Russia's croplands are being irrigated with the tears of farmers

14.03.2011 — Analysis

Fewer grains were planted in the Sverdlovsk region in 2010. Less farmland was sown with other crops as well, and the harvest of potatoes and vegetables decreased. Officials in the region blame the agricultural problems on the weather. And it's true that Russia experienced record-breaking heat last year. But farmers have convinced this columnist for "RusBusinessNews" that it is an adverse business climate that is at fault, not Mother Nature. The government only claims to support farming - the truth is the laws have little effect in the countryside, and the land is being used in the interests of organized crime.

Last year, 47,000 fewer hectares were sown with pulses in the Central Urals. The overall grain harvest decreased by almost 20% - 12% fewer vegetables and 36% fewer potatoes. Of course, the arid summer of 2010 was much to blame, but farmers hold government officials more accountable than nature for the poor yield.

At an expanded regional government meeting, Andrei Savchenko, the chairman of the Farm Association of the Sverdlovsk region, cited several reasons hindering the growth of agriculture: corruption, arbitrary actions taken by officials, high inflation, and the lack of economic incentives for business. He claims that farmers are unable to afford agricultural equipment and that the price of electricity, fuels, and lubricants has risen 65-80% in the last year.

But there is another factor that is even more significant - farmers are operating in a chaotic environment, which bears little resemblance to a market economy. Agricultural producers constantly find themselves in limbo, since Russia lacks a pricing policy, an established market infrastructure, and functioning, reliable industrial relations. As a result, Mr. Savchenko claims, farmers do not know what to produce, what to do with their products, and most important, are unable to predict the prices of agricultural commodities.

Igor Kovpak, the owner of the Kirovsky trade network, notes that market competition has not yet taken hold in agriculture, and thus the prices of products rise without real justification. For example, the price of potatoes went up 40% in December, although taxes and utility costs didn't rise until after New Year. According to Mr. Savchenko, the cost of fuel does not significantly affect the price of commodities. Taxes and wages make up as much as 60% of farming expenses, and another 12% goes for utilities. Thus, potatoes should not have gone up more than a ruble or two, but in fact their price increased by 10 rubles. Igor Kovpak believes that when things like this happen, it is the government's responsibility to reconcile the interests of all the market players, but officials are not doing that very well.

Businessmen claim that the Sverdlovsk region has approved an unrealistic rate of taxation on land. It is impossible to understand the logic of officials who assign the same assessed value to land parcels of completely different quality. It seems like local officials were driven only by a desire to extract as much revenue as possible. And the situation is only getting worse - in 2011, municipalities imposed the maximum land payment rates, and another tax increase is expected in 2012, due to the approval of new rates on the value of inventoried land. Obviously, the business community is expecting a sharp jump in land payments.

Responding to the protests of business owners, Aleksandr Misharin, the governor of the Sverdlovsk region, agreed that clear rules are needed, particularly regarding the allocation of land. He believes that everyone who wants to run a farm should have the opportunity to do so, but he also pointed out that in some areas only a quarter of the arable land is being cultivated. Businessmen told the governor that if the authorities want to develop the economy, they should pay more attention to those who create jobs, pay taxes, and fill the government's coffers - in other words, to them.

Russian farmers do not consider themselves to be stewards of the land, and officials, with or without cause, encourage this attitude. Andrei Savchenko claims that the Russian Land Code passed in the first decade of the 21st century failed to clarify the legal relationship between farmers and the government. For example, the head of the Revda urban district notified one of the local farmers that the municipality was planning to sell the irrigation system that ran two meters underneath the land the man was leasing. Neither the land nor, for that matter, the irrigation system belonged to the municipality, but that did not stop them from digging up the land plot from one end to the other. Neither the courts nor the Prosecutor's office defended the farmer's rights.

Andrei Savchenko believes that this kind of lawlessness does nothing to enhance the government's credibility. And he has no doubt that the fly-by-night firm, that dug up similar irrigation systems in three other areas of the Sverdlovsk region, has powerful protectors. They aren't even frightened by Russian President Dmitry Medvedev's emotional suggestion to "chop off the hands" of those who sell irrigation systems that were installed back in Soviet days. "The country's leaders say all the right things, but it is the local officials and law enforcement who run the show in the provinces, and they are quite chummy with one another", - notes Andrei Savchenko. And one shouldn't expect record harvests from Russian farmers under those conditions.

Vladimir Terletsky