonal

thus means extra-territorial, a distinction that more or less parallels the distinction in physical geograph y

between soils formed on residual versus transported (alluvium or loess) parental material . Incidentally ,

alluvium-rich river valleys and deltas constitute another well-known example of relative extra-territorialit y

in agriculture . Viewed from this perspective, not all of MO's agricultural system is azonal or suburban ,

but, barring the oblast's northwestern and southeastern peripheries, much of it is .

For several decades, agricultural investment in the environs of Moscow exceeded that in most, i f

not all, other Russian and indeed Soviet regions . Per unit of agricultural land. only in the vicinity of Sain t

Petersburg and in Estonia was this investment on a par with that in MO under Soviet rule . Invariably thi s

showed up in statistics of fixed assets, according to which the highest in the Soviet Union was in MO,

reflecting the concentration of mechanized animal and poultry farms, land drainage systems, and fertilize r

3

application . Although the concentration of demand for perishable produce fueled this heightene d

investment in the first place. it was not the only factor.

While conducting research for the project Moskovskii Stolichnyi Region . Ioffe estimated that

growth of output by one percent cost 7 .5 times less additional investment than m the Non-Chernoze m

Zone (NCZ) 2 as a whole, of which MO was part (Ioffe 1988) . The environs of Moscow . thus, offere d

much higher return on investment than most of the NCZ primarily because of heightened quality o f

infrastructure, living conditions, and agricultural labor force .

There are elements of suburban agriculture in RO as well, but they are confined to the immediat e

vicinities of the oblast capital . Although a large city (535, 000 residents in 1999), Riazan ' is much, muc h

smaller than Moscow (8,630,000 residents) . Also part of the NCZ . RO is located at the junction of forest

and steppe-forest biomes, the latter containing patches of Chernozem soils . Cropland in RO accounts for

as much as 40 .9% of the entire land area. In contrast, in MO it is only 25 .3 % (Se/ 'skoye . . . 2001, p . 218) .

More than half of cropland in RO is devoted to grains (a decidedly zonal . that is, not suburban staple)

whereas in MO less than one-fifth is (Table l) .

Table 1 Agriculture in Moscow and Riazan Oblasts .

Indicators Moscow Riazan' EuropeanOblast Oblast Russia

Percentage Share of Urban Population 80 68 73Urban Population Density in People per Square Km 298 22 2 0Rural Population Density in People per Square Km 28 .7 10 .2 7 . 1Paved Roadways Density in Km per 1000 Square Km 324 161 9 0Gross Agricultural Output in Thousand Rubles per Ha 5 .5 2 .1 1 . 7Percentage Share of Grain in Cropland I8 .6 54 .7 42 . 61986-90 Grain Yield in Centners per Hectare 25 .1 17 .6 I6 . 01995-99 Grain Yield in Centners per Hectare I6 .4 I4 .6 14 . 21990 Milk Yield per Cow in Kg 3922 2881 27451999 Milk Yield per Cow in Kg 3547 2205 2377Percentage Share of Subsidiary Farms in the Output ofthe Following

2 "NCZ" has long been in use to refer to a natural setting with soils less fertile than elsewhere in European Russia .However, the March 1974 Communist Party ruling on the miserable condition of agriculture and the necessity t oimprove it also designated the NCZ as a problematic unit of targeted socio-economic planning . NCZ consisted of 2 9oblasts and former autonomous republics of European Russia . These included all of the Industrial Center, th eNorthwest, the Volgo-Viatka, the North, and part of the Ural economic macroregions plus Kaliningrad Oblast .Today the term NCZ is still in use, although more sporadically than in the 70s and 80s .

4

Meat 31 64 5 5Milk I6 38 44Eggs 10 35 3 0Potatoes 40 92 9 2Vegetables 35 94 7 6Cattle Head 8 19 3 0Pigs Head 22 64 3 6

Percentage Share of Unprofitable Socialized Farms 30 65 5 4Bioclimatic Potential 21 22 19Notes : Unless shown otherwise, data is given for 1998-99 . For the sake of comparability urban population density fo rMoscow Oblast takes into account population of the city of Moscow .Sources : Chislennost' Naseleniya po Gorodam I Raionam na 1 .01 . 2000, Moscow : Goskomstat 2000 ; RegionyRossii, Vol . 2, Moscow : Goskomstat 2000 : 440, 480, 595 ; Agropromyshlennyi Kompleks za 1998-99, Moscow :Mosoblgosstat 2000; Pokazateli Razvitiya Otraslei Agropromyshlennogo Kompleksa Riazanskoi Oblasti v 1980-9 8gg., Riazan' : Riazanskii Oblkomgosstat 1999 : Sotsial ' no-Ekonomicheskoye Polozheniye Rossii 1999, Moscow :Goskomstat 2000 ; Sel'skoye Khoziaistvo v Rossii 2000, Moscow : Goskomstat 2000 : 260-364 ; Prirodno -Sel'skokhoziaistvennoye Ispol'zovaniye Zemel'nogo Fonda SSSR, Moscow : Kolos 1983 .

Table 1 contains indicators enabling a comparison of MO with RO and of either of them wit h

European Russia in general . Proceeding from the top of the table, these indicators reflect externa l

conditions of farming, its productivity, and the relative significance of subsidiary farms . MO is clearly

more urbanized (indeed, even if the city of Moscow were omitted from the calculations, urban populatio n

density in MO would still be five times that of RO), while RO has sli ghtly more favorable natural

conditions for farming.

Yet the productivity per unit of agricultural land of RO is considerably lower than in MO and th e

spread of unprofitable farms is far greater, the reasons being inferior equipment on farms and less suppl y

and lower quality of labor . MO is all but unique in Russia in terms of its continuing reliance upon large

socialized farms and the consequently low share of subsidiary farms – that is, the share of produce grow n

in rural and small-town residences' backyards in total output . As Table 1 shows, RO is much closer to

European Russia in this regard than is MO . where self-supply of food is not a matter of course for most

people as it is in much of Russia .

Though relatively more productive, the socialized farms of MO account for a smaller share o f

agricultural land than in RO (83 .9% and 92 .5%, respectively, according to Sel 'skoye . . . 2001, p . 198) .

Elsewhere we showed that in the 1990s, due to high demand for suburban land, much of it was transferre d

from the jurisdiction of socialized farms to rural administrations that sold it to various users, primaril y

5

Muscovites (Ioffe & Nefedova 1998 . p . 1348-51) . In 1999, 7 .2% of MO's agricultural land was owned

by urbanites versus only 0 .6% in RO (Sel'skoye 2001 . p . 198) . It should be pointed out that dachas and

various other allotments belonging to urbanites but located in rural areas had claimed a heightened shar e

of MO land even before these transfers .

Neither in MO nor in RO is there a high share of land under private family farms, the third clas s

of food producers m today's Russia (the others being socialized and subsidiary farms) .3 In both MO and

RO, it is within the range of 2-3% . Elsewhere we elaborated on the missing preconditions for private

family farming in Russia (Ioffe and Nefedova 1997) .

There is hardly any meaningful connection across Russia as a whole, between the degree o f

market conversion and agricultural performance ( Ioffe and Nefedova 2001a) . By all accounts. MO' s

socialized farms have been subjected to a much more laissez-faire attitude from local government (in fact ,

in the opinion of many of the initiated, it has been too laissez-faire, since better protection from import s

and help with selling the produce, not to mention modernization, would be beneficial) than in RO, part of

Russia's red belt, governed by the Communists . Yet, over the 1990s, setbacks in agricultural output hav e

been more significant in MO . For example, 1999 agricultural output in MO was 55 .6% of its 1990 level ,

in stable prices, whereas in RO . 62 .8% (Sotsial'no- 2000, p . 275) . In both cases, the shrinkage of anima l

husbandry was largely responsible for this setback: the decline in crop farming output was only on the

order of 5-9% .

Before attempting to analyze and compare spatial changes in MO and RO, we would like t o

address a hypothetical question : are the respective agricultural systems able to meet local demand in food ?

The hypothetical nature of this question lies in the fact that neither RO nor, especially, MO is a close d

regional structure . There is substantial inter-regional exchange in food (Nefedova 2000) . For example,

much food comes to Moscow from various regions of European Russia, while Moscow-produce d

6

In contrast to private family farms, subsidiary farms are not registered businesses subject to taxation and qualifyin gfor bank loans.

processed foods are available as far away as Western Siberia . Nevertheless, addressing this question does

make sense, as it allows one to get a feel for the relative scale of local agricultural systems.

Important information for this analysis was found in a Goskomstat's agricultural databoo k

(Se/ 'skoye 1999), which contains estimates of average personal food consumption based on sample d

regional household budgets (pp . 124-130) . These estimates express the overall meat and milk

consumption in raw meat and milk equivalent respectively (just as energy consumption is often expresse d

as coal equivalent) . This is the demand side of the equation .

These estimates can be compared with regional agricultural production . Information on 1999

production and inter-regional exchange in raw produce was found in regional bureaus of statistics . Based

on this information, production can be adjusted by estimates of sales to and purchases from other Russia n

regions . In this way, the supply side of the equation was assessed . Note that with respect to the city o f

Moscow, MO is considered "another region" . Note also that the relatively low estimates of purchases of

produce from other Russian regions in Table 2 find justification in the fact that only unprocessed produc e

is taken into account on the supply side . When consumption is weighed against supply, a deficit o r

surplus of unprocessed food can be calculated . Foreign imports and the inflow of processed foods from

other Russian regions cover this deficit .

Table 2 contains relevant calculations for meat . milk, and eggs. It appears that MO's agriculture

meets only a tiny portion of Muscovites' demand for milk and meat but satisfies 80% of its demand in

eggs . More satisfactory is the situation with potatoes (not included in Table 2); according to our

calculations, two-thirds of Moscow and MO's own demand is met by MO potato farms .

7

R

Table 2 1998-99 Estimate of Self-Supply in Food

Meat in thousand tons Milk in thousand tons Eggs in millio n

Indicators Moscow Moscow

RiazanOblast

OblastMoscow

Moscow

RiazanOblast

OblastMoscow

Moscow

RiazanOblast

Oblas t

Output in agriculture

0 .0 139 .9

69 0 0 .0

977 .0

611 0 0 .0

2456 .0

418 . 0

Export to Other Regions of

0 . 0Russia

260

5 .7 0 .0

106 .7

7 3 0 .0

1187 .6

10 . 7

% Ratio of Export to

0 . 0Output

18 .7

8 .3 0 .0

10 .9

1 2 0 .0

48 .4

2 . 6

Total Consumption

627 .6 390 .9

78 6 2231 .6 1881 .8

417 4 1682 4

1418 .0

378 . 3

Import from All Sources

39 .2 28 .8

2 .9 104 .8 65 .0

9 .6 I345 .0

187 .0

0 . 7

% Ratio of lmport to 6. 3

Consumption7 .4

30 4 .7 3 .5

2 .3 800

I30

0 . 1

Deficit

627 .6 2510

96 2231 .6 904 .8

00 1682 .4

00

0 . 0

Adjusted Deficit

588 .4 248 .2

12 .9 2I26 .7 946 .5

0 0 337 .3

0 0

0 . 0

6 Ratio of Adjusted

94Deficit to Consumption

63

16 9S 50

0 20

0 .0

0 .0

_

Adjusted Deficit - Deficit + Export - Import . Sources are explained in the text_

RO, on the other hand. consumes only locally produced milk and eggs (and also potatoes) .

However. RO is meat-deficient . An examination of Table 2 may pose a question about surplus fresh milk

in RO (611 .0 – 417 .4 -7.3 thousand tons) . To the best of our knowledge, this surplus in large measur e

goes to local milk refineries, most of which currently work not as processors but as middlemen m this

milk's sale to Moscow . Nominally milk qualifies as processed (even if this is not quite the case) as soo n

as it leaves a refinery . lt is thus not accounted for in Table 2 . While this qualification is important for

understanding this specific table, it also shows that Russian statistics have to be used with caution . They

are not deliberately incorrect or imprecise . but they usually do not fully document the phenomenon they

are expected to highlight, so insider expert knowledge is indispensable .

What does the staggering role of foreign and domestic imports in meeting the demand of Mosco w

and indeed MO, itself, for dairy products and meat (bottom row of Table 2) say about the capacity o f

MO's agricultural system? First, the full potential of MO to supply the city of Moscow with meat an d

especially milk is probably not tapped. This issue warrants separate scrutiny to analyze numerou s

indications, given by Russian news media, that Moscow city authorities prefer imports and discriminat e

against local producers. Even under the Soviets, however, about two-thirds of Moscow's demand for food

was satisfied by imports from Soviet republics outside Russia and from foreign countries, these tw o

sources contributing more or less equally . Compared with this, the current level of dependency upo n

imports (70%, according to Shmeliov et al 1999) is not a major change .

Center-periphery gradien t

It follows from our previous research that the center-periphery gradient of agricultural land us e

intensity typifies many, if not all, Non-Chernozem regions of Russia . In Chernozem regions, this gradien t

is less pronounced (Ioffe and Nefedova 1997, chapters 10 and 4) .

1 0

Figure 1 . Raions of Moscow Oblast grouped in concentric rings .Raions. I : Balashikha, 2: Volokolamsk, 3 : Voskresensk, 4 : Dmitrov, 5 : Domodedovo, 6 : Yegoryevsk, 7 Zaraisk ; 8 :Istra, 9 : Kashira, 10 : Klin, 11 Kolomna, I2 . Krasnogorsk, I3 : Leninsky, I4 Lotoshino, I5 : Lukhovitsy, 16 :Lyubertsy, 17 : Mozhaisk, 18 : Mytishchi, 19 : Naro-Fominsk, 20 : Noginsk . 21 : Odintsovo, 22 : Oziory, 23 : Orekhovo-Zuyevo, 24 : Pavlovo-Posad, 25 : Podolsk, 26 : Pushkino, 27: Ramenskoye, 28 : Rouza, 29 : Sergiev-Posad, 30 :Serebryannye Prudy, 31 : Serpukhov. 32 : Solnechnogorsk . 33 : Stupino, 34 Taldom, 35 : Khimki, 36 : Chekhov, 37 :Shatura, 38 : Shakhovskaya, 39 : Shchiolkovo . Concentric Rings. 1 : First-Order Neighbors of Moscow; 2 : Second -Order Neighbors of Moscow : 3 : Third-Order Neighbors of Moscow ; 4 Fourth-Order Neighbors of Moscow. Theunshaded area in the center is the city of Moscow .

1 1

Figure 2a . 1978 Gross Agricultural Output in Thousand Rubles per One Hectare (Ioffe 1984 . p . 66) .

Figure 2 b Moscow Oblas t1986 Gross Agricultural Output in Thousand Rubles per One Hectare (Ioffe 1990, p . 71 )

1 2

2

Figure 2c . Moscow Oblast: 1997-98 Gross Agricultural Output in Thousand Rubles per One Hectare .

1 3

Figure 3b . Moscow Oblast : 1997-98 Gross Agricultural Output per Hectare (Y) versusDistance from Moscow (X)

1 4

In MO, the highest agricultural output per unit of land has long been characteristic of the raion s

located immediately outside the city line, especially Liuberetsky (southeast), Balashikhinsky (east) ,

Leninsky (south), and Krasnogorsky (west) [Figure 1] . The isoline map, published by loffe (1984, p .68 )

first portrayed this situation based on late-1970s data (Fig 2a) . The situation had not changed much by the

mid-1980s [Figure 2b] as featured in Ioffe (1990) and later reprinted in Ioffe and Nefedoya (1997, p .

229) . The difference between Figures 2a and 2b is mostly related to the different gradations (or brackets )

used and, most importantly, to prices . (In 1983 . new, higher prices at which the government bough t

agricultural produce from socialized farms were introduced . )

The late 1990s picture (Figure 2c) is based on still different (this time, market) prices, but what i s

stunning is that the slope of the center-periphery gradient in production per unit of land has increased from

7-10 (Figure 2b) to 10-20 (Figure 2c) times! This change in the spatial trend also appears on charts

relating gross output per unit of land to distance from Moscow (Figures 3a and 3b) : the slope of the

approximating curve has gotten noticeably steeper. This means that production setbacks in outlying raions

of MO have been much more dramatic than in those close to Moscow .

Gross agricultural output per unit of land is typically related to a) concentration of activity and b )

farm specialization, whereby some staples (e .g ., vegetables) typically lead to higher land use intensity tha n

do others (e .g., grain) . However, the gradients in such all-round output indicators as grain yields (Figur e

4a) and even in milk yield per cow (Figure 4b) are also significant .

1 5

200

Figure 4b . Moscow Oblast: 1997-98 Milk Yield per Cow (Y) versus Distance from Moscow (X )

1 6

In contrast to MO, in RO the regional capital's location is eccentric : as in all surrounding M O

regions but one (Smolensk), RO is pulled towards the city of Moscow. This spatial bias, however, has no t

eliminated the center-periphery gradients . Rural population density in Riazan' Raion is 3-5 times higher

than in the raions most remote from the oblast center . Road network density and other infrastructur e

supply indicators all decline outwardly from the city of Riazan' . For example, according to unpublished

data from the local Census Bureau, the proportion of rural residences with flush toilets is 50-60% i n

Riazan' Raion, whereas in the most remote northeastern corner of RO it is only 6-10% . In contrast, in

MO, the lowest frequency of flush toilets (60%-61%) is found in the three most remote southeaster n

raions, while elsewhere it ranges from 65%-96% (Pasport sotsial'no-ekonomicheskogo . . . ) .

The center-periphery gradient in agricultural productivity in RO is not nearly as steep as in MO ,

but it is still quite noticeable (Figure 5) . The yields of all crops have long been at their highest in Riazan '

Raion and in two neighboring raions, Pronsky and Starozhilowskv (Figure 6) . In the western part of RO.

adjacent to MO, as well in the southern part, which has the most fertile soils, the productivity is highe r

than one would expect from the outlying areas, but still lower than around the city of Riazan' . The

classical periphery is located in the northeastern part of RO . Not only is it very remote, but it also has

inferior soils . RO is thus a miniature model of European Russia in general . Just as in European Russi a

(Ioffe and Nefedova 1997, Chapter 4), in RO all three geographic vectors of agriculture's spatial varianc e

show up: center-periphery, west-east, and north-south .

1 7

Figure 5 . Riazan Oblast : Gross Agricultural Output per Hectare (Y) versus Distance fro mRiazan (X )

Figure 6 . Regions of Riazan' Oblast .

I - Yennishinsky, 2 - Zakharovsky, 3 - Kadomsky, 4 - Kasimovsky, 5 - Klepikovsky, 6 - Korablinsky, 7 -Miloslavsky, 8 - Mikhailovsky, 9 - Novoderevensky, I0 - Pitelinsky, I 1 - Pronsky, 12 - Putiatinsky, I3 -Rybnovsky, I4 - Riadovsky, 15 - Riazansky, 16 - Sapozhkovsky, I7 - Sarayevsky, 18 - Sasovsky, 19 - Skopinsky,

20 - Spassky, 21 - Storozhilovsky, 22 - Ukholovsky, 23 - Chuchkovsky, 24 - Shatsky, 25 - Shilovsky .

1 8

Table 3 . Range of Variance of Agricultural Productivity

Moscow Oblast Riazan Oblast1986-90 1995-99 1986-90 1995-99

34 .2 28.9 24 .0 19 . 218 .1 11 .5 10 .3 8 . 0

l .9 2 .5 2 .3 2 . 41991 1998 1991 19984180 4608 3155 28602086 1865 1762 1222

2.0 2.5 l .8 2 .3Source: Unpublished data of regional bureaus of statistics .

Table 3 compares grain yields and milk yield per cow in the three top and three bottom-ranke d

raions of MO (8% of all raions) and in the two top and two bottom-ranked raions of RO (also 8% of al l

raions) . Between the late 1980s and the late 1990s, the composition of these raion sets has been

essentially stable, with top raions invariably located next to the oblast's capital city and bottom-ranke d

raions located in the periphery . In this case, however, it is the magnitude of indicators itself, not the exact

locations of the most and least advanced raions, that is worth considering .

Examination of Table 3 suggests that there is something like an "economic-geographic hierarchy "

in place . observed by loffe (1991, p . 335 . Table 5) for European Russia as a whole . In this case, the top -

ranked raions of RO only slightly out-produce the bottom-ranked raions of MO . It appears that by th e

time Russia's economic crisis commenced. MO raions had much and therefore had much to lose, and i n

fact they have lost part of their edge over the 1990s : the leading MO raions have more or less held their

own. but the peripheral raions sagged appreciably . The center-periphery gradient has, thus, gotten steeper .

RO represents a more typical NCZ domain, in which the declining trend in agricultural

performance had been in place for several decades and had almost bottomed out by the late 1980s, that is ,

prior to the commencement of the crisis. This is especially the case in RO's periphery . As pointed out in

our previous article, "when grain yields have fallen to roughly 10 centners per hectare and average milk

yields per cow are on a par with that of a sheep, there is hardly any room for further decline" (Ioffe an d

Grain Yield in Centners per Hectar8% Top-Ranked Raions

8% Bottom-Ranked Raion sRatio

Milk Yield per Cow in Kg8% Top-Ranked Raion s

8% Bottom-Ranked Raion sRatio

1 9

Nefedova 2000b, p . 293) . As a result, the center-periphery gradient m RO has gotten steeper, but it is stil l

less steep than in MO .

Spatial concentration

The above result implies an advancing spatial concentration of production, particularly in MO . In

order to examine this process explicitly we expanded both the set of top-ranked raions and the set o f

criteria. We considered the top quartile of raions (10 in MO and 6 in RO) in the descending list of raion s

with high-ranking positions in six product sub-divisions (meat . milk . eggs, grain, potatoes . and other

vegetables) and in head of cattle, pigs, and poultry – a total of 9 indicators. For RO only, a tenth indicato r

was used. production of sugar beets. one of the local staples .

As a rule, in both MO and RO, raion rankings based on individual criteria do not coincide . We.

however, considered raions that find themselves in the top quartile in several criteria at the same time . For

example, Ramensky Raion of MO is in the top quartile for as many as seven criteria and is thus th e

undisputed agrarian leader of MO ; Stupinsky, Dmitrovsky, and Sergiyev-Posadsky Raions are include d

for six criteria . Figure 7 reveals the northwest-southeast axis of agrarian development in MO .

In RO, all western and southern raions find themselves among the leaders . Riazansky Raion is i n

the top quartile for nine criteria out of ten (!) ; Skopinsky and Shatsky Raions made it for seven criteri a

(Figure 8) .

20

Figure 7 . Top-ranking agricultural raions of Moscow Oblast1 – based on seven criteria, 2 – based on 5-6 criteria, 3 – based on 3-4 criteri a

Figure 8 . Top- ranking Agricultural Raions of Riazan Oblast1—based on seven criteria, 2 – based on 5-6 criteria, 3 – based on 3-4 criteria .

2 1

Table 4 Percentage Shares of Agricultural Output in Top and Bottom Quartiles of Raion s

Moscow Oblast Riazan Oblas t1998 1990 1998 199 0

50 .0 53 .0 52 .3 46 . 045 .1 40 .3 43 .8 38 . 283 .0 80 .0 98 .8 94 . 259 .5 56 .6 44 .2 42 . 662 .3 47 .3 44 .2 86 . 969 .4 78 .7 94 .0 85 .7

Source : Unpublished data of regional bureaus of statistics .

Table 5 1998 Agricultural Output as a Percentage of That in 1990 .Moscow Oblast Riazan Oblas t

1 All farms Socialized Farms

.All farms

Socialized Farm sAl lRaions

Raions in

Al lTop

RaionsQuartile

Raions in j All Raions inTopQuartile

AllRaions

Raions i nTopQuartil e

Top

RaionsQuartil e

Meat 1 44 46

27 27 4I 43

2I 2 3Milk 44 47

38 41 , 48 50 33 3 4Eggs 44 48

47 48 82 86 86 9 0Grain 60 63

60 63 59 60 57 5 9Potatoes 141 I36

36 48 52 50 I0 1 7

I Vegetables _ 64 58 52 45 1

135 128

1 6 7Note : Grain is produced on socialized farms only .Source : Unpublished data of Regional Bureaus of Statistics .

Tables 4 and 5 show that the degree of spatial concentration of socialized farm production in on e

quarter of the top raions is fairly high both in MO and RO . Moreover. against a backdrop of steep

production declines over the 1990s, this concentration has increased in most product sub-divisions (Tabl e

4), the notable exception being potatoes, a sub-division which no longer hinges on socialized farms (se e

Table l) . Table 5 shows that for most products, the setbacks experienced by top raions have bee n

somewhat less dramatic than elsewhere . This implies that despite significant sectoral shift in productio n

(from socialized to subsidiary farms), the spatial pattern has remained stable and, if anything, the role o f

top-ranked raions has increased as they have fared better than others in times of crisis .

Earlier we used a simple way of picturing a core-periphery gradient and evaluating the spatial

concentration of production in MO . Specifically, we divided MO into four concentric bands of raion s

MeatMil kEggsGrainPotatoesVegetables

2 2

based on the order of their proximity the city of Moscow (Figure 1) . Table 4 applies this pattern to anima l

husbandry . Although, as shown above, the agriculture of the inner zone is most productive, it is th e

second zone, located within 20-60 km radius from the city of Moscow that produces the most in overal l

terms (not per unit of land) . This is especially the case in animal husbandry . The inner zone (mostly

within 20-km radius) is almost as significant in the production of eggs . Indeed most highly mechanized

poultry farms are located in the two inner zones . In crop farming, the role of inner zones is not as

pronounced and the production of grain, mostly intended as animal feed, gravitates to the outlying zone ,

while vegetables are for the most part produced both in the inner zone and in the outer zone . The latter

contains the confluence of Moscow and Oka Rivers, notable for its rich alluvial soils .

Predictors of agricultural productivity

Theorizing the spatial variance of Russian agriculture's performance, we invoked the notion o f

economic rent as the universal measure of its differential productivity (Ioffe & Nefedova 2001 (b)) . Two

major specifications of economic rent, the so-called Ricardo rent and the Von Thunen rent, enabled us t o

select corresponding predictors of agricultural variance, the natural quality of the soil and urbanization .

The proxies for both, bio-climatic potential and urban population density, were successfully used t o

statistically explain the land tax rate set in Russian regions . It was thus shown that this measure o f

differential utility of land, although applied in a seemingly arbitrary way by central authorities, is in fact a

function the two above-mentioned predictors of agricultural variance (Ibid.) .

We will now apply a similar approach to MO and RO, statistically identified as sets of thei r

constituent raions (39 in MO and 25 in RO) . This time, however, we will focus not on land tax but on

measures of agricultural productivity, considered as dependent variables . We will use statistical estimate s

of soil quality borrowed from two different sources . For MO, the source is Pochvy 1974, which assesses

4 This estimate of natural fertility is based on long-term records of yields on specially designated, regionallyrepresentative parcels of land that do not use irrigation or other sophisticated cultivation methods – that is, the yreflect natural conditions of soil type, heat, and moisture (Prirodno- 1983).

2 3

the natural fertility of the soil on an ordinal scale . For RO the source is unpublished data of the local

Census Bureau which express fertility of the soil in so-called animal feed units . ' Although not quite

identical . these two sets of soil fertility estimates are two modifications of the same assessmen t

methodology, accounted for in Prirodno- 1975 and 1983 . As for the proxy for urban influences, we will

use the physical distance between raion seats and the oblast capitals . Moscow and Riazan ' respectively .

Our data bank allows us to selectively evaluate the impact of natural/zonal an

d urbanization-related/azonal factors on agricultural productivity. Linear regression analysis will be used_ the results o f

which allow us to explore several lines of comparison : a) between the said impacts for one point in time .

b) between two or more points in time, and c) between the two case study areas . We base our

interpretations only on summary measures contained in standard regression analysis output (significant

within 95% confidence limits) . Because this is essential for our purposes, we express the coefficient o f

determination R2 – in this case the overall share of variance in productivity attributed to selected predictor s

— as the sum of two addends or components° . These are the amount of variance separately attributed t o

each of the considered predictors, natural fertility of the soil and distance from the major city, the oblas t

capital . These statistics are given in Tables 7-11 and described below .

Gross agricultural output per unit of land

In MO. this summary measure of productivity has not shown any meaningful relationship wit h

soil quality in the 1970s, 1980s or 1990s . Distance from Moscow, however, has been a highly meaningful

factor all along, with the slope of output decline outward from the Moscow city line becomin g

progressively steeper (Table 7), which confirms what was extracted earlier from the comparison of isolin e

One animal feed unit is based on calorie content of 1 kg of oats . Such units allow not only comparison of variou sanimal feeds (for instance, 1 kg of hay is worth 0 .5 a .f.e . and 1 kg of clover is worth 0 .2 a .f.e .) but also provide aprice-insensitive common denominator for summing up various crops produced within a designated area (usually pe r1 hectare) .

2 4

maps (see Figure 2) . MO's agricultural system, therefore, resembles Von Thunen's isolated state much

more than when it was first documented in the mid-1980s (Ioffe 1984) .

In RO. an incomparably more typical Russian sub-division, both soil quality and distance from th e

oblast capital are meaningful factors exerting comparable impacts on the gross agricultural output per uni t

of land (Table 8) .

Milk yield per cow

Dairy is the major specialization of MO's agriculture and an important sector of RO's agriculture

as well . The overall milk output is . naturally speaking, a product of the number of cows and yield per

cow. In the 1990s, both declined, the former most sharply. In 1961-86, when the number of cattle ha d

grown steadily, the production of milk in MO's inner circle of raions had grown much more because of a n

increase in the yield per cow (79% of the overall growth) than in an increase in head count (21%) . At the

same time, in outlying raions of MO, the ratio between these intensive and extensive growth factors ,

respectively, was less in favor of the former (67% and 33%, respectively) (Ioffe, 1990, p . 73) . In the mid-

1990s, milk yields in MO continued to exhibit a center-periphery gradient (Ioffe and Nefedova 2000, p .

132, Table 2 .31) . In the late 1990s, in MO, distance from Moscow continued to be an importan t

productivity factor. Moreover, milk yields on average declined with distance from Moscow more steepl y

than gross output per unit of land. In RO both distance and soil quality matter as factors behind the

distribution of milk yields (Table 9).

6 These components are sometimes referred to as partial coefficients of determination . Each of them is a productR ;rrv, where p ; is a standardized regression coefficient (b= (3 ;a,la,, where b ; - regression coefficient and a„ and a 1 arestandard deviations) . The (total) coefficient of determination is then a sum of particle coefficients : E13, riy . Tables 8-1I are based on these equations stemming from regression analysis (see for example, Boudon 1965) .

2 5

Table 6 . Percentage Distribution of Moscow Oblast's Animal Husbandry Output Among ConcentricRings Featured by Figure 1

Farm Types

Year

Inner (1)

t 2)

(3) Outer (4 )

All 1998 I2 38

25 24Meat Socialized 1998 I7 40

22 2 1

All 1990 I6 43

23 1 8Socialized 1990 16

45 1 7Milk All 1998 9

34 30 2 7Socialized 1998 10

35 29 3 7All 1990 10

31 29 3 0Socialized 1990 11 31 29 3 0

Eggs All 1998 j

28

4I 23 8Socialized 1998 3I

42 21 6All 1990 !

33

40 18 9Socialized 1990 I

35

40

18

SSource : Unpublished data of Mosoblstat .

Table 7 . Distance from Moscow as a Predictor of Gross Agricultural Output per Hectare in Mosco w Oblast (39 Raions)I Years

1977 – 1979

- 0 .668 -2.751985 – 1987 - 0.636 - 4 .301997 – 1999 - 0.710 - 8 .70Source : authors' calculations .

Table 8 . Statistical Explanation of 1997-99 Gross Agricultural per Hectare in Riazan Oblast (25 Raions )

Partial Coefficients of Determinatio nIndependent Variables Dependent Variable: All

Farms ' OutputDependent Variable :

Socialized Farms ' Outpu t

Distance from Riazan

Soil Quality0.2050.244

0.2830.21 3

R 2 0.449 0 .496

Source : authors' calculations .

Pearson Correlation Coefficient 1 Regression Coefficient (Slope of theOutwardly Descending Productivity )

2 6

Table 9. Statistical Explanation of 1997-99 Milk Yield per Cow

Independent Variables

Partial Coefficients of Determinatio nMoscow Oblast

Riazan Oblast

Distance from the Oblast Capital

0 .302

0 .382Soil Quality

0 .089 .

0 .354R 2

0 .391

0 .736statistically insignificant .

Source : authors' calculations .

Table 10 . Statistical Explanation of Grain Yield in Moscow Oblas t

Coefficients of DeterminationPartial

ear

Total (R2)

Dependant Variable :

Dependant Variable :Soil Quality Distance from Mosco w

1986—1990

0,441

0 .290

0 .15 11993—1995

0 .472

0 .310

0 .162

1995—1997

0 .417

0 .187

0 .230

1997—1999

0 .507

0 .192

0 .31 5

Source : authors' calculations

Table 11 Statistical Explanation of Grain Yield in Riazan Oblas t

Coefficients of Determinatio n

Year PartialTotal (R2)

Dependant Variable :

Dependant Variable :Soil Quality Distance from Riazan

1986—1990

0 .844

0 .659

0 .18 51996—1998

0 .733

0 .657

0 .076.

- statistically insignificantSource : authors' calculations

Grain yields on socialized farms

Grain yields are not so much important in terms of agricultural specialization in both oblasts a s

they are in terms of reflecting the general quality of crop farming or, as Russians put it ,kul'tura

zemledeliya.

2 7

In MO. both soil quality and distance from Moscow, are statistically significant factors of grai n

yields, but there has been a major change in the mid-1990s . Prior to that. soil quality mattered more.

whereas after the mid-1990s it faded into the back ground and distance from Moscow became more

important (Table 10) . In contrast, in RO distance from the oblast capital didn't matter in either the 1980 s

or the 1990s, but soil quality was a valid predictor of productivity (Table 11) .

Potato yields on socialized farms

Although most potatoes are no longer produced on socialized farms . this estimate is meaningful i n

its own right. Potatoes are one of the few food products for which demand is more than met by domestic

producers . It has long been habitual for the Russian urbanite to buy potatoes mostly from subsidiar y

farmers . Therefore . most of what is produced on socialized farms is not for immediate consumption, with

the exception of those which fill military rations . The rest go to food processors producing chips, starc h

and sometimes alcohol .

As a rule, food processors prefer to buy from large farms . Hence there is a high level o f

specialization in potatoes on farms that have chosen to cultivate them at all . Prior to the 1990s, thi s

heightened level of specialization in potatoes was precluded by very low state purchase prices, whic h

prevented profitability from potato yields no matter what the production level . As a result, productio n

quotas on potatoes were spread thinly and imposed on as many farms as possible . In the 1990s. with the

advent of market pricing, reasonable concentration of potatoes became possible .

lnterestingly enough, in MO, soil quality was not a significant predictor of potato yields either i n

the 1970s or in the 1980s, when many more potatoes were produced on socialized farms than now . Soi l

quality became significant in the 1990s, but of special importance was distance from Moscow . However,

whereas before potato yields declined with distance from Moscow (just as most other productivit y

aspects), the opposite became the case in the late 1990s . The 1990s situation clearly invokes scal e

2 8

economy in crop farming: the larger the potato-sown fields, the hi gher the yields . In RO, only distanc e

from Riazan' matters. just as was the case in MO prior to the 1990s : yields are lower in outlying raions .

Shifts in food processing

Elsewhere we expounded on the role that food processors currently play in the revival of Russia n

farms, an emerging vertical link that has become crucial after the August 1998 devaluation of the rubl e

(Ioffe and Nefedova 2001a) . Food processing in MO is second to none in all of the NCZ . In 1991-1999 ,

however, the production of processed milk and meat in MO declined by a factor of three : and the outpu t

of canned meat produce by a factor of ten . Still this steep decline has been less than that for the Industria l

Center (IC)8 as a whole . As a result, the share of MO in the meat production of the IC has increased fro m

19% to 29% . The share of MO in the IC's milk production, 19%, has not changed . The share of RO in

the IC food processing is much more modest, about 5% for many products . During the 1990s, processed

meat production in RO declined by a factor of eight. and processed milk production halve d

(Prodovol'styennvi 2000, pp . 123-124) .

The downward trend bottomed out by the end of 1996 . and since that time processed foods '

production has been on the rise (loffe and Nefedova 2001a) . Particularly meat, sausage, cheese, fruit

juices, dough, noodles, bread, vodka, beer, and wine produce have benefited from this resumed growth .

The most significant growth has been in alcoholic beverages, upon which many regional budgets in large

measure rest, including those in MO and RO. Russian media is replete with success stones in the brewin g

In this case "processed" is at least in part a nominal qualification meaning "passed through a processing plant on it sroad to a consumer." In regard to meat, this may mean inspected for disease, certified, sorted, and cut . In regard tomilk this may mean diluted to a certain milkfat content, pasteurized, and bottled or placed in cartons . Obviously, asubstantial amount of milk and meat is indeed processed into cheese, sour cream, kefir, yogurt, sausage, etc .

8 Despite the recent division of Russia into seven federal okrugs, we operate with a more traditional, long-term, andgeographically reasonable division into economic macro-regions, of which Central Economic Region or Industria lCenter is one ; it consists of I1 oblasts .

2 9

industry (e .g ., Khazbiyev 1998) . The case of vodka was best researched by Nikolai Petrov of Mosco w

Carnegie Center (Petrov 1999) .

Table 12. Food Processors of Moscow and Moscow and Riazan Oblasts (Meat. Dairy, and Fruit andVegetable Branches )

.Moscow MOSCOW

OblastRiazanOblast

Total Number of Production Units . 134 78 34Including with personnel numbering

I000 13 0 0200—1000 15 21 7

50—200 22 44 2220—50 32 9 5

20 52 4 0

Total Number of Personnel in Thousands 32 .3 14 .0 4 . 6Units with More than 200 Personnel as a Percentage of the Total 85 67 42Number of Units Emerged in the 1990s 63 12 7

Source : calculated based on the enterprise list contained in Biznes-Kama 99, Moscow : ADI Biznes-Karta1999 .

For the city of Moscow. large food combines with over 1000 employees are typical (Table 12) .

They account for more than 60% of all the Moscow city employment in food processing industry . The

best-known food processing giants are the Cherkizovsky and Ostankinsky meat combines an d

Ostankinsky, Ochakovsky, and Lianozovsky dairy combines . The city of Moscow also stands out with a

high share of the smallest food processors, those with less than 20 employees (Table 12) . These have been

active in satisfying Moscow's demand for the high quality produce, especially sausage and pelmeni (meat

dumplings) . MO is dominated by medium-sized food processors, although the Ramensky, Noginsky, an d

Klinsky meat combines and the Ramensky milk combine (MO) have more than 500 personnel each .

Small processors are not typical for MO, or else are part of a shadow economy not featured in Table 12 .

To the best of our knowledge, this is also the case in RO, where food processors are on average smalle r

than in MO .

3 0

Over the 1990s . the level of concentration in food processin g has grown appreciably (Ioffe and

Nefedova 2001 a) . For example . in MO. two-thirds of processed meat comes from just three meat

combines (Klinsky, Noginsky, and Ramensky) out of twenty available, while one half of all processe d

milk in MO is released by four dairy combines (Ramensky, Istrinsky, Liuberetsky, and Podolsky) out o f

the twenty available (Agropromyshlennyi . . 1999) .

Quite a few enterprises have come to a standstill since the early 1990s . For example. milk

processors of MO on average work to 27% of their capacity . 9 Also, many medium-sized milk processors

have shed their traditional producing functions to become go-betweens that buy fresh milk from loca l

farms and sell it to Moscow-based milk processing giants .

Perhaps the biggest corporate success story in the entire food processing industry of Russia i s

Wimm-Bill-Dann (WBD), a Moscow-based dairy and fruit processing company founded in 1992 . It s

foreign name goes back to the fact that when the production of fruit juices in Russia was still at it s

planning stage, a broad survey of demand was conducted . It became clear from that survey that many

[Russians] have no confidence in domestic producers . . . . In order to attract customers. it was imperative to

invent something inordinate and, especially, come up with a non-Russian name.''10 Now this fad is clearly

a thing of the past . The infatuation with imports is subsiding in Moscow and other big-city markets, an d

Russian newspapers – even those with the softest stand vis-à-vis the West – are full of articles that no t

only signal this trend but also allege that many imported foods are of inferior quality (Averbukh 2000) .

WBD is the brainchild of Pawel Dudnikov. a prominent Russian entrepreneur of the first wave.

who began in late 1980s. under Gorbachev . as a cooperative owner and then in 1992) leased a productio n

line at Moscow's Lianozovsky dairy combine . Currently WBD controls 30% of the Russian market i n

deeply pasteurized milk and over 30% of the fruit juices market . Its 1999 sales amounted to

$402,386,000 . WBD owns seven large dairy processors, including the Lianozovsky, Tsaritsynsky, and

3 1

9 http ://www .infoart .ru/company/ecodaily/undex/htm (read in October 2000) .

10 www.wbd.ru/winl251/about/frabout .html (read in December 1999) .

The Baby Formula plant in Moscow, the Ramensky dairy combine in MO, three dairy combines i n

Novosibirsk Oblast, one in Nizhnii Novgorod . and one in Vladivostok

WBD is instrumental in the modernization of dairy farms, especially in MO. It is noteworthy that

WBD deals with the most productive and largest farms. By the end of 1999, WBD had already supplied

65 MO dairy farms with state-of-the-art Swedish milking and refrigerating equipment, at a total cost o f

$7,000,000, and hired foreign specialists to put this equipment into operation . Dairy farms are expected

to repay this modernization in milk within eight years (Sistema. . . 1999; www.wbd.ru/company/news/ 20 -

07-2000) .

During the second stage of WBD's farm modernization launched in the summer of 2000, another

18 farms will be brought into the program. including some in RO . Along with the above-noted

equipment. WBD also finances the supply of state-of-the-art combines, produced by a joint venture, Dopp

Stadt (Germany) and Kirovsky Tractor Factory (Saint Petersburg) . These combines are essential fo r

harvesting succulent animal feed . WBD currently buys 30% of the fresh milk produced in MO .

Alongside its focus on dairy products and fruit juices, in 2000 WBD added two breweries (in Nizhni i

Novgorod and Vladivostok) ; and it also collaborates with Hungarian (Globus in canned vegetable produce .

Because of Moscow's sheer size and its concentration of a disproportionate share of Russia' s

buying power, MO has become Russia's leader in terms of foreign investments in food processing . The

world's food processing giants have created networks in Russia, in which MO-based enterprises play a ke y

role . These include a joint venture . Nestle-Zhukovskoye Morozhenoye in Zhukovsky, a town 40 km eas t

of Moscow built by the Russian aircraft industry and a Baskin Robbins production unit that releases an d

sells up to 20,000 tons of ice cream in the city of Moscow . Mars has factories in Stupino (80 km south o f

Moscow) . Danone produces 60,000 tons of yogurt at the Moscow-based factory, Bol'shevichka .

Unilever bought the Moscow Margarine Factory (Uspekhi 1998) .

3 2

//www.wbd.ru/company/today/main.html (read on 26 January 2001) .

McDonald's owns and operates a 10 .000 sq. ft . processing and distribution center in Solntsevo.

MO (a southwestern suburb of Moscow) . For its menu. McDonald's in Russia purchases 75% of its

ingredients from small Russian and CIS companies (Ibid.) . Today McDonald's operates 58 restaurants in

a dozen Russian cities, half of which are located in Moscow and MO . The first McDonald's opened in

Russia on January 31, 1990 and is located on Pushkin Square in downtown Moscow . It immediately

became the largest McDonald's in the world (more than 28,000 sq . ft .) and the busiest one – titles th e

restaurant retains today .12 Pepsico has built a new plant in the so-called Serrizone, a free economic zone

close to Sheremet'yevo International Airport .

Large foreign investments are associated with milk processing, where WBD controls 33% of

Russia's yogurt market . Three of the world's renown yogurt producers . Danone (France), Campina (the

Netherlands), and Ehrmann (Germany) seem to have discovered simultaneously that locally manufactured

yogurts produced from fresh milk, not from cream exposed to long-haul transportation, are preferred b y

Russian consumers because of the fresher taste of the former . All three have now built processing plant s

in MO, where there is no surplus production of fresh milk, especially of the quality milk demanded b y

yogurt producers .

Evidently because of this short supply, the putting into operation of two (Ehrmann in Ramensk y

raion and Danone in Chekhovsky raion) of the three brand-new plants was postponed (Campina's plant i n

Stupinsky raion has been in operation in Spring of 2000), and a veil of secrecy shrouds their operation s

and future plans. When in May 2000 we tried to schedule an appointment with the managers of th e

Ehrmann plant. we were turned away. Soon Izvestia (a popular Russian newspaper), whose penetratin g

ability is well above that of two independent researchers, reported that the newly built Danone plant in

Chekhovsky raion is "closed for journalists" (Sagdiyev 2000) .

The ensuing surge in demand for fresh milk will definitely exert its effect on more MO farms .

However, food processing giants are reluctant to deal with smallholders . They prefer to either contract

3 3

12 www.mcdonalds.com/countries/russia/russia.html (read in January 2001 . )

with large-scale intermediaries or large and viable or restorable socialized farms . This promotes the

segregation of farms and strengthens the concentration of agricultural production . Such a trend is already

visible in the production of meat . For example, the Moscow-based Cherkizovsky meat combine had b y

1998 controlled one-third of MO's pigs, by virtue of buying up several of the strongest pig-fattening

farms .

The food processing industry of RO is incomparably smaller than in MO . The linchpins of the

former are 24 dairy processing and seven meat-processing plants . By now, 21 dairy plants have shed their

processing operations and work as intermediaries passing fresh milk collected from local farms to larg e

processors . mostly in Moscow and to some extent in Riazan' . Five meat processing plants are at a

standstill, in part . because farms have drastically cut back on livestock but, also, due to their inability t o

compete with imports (even after the 1998 devaluation of the ruble) and Moscow-based processors .

Although RO furnishes decidedly fewer success stories in food processing than MO (one suc h

story will be accounted for below), it offers an example of the reincarnation of an oblast-leve l

administrative structure into a commercial corporate one . This development is in line with the Communist

control over RO administration . .\s is well known . Russian Communists have found peculiar ways to

adjust to the current "wild market" situation .

The structure in question is JSC Niva-Riazan, which was created precisely because oblas t

bureaucrats are legally barred from their own commercial activity . However, 51% of shares of the JS C

belong to Riazan Oblast' Committee for the Management of State Property, while the staff of the Oblas t

Agricultural Department oversees the everyday activity of the JSC, which is actually located on the

Department's premises.

The JSC buys farm produce, directs it to food processors, and oversees the distribution o f

processed foods . Farms and food processors that enter into contractual agreements with the JSC lose th e

right to dispose of their produce and fall into dependency on this regional octopus . Thirty-eight farms,

several raion-based cooperatives and food processors are within the orbit of the JSC . The latter insure s

3 4

loans issued to these food producers by local and Moscow-based banks . JSC also sells fuel at below free -

market prices, owns a fleet of agricultural machines to lease, and has a renewable emergency bank o f

seeds should something happen to seeds at socialized farms .

The creation of JSCs that merge civil administration and commerce can be attributed to a lack o f

marketing infrastructure and selling cooperation among food producers and to exceedingly weak loca l

initiatives in general — that is . to the same factors that facilitate vertical cooperation . Needless to say, such

JSCs provide channels for incredible personal enrichment of regional bureaucrats . According to S .M.

Ivanov, Niva-Riazan's director (Personal interview. 7 June 2000), this JSC prefers to work wit h

economically strong farms, and this is one important distinction between it and its purely administrative ,

Soviet-style predecessor . Needless to say, it is weak farms that would be most interested in joining th e

JSC .

The Russian food system close-up : a tale of two raion s

Our focus here is on two raions : Ramensky, MO, one of the most productive raions, even agains t

the backdrop of "suburban" agriculture in general, and Kasimovsky . RO. a typical outlying raion. yet

hardly the worst m agricultural performance. Table 13 provides relevant comparative data .

Table 13 Two Raions : 1999 Selected Agricultural Indicator s

Indicator Ramensky, MO Kasimovsky, R OAgricultural Land in Thousand Hectares 49 .4 100 . 1Average Number of Personnel per Socialized Farm 331 12 5Agricultural Personnel per 100 Hectares 11 3Head of Cattle in Thousand 21 .4 19 . 7Head of Cattle per One Employee 4 7Head of Cattle per 100 Hectares 43 20Milk Output in Thousand Tons 41 .8 15 . 1Milk Yield per Cow 4430 2049Share of Socialized Farms with Milk Yield Over 4 62 4TonsPotato Output in Thousand Tons 15 .6 19 . 8Potato Yield in Centners per Hectare 105 82Source : unpublished data of raion administrations .

3 5

Ramensky raio n

Ramenskoye is a major suburban railway station and a fairly large industrial town . whose 85.000

residents live for the most part in multistory apartment blocks . The town's industrial profile earlier thi s

century focused on textiles, later supplemented by the aircraft and food processing industries . Ramensky

raion contains one of the largest clusters of traditional dachas, the agro-recreational estates of Muscovites .

In the 1990s more Russian nouveaux riches built their mansions in Ramensky raion than in any other raio n

of MO (loffe and Nefedova 2000, p . 100) .

Ramensky raion, cleaved by the Moscow river valley, has long been the largest producer of milk ,

potatoes, and vegetables in MO . Aside from farms, there were several well-known food processors ,

mostly located in the town of Ramenskoye . Along with some mainstream socialized farms well-

publicized in the 1970s and 1980s (e .g ., sovkhoz -Borets") supplying Moscow with fresh produce, there

were several "closed circuit" farms which did not supply the general public but were part of suc h

institutional networks as the CPSU's health care and recreation complex (Kratovo) and the R & D aircraf t

complex (Zhukovsky) . Of importance was a highly mechanized poultry farm in Kraskovo . All of thes e

are to a variable extent alive today, as is one more prominent facility. the German-owned dairy processin g

plant Ehrmann, put into operation in 2000 .

Currently there are I6 socialized farms in the raion . They are large (2,000-4,500 hectares) by th e

standards of a land-deficient suburbia and employ over 300 employees per farm . On average there are 1 1

agricultural workers per 100 ha, which translates into a fairly high labor intensity . Labor intensity may

have increased over the 1990s even as the number of personnel declined, simply because this decline wa s

by far outpaced by the reduction in livestock and the overall reduction in output (the latter halved in 1991 -

99) .

The economic situations of farms vary, but most of them fare well against the backdrop o f

Russian farming in general . For example, there is no single farm unit in the raion in which the milk yiel d

per cow is below the Russian average . In fact, in 10 farms out of 16 the average is more than 4,000 kg .

3 6

Three farms in the raion – JSC Podmoskovnoye, Konstantinovskoye, and Chulkovskoye – are among th e

largest socialized farms of Russia (Rating 2000) . They account for 40% of the raion's total agricultura l

output .

On Chulkovskoye JSC, which we visited in May 2000, the 1999 milk yield was 6,200 kg per cow ,

on a par with Western producers . The quality of milk meets the requirements of the nearby, newly opene d

Ehrmann plant . which in 2000 offered 5 rubles per liter, whereas Ramenskoye and Liuberetsy-based mil k

processors, the traditional buyers, paid only 3 .5-4 .2 rubles. Ehrmann has supplied the farm with two state -

of-the-art refrigerators to be paid off in fresh milk. Also, the emergence of this German plant has changed

the farm management's expansion plans . Only recently the development of the farm's own processin g

unit was seriously considered, but now the plan has been abandoned .

Not only are farms of the raion not being divided into smaller units, an idea contemplated b y

Russian reformers of the early 1990s who took cues from their Western advisors, but socialized farms ar e

actually getting larger . Farm managers believe there is a shortage of land at their disposal, a belief

exacerbated by urban sprawl and the ensuing administrative withdrawal of farmland . For example, the

above-mentioned JSC Podmoskovnoye, mostly specialized on vegetables and employing over 100 0

workers, was recently obliged to cede part of its land to the town of Zhukovsky . Its predicament was

resolved by merger with another farm in dire straits . Podmoskovnoye aided this failing farm with

machines and seeds, resumed cash payments to employees, accepted its 800 malnourished cows and i n

exchange got l,600 hectares in the raion's periphery . As a result of mergers like this, the number o f

socialized farms in the raion has declined from 21 to 16 in just three years (1996-99) .

All socialized farms of the raion, domestic-owned food processors and some agricultural service s

form the raion's APK (the Russian abbreviation for "agrarian-industrial complex") . This can be viewed a s

a vestige of the Soviet era, especially given that all production units are de facto independent ; that is, they

sell their produce and purchase their necessities on their own, often crossing raion boundaries . The very

survival of Ramensky APK as an administrative structure may seem puzzling. Unlike its Soviet

3 7

predecessor of the same name, it is no longer a management unit in the strict sense . It appears that its

retention is due to the personality of Konstantin Victorovich Kunitsky .

Until the mid-1980s. Kuritsky was the leader of the oblast-level APK. then was demoted unde r

Gorbachev to the raion level . but earned a good reputation in Ramenskoye, in part owing to his contacts i n

the corridors of Russian power, which he used to aid the raion's farms . Today, all that is left of the

management functions of the Soviet-style bureaucratic structure is the distribution of minuscule stat e

subsidies and mediation of farm relations with the Ramensky dairy combine, the principal buyer of locall y

produced fresh milk .' ' Interestingly enough, this combine, formerly a sizable state milk processor an d

now owned by Wimm-Bill-Dann. earns the bulk of its food-processing profits from fruit juices . and 80%

of the milk that it buys from local farms is passed to the Lianozovsky combine (belonging to the same

owner) in Moscow. Ramensky thus works as an intermediary .

Contrary to traditional claims that the so-called agrarian lobby is strong enough to be an obstacl e

to reform (an opinion aptly criticized by Stephen Wegren (2000)), Mr . Kunitsky, interviewed by us on

May 20, 2000, actually stated that this lobby, at least in MO, is decidedly weak . Its weakness, accordin g

to Kunitsky, is its inability to change the situation in which Moscow city authorities facilitate contract s

with importers and foreign-owned companies in Russia rather than with local producers . According to

Kunitsky, this neglect of local producers borders on the criminal and does not allow local productio n

potential to be tapped. If this were not the case, Kunitsky believes the production of milk in MO could b e

easily doubled within a short period of time .

The issue requires a more focused study to validate Kunitsky's claim . However . it is not only th e

sheer size of output that matters . In the 1980s, Ramensky APK did indeed produce twice as much as it

does today, so the setback of the 1990s, which halved production, could perhaps be reversed . However,

13 Characteristically, Kunitsky's office is antiquated and has no computer ; his secretary uses a typewriter . At the tim ewe visited, someone's dog lay on the floor beside the secretary's desk . This air of neglect is in contrast to that of th eadministration headquarters of economically viable production units, both farms and food processors . Barring thespecific cases of company towns, the situation was the reverse under the Soviets, as local bureaucrats' office sinvariably looked slicker and better equipped than those of production units' bosses located within these bureaucrats 'area of jurisdiction .

3 8

the costs of implementing this potential reversal and how they compare with relying on imports – in wha t

is now a more open and less administratively run economy – ought to be considered . In Ramensky raion' s

dairy farms, for example, the profit margins are at their highest when milk yields per cow are only 3 to 4

tons. Investing to increase milk yields to 5 to 6 tons cuts back on profit margins unless there are exclusiv e

buyers on hand that, like Ehrmann, are willing to pay a higher price. This shows that diminishing return s

are at work here, an indicator that the need for technological change is vastly more profound than could b e

currently undertaken without outside help .

Kasimovsky raion .

The town of Kasimov. the raion seat (36.000 residents), and a formerly vibrant merchant town

with a sizable Tatar minority and a passenger boat landing on the broad and full-flowing Oka River, wa s

progressively falling into neglect under the Soviets. Many of its streets are unpaved with piles o f

construction and other litter in the middle, and most residences are in fact rural village huts surrounded by

small fenced plots with vegetable gardens . Few architectural specimens of former merchant splendor ar e

available downtown . The vistas of the Oka valley are breathtaking, but the access to the river lack s

modern landscaping and is immensely littered .

Typical of Russian NCZ agriculture in general . Kasimovsky raion is worlds apart from Ramensky

(Table 13) . Out of 23 socialized farms, in 1999, only one had grain yields in excess of a meager 1 4

centners per hectare (ha) and only eight farms received more than 2 .000 kg of milk per cow. The

traditional specialization of the raion's agriculture has been milk and potatoes . But the concentration o f

production is higher than in Ramensky : five profitable farms account for 55% of the milk and 80% of th e

potatoes produced in the raion.

About half of the raion's socialized farms are de facto bankrupt, although only one farm ha s

officially ceased to exist in the 1990s . Although Table 13 does not contain explicit proof of agricultural

land redundancy, knowledge of Russian agriculture's technological stage and rural infrastructure prompt s

3 9

the conclusion that three workers per 100 hectares – quite sufficient to maintain productive use of lan d

somewhere in Germany or Canada – are grossly insufficient in an outlying raion of Central Russia.

At least one out of these three workers is an elderly person ; local mobility is severely curtailed b y

the condition of roads and limited number of vehicles ; and the fleet of agricultural machines has been

depleted and worn out . Additionally, producing at a loss has precluded cash payments to workers for

years . thus reinforcing their reliance on their own plots of land. which they cultivate by all means availabl e

on a socialized farm . In cases like this the borderline between a parental socialized farm and scores o f

subsidiary farms is almost completely blurred .

The leader of raion administration Vladimir Yermolavevich Lukashkin, interviewed by us on 3 0

May 2000. mentioned that the closure of chronically unprofitable socialized farms is not in the offin g

"because we cannot let the people down who have nowhere else to go ." The outward signs of profound

neglect that we were able to observe during our field trip in May 2000 are many . One of them is the

visible shrinkage of cropland : vast formerly cultivated fields overgrown with bushes, birches, and aspen

catch the eye. Some of these overgrown fields have costly drainage systems buried in them barely 20-3 0

year ago .

Another sign of neglect is hard drinking. While this is the scourge of Russia in general, there ar e

different degrees. In the town of Kasimov and around it we did not see a single adult male who would no t

be completely drunk after 5 p .m. on a weekday . Because alcoholism has mostly affected men. the three

most prominent posts in the raion's economy are held by women, a willy-nilly situation rather than on e

induced by growing popular acceptance of women as leaders. These are the director of the best socialized

farm, which still bears Lenin's name, the director of Yelat'ma dairy plant, and the owner of Krotbers, th e

biggest private business in Kasimov, which has the largest stake in the raion's sole potato-processing plant .

The Lenin farm (3,500 ha and 250 employees), the best one in the raion, seems to owe its relativ e

prosperity to its location close to the raion seat and to the management skills and personality of its boss ,

Tatyana Mikhailovna Naumova. Milk appears to be profitable on the farm – even despite the fact tha t

40

local price, 3 .20 rubles a liter, is fairly low – and milk yield per cow is 4,300 kg, totally out of line with

most. if not all, outlying raion averages. Interestingly enough, Ms . Naumova . a locally born and raised

woman. interviewed by us on 31 May 2000, though lamenting the quality of the agrarian cadre, insiste d

that the major problem is not in developing production. Rather it is finding buyers who will pay cash .

Most either pay with delay or offer barter deals unsuitable to the farm . Just as their suburban counterparts.

successful farms in the periphery often choose to expand : thus. the Lenin farm has recently leased an

additional 1,500 ha belonging to another, de facto bankrupt farm and hired part of its labor force that had

not been paid in cash for six years .

The 1990s have also seen a growing differentiation among local food processors . The

Kasimovsky meat combine, which prior to 1991 sold its produce even in Moscow . currently works at 10 %

of its capacity. It produces low quality (hardly edible, according to these authors) sausage that is forced

onto local retailers by the Kasimov town administration. These same retailers also peddle Moscow-mad e

brands which are, however, much pricier . ' Another long-time food processor, the Kasimovsky dairy

plant, is at a standstill .

New developments are all the more impressive against the backdrop of these Soviet-era ruins and

overall agrarian neglect . There are two of them, a total upstart and a suddenly successful vestige of th e

Soviet times. The total upstart is the brand-new Torbayevsky potato chips plant with Dutch and Czec h

equipment. It is located next door to the Lenin farm and uses its potatoes . The plant is controlled by a

local construction and retail fine, Krotbers ; however. Mostransgas. a Moscow-based natural gas deliverer

whose pipeline traverses Kassimovsky raion, owns 25% of the plant's shares .

The Yelat'ma dairy plant, located in the town of Yelat'ma, the second largest settlement in th e

raion, used to be one of 24 milk processors in RO and a division of the currently bankrupt Kassimovsk y

The buying power of most local residents' is low indeed . There are sundry ways to verify this on a personal visit .For example, a fairly decent quality three-course dinner with beer in one of the two best local restaurants, Taverna ,owned and operated by a local Tatar family, was priced at about 45 rubles per person, totally unthinkable not only i nMoscow but in any other reasonably well-to-do Russian community . We recently learned that Tavema,which wevisited in May 2000, was in the meantime burned to the ground by racketeers .

4 1

dairy plant . The latter, as well as 21 other dairy plants in RO. are now merely intermediaries collectin g

fresh milk from local farms and passing it on to Riazan and Moscow dairy combines . In the 1990s, the

Yelat'ma plant. however, has not only managed to survive as a genuine processor, but it has literall y

broken the bonds with the Kasimov milk plant, of which it used to be a subdivision . It has expanded from

32 to 520 employees, broadened the range of produced foods and significantly increased output .

Moreover, its corporate structure evolved into a holding conglomerate, as it devoured production unit s

both up- and downstream on the food chain : on the one hand, it incorporated a former sovkhoz ; on the

other, it opened 27 retail outlets, including a kiosk in Moscow . Finally, it swallowed its parental Kasimo v

plant .

The Yelat'ma plant buys 10% of its milk from households through private intermediaries .

However, the main supplier of fresh milk (37% of the total) to the Yelat'ma plant is the aforementione d

Lenin farm . And like the Lenin farm, the Yelat'ma plant seems to owe much of its success to the unusua l

entrepreneurial skills of its female boss . Lyubov' Nikolayevna Umnova and her handpicked team .

Ms.Umnova, also locally born and raised. is definitely one of a rare but prominent breed o f

genuinely Russian entrepreneurs who "run a gauntlet of confiscatory taxes, criminal extortion, scarc e

credit, thin services, and obtrusive bureaucracy" (Gustafson 2000 : 129) – and yet succeed . Ms. Umnova' s

spacious computerized office with modern office furniture, while entirely unremarkable by Moscow an d

Western standards, looked almost surreal against the backdrop of the ambient squalor endemic to the area .

Just 100 yards down the road in the midst of a pothole-ridden square where damp patches of dirty gray are

taking over the crumbling facades of once white municipal buildings, a shabby monument of Lenin stoo d

surrounded by cowpies. One wandering cow was beating her tail against the pedestal .

Discussion

Raw statistics, statistical inference, field observations, conventional news as well as research

media, the worldwide web, interviews, and anecdotal evidence combined to produce the above-narrate d

4 2

results . The nature of these results hardly justifies a true conclusion . Rather, it warrants an open-ended

discussion . The Russian food system is in flux . Although some trends seem well established. there is n o

sense of finality, and trends may well be overturned . We. however. see five issues that our results shed

some light on and that engage our professional attention .

The first such issue is center periphery contrasts in agricultural land use intensity and their

significant growth in MO (we expect that a similar trend has shown up in the 1990s around other majo r

Russian cities) . This issue invokes a dual conflicts :

a) between agriculture and competing forms of suburban land use ; and

b) between the inherited spatial pattern of agriculture and market conversion .

The former conflict is embodied in the fact that both the environmentally hazardous large anima l

farms and the largest share of urbanites' second dwellings gravitate to one and the same concentric zon e

from 2—60 km from the central city line . In 1998, 65% of all MO's dachas and 41% of all so-calle d

collective orchards were located in this zone (Ioffe and Nefedova 2000a . p . 96) . Mansions of the Ne w

Russians also gravitate to the same zone . In any case, should Russian suburbs continue to evolve in the

direction of their Western counterparts . thereby developing subdivisions for middle-class commuters, thi s

will collide with the inherited spatial pattern of fanning if only because the capacity of accessible an d

environmentally inviting space within this radius is fairly limited .

The reinforcement of the inherited center-periphery gradients in the 1990s also contradicts th e

changes that agriculture in advanced market economies experienced in response to progress i n

transportation . that is. the erosion and squeezing out of "suburban" farming as a result of developers '

ensuring much higher level of economic rent in suburbia compared with farmers . Even though in Russia

land turnover has so far been limited by six-year deadlock over the free-market Land Code's in the Duma ,

local regulations have provided for quite a significant withdrawal of agricultural land in the vicinity o f

Moscow in the 1990s . Just in 1991-96, the inner ring, composed of raions abutting the Moscow city lin e

and containing only 5% of the total agricultural land of MO, accounted for as much as 31% of the overal l

43

reduction (374,000 hectares = 100%) of agricultural land in the oblast (Ioffe and Nefedova 2000a . pp .

138-140) . However, an average hectare of farmland in the innermost ring produces 10 times more mea t

and 3-4 times more vegetables than in the remaining rings combined. Given such a core-periphery

gradient in agricultural land use intensity, the expediency of land transfers from "suburban" agricultur e

may be called into question . At a time when agriculture is languishing outside the environs of large cities ,

intensive suburban farming grows in importance . especially amid popular anxiety over the alleged loss o f

national food security . Now that the bastion of communist resistance to free land sales has begun to cav e

in, 15 the conflict between the sectoral inexpediency of land transfers (as viewed from the perspective o f

agriculture as an economic sector and from the perspective of food security) and its regional expedienc y

may come to a head.

The second issue worth discussing is changes in the relative significance of agricultura l

productivity factors over the nineties as evidenced by regression analysis . The difference between M O

and RO in this regard – low contribution of soil quality in conditioning gross output level as well as mil k

yields per cow in MO – is in line with the azonal nature of suburban farming . In MO. much of the

agricultural output is produced by animal husbandry, which uses animal feed in large measure importe d

from other Russian regions and from abroad . In RO, agriculture is more of an indigenous phenomenon i n

every respect .

Theoretically speaking, economic crisis can affect the relative performance of the two productivity

factors in the following two ways, one of which (a) assumes mutual substitution of production inputs an d

the other (b) invokes system disorganization .

15 Unable to push a reform Land Code through the Russian Duma since 1994, the reform factions have recently (lat eJanuary 2001) succeeded in outmaneuvering the Communist and agrarian factions by leaving the infamous Land Cod ein peace for the time being and pushing through necessary changes in Chapter I7 of the Russian Civil Code instead .Accepted by a slim margin of four votes, with Communists leaving the Duma premises in protest (Sergeyev an dSmetanina 2001), these changes could now be used to sanction non-agricultural land sales without the okay of loca ladministrations . This may bode well for the eventual acceptance of the pro-reform ruling vis-a-vis agricultural land sas well, if only because Vladimir Putin seems to be in favor of this, and the Duma is willing to grant his wishes as i twas not his predecessor's.

44

a) If productive use of fixed assets – machinery and farm buildings – and the system's externa l

supports (e .g . animal feed imports and/or fertilizer supply) are cut back drastically, soi l

fertility as a predictor of economic outcome grows in importance because variance in th e

natural setting, of which soil quality is one aspect, "is always there : "

b) As long as system disorganization grows outward from the major decision-making center, the

significance of distance as a productivity factor naturally increases . This line of reasonin g

assumes that command and oversight accorded by personal contact continue to be th e

important regulators in the economic system.

While both outcomes are in fact consistent with crisis as shown in our regression results, it is clea r

that in MO, the latter outcome (b) has proved incomparably more important which shows up in th e

changing geography of the gross agricultural output and grain yields . If anything, extracting benefits from

the physical closeness to the administrative center is a system behavior not indicative of marke t

conversion. In RO soil fertility has always been a meaningful predictor of productivity and no significan t

changes in this regard have occurred in the 1990s .

The third issue, especially accentuated by our informal field observations and anecdotal evidence .

is the quality of human capital available for agriculture . So far, only the quantity aspect of labor supply –

rural demographics – has been researched as an issue important in and of itself and as a constraint o f

agricultural progress in Russia (see, for example, Ioffe and Nefedova 1997, Chapter 5, Wegren et a l

1997) . For whatever reasons, the quality aspect has not been much publicized .

This aspect, however, is no less significant . I n many Russian areas socialized farms have been no t

so much production units as vehicles of collective survival : survival of the weakest . In outlying

agricultural areas, various signs of human degradation are too much "in your face" not to notice . Some

were related above in conjunction with out field trip to Kasimov . They are also in line with our previous

observations in other publications.

4 5

As early as the mid-1970s one of the authors discovered that one-sixth of local children in

surveyed rural Soviets of the Uglich raion. Yaroslavl Oblast, were mentally handicapped, a legacy o f

chronic alcoholism of their parents . In 1985 . in Nekouz raion of the same oblast. we visited the "First of

May Farm . ' – later described in Ioffe and Nefedova 1997, pp .241-42 – where, at the time of our arrival ,

cows had not been milked for three days . Three days earlier dairymaids received their long-delayed pay

and since that time they had been drunk . These malnourished and mistreated cows yielded no more than

1000 kg a year, while grain yields on the farm were only 5-9 centners per ha .

In the summer of 2000, villagers in Pskov Oblast repeatedly pulled down electric wires to sel l

them as non-ferrous scrap metal to illicit buyers . As a result. dozens of rural villages in the oblast stayed

without electricity for weeks . According to Governor Mikhailov of Pskov . 800 (!) people perished

dismantling these wires between April and June 2000 . This is more than twice as many as those killed in

combat in Chechnya during the same time (Ivanov 2000) . And this is just in one oblast .

The above may seem to be disconnected cases not worthy of generalizations : but we tend to think

that they are, as we encountered all too many instances of them over 25 years of field trips in rural Russia .

The bottom line is that these observations describe a type of social environment not conducive to an y

meaningful reform whatsoever . Therefore, it seems to us that all the other obstacles in the way of agrarian

reform in Russia (e .g ., legal hurdles or price differentials) pale beside the quality of human capital left i n

the countryside. We see this as the accumulated result of a long-lasting self-selection that accompanied

rural out-migration in Russia for decades, in which the most enterprising, skillful, and independent-minde d

left for the city, while the most passive, resigned, and prone to heavy drinking stayed . T his has been

especially the case in the Non-Chernozem periphery .

The fourth issue that merits discussion is the role of food processors in farms ' restoration and

survival . As shown above, successful food processors contract with or buy up farms to the benefit of bot h

sides involved . It seems that in today's Russia vertical cooperation in the food chain is one of the fe w

46

active vehicles for agricultural development . It is viewed as such by the top government officials 16 and

corroborated by other researchers (e.g., Gustafson 2000, p . 52) .

Where a bottom-up pattern of agricultural development – that is, one starting out from a farm –

fails primarily because of limitations inherent in human capital . top-down strategies naturally fill the

void. There are, however, different top-down strategies, and Soviet-style order-and-decree management i s

certainly inferior to vertical cooperation, if only because the latter is essentially market-driven conduciv e

to technological change, and does not lay claim on state funds .

This, however, has a flip side : namely, it fosters spatially selective development . For years and,

indeed decades, this selectivity advanced on its own . like grass through asphalt, in spite of income levelin g

policies of the government that subsidized economically weak farms and thus prolonged their existenc e

and held back progressive establishments . Today the alternative top-down strategy is conducted by marke t

players . It no longer levels the playing field . Rather it explicitly promotes uneven growth .

Two outcomes of this process are worth considering . The first is social uncertainty : what, i f

anything, will be done with the myriad of decaying socialized farms? The second is the spatial pattern of

uneven development in the agricultural sector .

The prospects of unprofitable farms warrant separate research . It seems as if no-one in today' s

Russia has figured out how to deal with them, although there is a growing awareness that tackling thi s

problem on an ad hoc basis may not be the best way . The problem has national scope and a strong

welfare component to it . Therefore, ultimately, it is the prerogative of the federal government to deal with

it . Deficient public funds and priority ranking have precluded this from happening so far . The problem i s

not adequately reflected in the Russian media, whose own market conversion has provided an urban bia s

in the national media coverage today that is incomparably more pronounced than under the Soviets . Large

16According to Alexey Gordeyev, Russia's current minister of agriculture : "The development of large agro-industrial

holding companies is the way to advance Russian countryside . The government has recognized that the futur ebelongs to them" (Popova 2000) .

4 7

city dwellers and businesses who "pay the piper" in the first place . order a "tune" decidedly more urban

than Russia itself.

In the absence of a funded national strategy, the de facto bankrupt farms die each in their own

way. Currently there are six major ways : a) incorporation by food processors (a rare scenario, as

processors prefer to buy up relatively strong farms), b) incorporation by a stronger farm (a mor e

widespread happening, but also limited. because of the low ratio of strong to weak farms) . c) the leasing

out or sale land (so far a limited outcome, mostly confined to the environs of urban clusters where

moribund farms are relatively rare), d) self-partition into privately owned farm units (an outcome wit h

fairly limited spread for the same reasons that apply to private farm movement in general – see Ioffe an d

Nefedova 1997), e) discontinuation of crop farming and transformation into cooperatives producing hay ,

gathering mushrooms and wild berries (an extremely promising and fitting type of change in outlyin g

segments of Russian regions, the actual spread of which is unknown to us), and f) leaving everything "a s

is" and languishing, benefiting slightly from a nominal farm status until able-bodied people die out or ge t

evacuated by urban relatives (this way seems to be most widespread) .

The total land area occupied by dying farms is enormous . An European Russia alone it probabl y

reaches 50 million hectares . This includes 30 million hectares of former cropland (Koltunova 2001), an d

that is most certainly a gross underestimate . Incidentally, even m MO. the actual sown area or cropland i s

15% short of the official size of arable land . while in RO it is 32% (!) short (Sel'skoye, 2001, p . 218) .

Although fallow land makes up part of this difference, it is most probably not a large part because cro p

rotation schemes practiced today rarely involve fallowing.

The spatial pattern of land abandonment resulting from the reinforced selectivity of far m

development is in line with the location of failing farms. This is the fifth and the last issue that arises in

conjunction with the results reported in the main body of this article . Because a disproportionate numbe r

of failing farms are located in outlying areas of characteristically mono-centric Russian regions, much o f

the abandoned agricultural land is not put to any alternative use, and most abandoned rural residences are

48

also located in such areas . This location pattern contributes to Russia's physical fragmentation, the tren d

analyzed in Ioffe et al (2001) .

According to Boris Rodoman, a keen observer of Russian life, the polarization of Russian space

has deepened over the 1990s . He divides this space into three segments : capital cities and their immediat e

environs; provinces (all the remaining land within 2 km from railway lines, highways, and paved street s

with year-round traffic) ; and the "boondocks ." The last category encompasses 10 million squar e

kilometers or about two-thirds of Russia .

Developments within this last segment are the antithesis of the modernization that has affected

capitals and their surroundings . Pervasive signs of regress. according to Rodoman, include abandoned

villages, spontaneous reforestation of previously cultivated fields, rapacious cutting down of forests, lac k

of social services, and the profound decay of the communication infrastructure – in contrast with th e

communication revolution in and around the capital cities, with their widening access to the worldwid e

web and cellular phones. Rodoman writes :

The spread of the internet and mobile phones, does not preclude but only sets off aparadoxical situation : in most of Russia, the population is being alienated fro mtransport and communication because of rising prices and lowering incomes . Anordinary telephone is still off-limits to rank-and-file villagers, and the radio -broadcasting network dies away while postmen no longer reach outlying villages, an dmore and more people cannot buy a TV set or repair an old one . . . . One way oranother most Russians are plugged into the "global civilization" because they kee pclose to roads. But the minority that do not are cut off as is the bulk of the land .(Rodoman 2000, p . 35) .

This spatial polarization is inherently linked with social stratification . Those services that are of

no use to the elite disappear. For example, in many instances a peripheral settlement is unplugged from a

cable telephone network precisely at the moment that local bosses acquire cellular phones . "Owners o f

bio-toilets, air conditioners, and buyers of bottled drinking water are less interested in mass sewag e

treatment, and in quality of piped water and street air . The clean and lively space equipped with mode m

conveniences lessens, shrinks around the elite, and the remaining space is driven into dirt and dark ." (Ibid . )

49

For those who frequent only the large cities of Russia the above image may seem surreal .

However, it is not. Russia's space is being progressively torn apart and pockets of vibrant socio -

economic life are like oases in a social desert or islands in a sea of stagnation and decay . Efficiency was

sacrificed on the altar of equity in Russia for such a long time that today the country seems to engage i n

the opposite extreme . Whether this is a necessary stage in Russia's development is debatable . We tend to

think that it is. and it ought to be recognized as such. so its implications will not surprise us.

5 0

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