The idea of such a law was cherished by the agrarian community from the very beginning of 90s and initially materialized in the Law “On state regulation of agro-industrial production” (No. 100-FL of July 14, 1997 effective till January 1, 2005). But then such a law could not become and actually had not become a real regulator of state agricultural policies in the country, the latter being carried out in an ad hoc manner, i.e.
by prompt response to the rapidly changing situation. Under these conditions the establishing of mediumterm farm regulation mechanism was not viable. Besides, agrifood sector managers of all ranks were not ready to accept and apply market-based regulation methods preferring administrative ones that in the new situation worked poorly. As a result the law “On state regulation of agro-industrial production” was rather a sort of manual on potential state policy methods in the agrifood sector and actually had no legal force.
The start of recuperative growth in the domestic agrifood sector after 1999 necessitated legal regulation of agrifood policies. By this time a rather strong agribusiness sector emerged in the country that was interested in and able to lobby for adoption of such legislation, market-consistent agrifood policy tools formed on both the federal and regional levels. Various teams (in the State Duma, the government, scientific institutions) started elaborating the draft law.
It should be also noted that similar legislation efficiently works in almost all developed countries. The most illustrative example of such a law is the so-called US Farm Bill adopted each 5-7 years starting from the 30s that details the US agricultural policies in the medium run.
In the beginning of 2000s the consistency of medium-term farm policies also became an urgent problem in Russia. Growth in the sector after the 1998 crisis, the involvement of large investors in agriculture and affiliated sectors necessitated predictability of state interventions on agricultural and food markets within the investment terms – at least 3-5 years. So far agricultural policies based on annual budget laws and annual government resolutions on support to agriculture. Thus the first and principal objective of the new law was the extension of state policy planning term in the sector.
To succeed, agribusiness needs transparent policies and a working feedback mechanism when nonefficient regulation tools are revised or abolished depending on their application results. Such policies also require legally established participation of producer associations in the law-making process.
Theoretically agriculture is considered to be one of the least monopolized sectors. However, it is affected by information asymmetry: farm producers have much worse access to market information than their counterparts – input suppliers and output buyers. The world practice offers a solution to this problem: antimonopoly policy in agriculture is carried out by creating state (or state-supported) system of equally accessible and comprehensive information. The new law was to settle this problem as well.
One would think that given the ongoing budget reform and the transfer to 3-year-term budget planning the idea of agricultural law embracing 3-5 years should have got the most vigorous support from the Federal Ministry of Finance. But the actual collision when passing the law was the confrontation of the Ministry of Agriculture and the Ministry for Economic Development and Trade with the Ministry of Finance that was flatly against adopting the law with definite budget parameters of state agrifood policies for 3-5 years. The outcome of this long confrontation was a compromise: instead of a law (or two laws) setting parameters of state policies in the medium run, a framework law was adopted envisaging State program for 5-year term with detailed outlining of tools and scale of agrifood sector financing. In the current situation the passing of the Law “On agricultural development” is surely a progress fostering development of the domestic agrifood sector.
What are the novelties of the just-adopted law First, an attempt is made to introduce a single definition of agricultural producer – a kind of “farmer” definition in developed countries. It must be confessed that the attempt has brilliantly failed since instead of giving a single definition, the law duplicates three definitions established by previous legislative acts: there will still be corporate farms, individual private farms and household farms in the country whose definitions base on different criteria. However, the presence of respective clause in the law leaves hope that when the society matures for a single definition, there will be a place in legislation where this new definition can be quite easily (from the law-making point of view) inserted.
The new law introduces the definition of State program that is fully consistent with the concept of resultoriented budgeting. The Program is to set priority targets for agrifood sector development in the medium (5year-long) term. These targets involve designation of specific tasks to be carried out through respective subprograms. Sub-program is a set of government regulation tools in the sector. Each sub-program specifies goals and, respectively, indicators of their achievement, mechanisms of state regulation and the amount of funds to be allocated from the federal budget in each year of the program’s implementation. In principle, State program of this kind should provide a stable basis for development in the agrifood sector, make its investment climate more attractive and serve as a guide for agribusiness.
According to this law, when working out agrifood policy decisions the government must (!) involve producer unions and associations concerned. It’s a remarkable step forward not only in elaborating of realistic and balanced agrifood policies but also in forming of civil society in the country. Though, the law requires such unions and associations to produce “over two thirds of the total output of selected agricultural and food products and materials on the territory of Russian Federation”. So far, there is hardly any union in the country conforming to this requirement. On the other hand, the prospects for real participation in agrifood policy shaping may encourage producers to form real associations widely representing the sector and having more democratic (as compared with the existing ones) operating rules.
According to the law, State program is the basic document establishing agrifood policies for 5 years. Its implementation is the responsibility of RF Ministry of Agriculture that has to make annual reports not on the performance of agrifood sector in general (which was the case so far) but on the implementation of specific sub-programs within the State program, i.e. on the results of its work. The law envisages preparation and promulgation of an annual National report of the Ministry of Agriculture. Moreover, a year before the end of State program an expert commission is formed including representatives of agrifood sector, independent analysts and government officials (their share is limited to one third of the total number of commission members in order to make the assessment of government’s activities under the State program really extramural and independent). The task of this expert commission is to evaluate the results of State program’s implementation, to estimate the efficiency of designated tools and to decide what has to be preserved, what has to be adjusted and what – to be abandoned. The commission’s conclusions have to be promulgated but they are only recommendatory for the government – a useful input for working out a next State program. This is the so-called feedback. Presently many tools of agrifood sector’s state regulation continue to be applied just due to inertia and lack of information on their efficiency. The expert estimation of Program’s performance is to improve the situation.
Altogether the described measures make the procedure of shaping agrifood policies in the country more transparent, democratic and quite consistent. No doubt, it will actually be such if agrifood market operators wish and are able to participate therein and do not keep aloof.
For the first time the law established the list of information essential for agrifood markets and the regularity of its publishing that the government has to observe. This information is to be placed on the website of the Ministry of Agriculture ensuring equal access for all the parties concerned (presumably a farm producer having no access to Internet does not need the up-to-date market information badly. It’s worth considering though how to provide all producers with such access but it’s another direction of farm policies). So far, the regularity of publishing some data established by the law does not fully meet market requirements (i.e. quarterly price information has little commercial importance). But one should understand that the system still needs some tuning and initially it’s better to make smaller but attainable commitments than to promise unattainable things. Later on this part of the law will be amended and updated as the information service improves.
One more important aspect of the adopted law is the ultimately accepted postulate that rural social development is a component part of domestic agricultural policies. Despite being commonly accepted in the world, it was actively debated in the course of administrative reform in Russia just several years ago.
The law inherited a lot from the previous law “On state regulation of the agrifood sector”. Its text largely consists of description of possible government regulation tools; some articles depict mechanisms of specific sub-programs (e.g. support of credit, insurance, interventions). These articles a priori have no legal implications: it’s absolutely impossible to answer one essential question – the state must or just can carry out these measures In case it must but funds thereon are not allocated in the federal budget approved by the legislative assembly, who is to blame Therefore we find that a large part of the adopted law should be regarded as “white noise”, a tribute to legal immaturity of the country’s agrarian establishment. At least, there won’t be any harm from these provisions.
The State program for 2008-2012 should be worked out by April 2007; otherwise all the envisaged measures won’t be included in the budget for 2008 and 2008-2010. The program should not be too ambitious, i.e.
attempt to fully revise the effective agricultural policies. To our mind, the complex arrangement and minor correction of the currently applied policy tools on the federal level can be a good start for the new system of agrifood sector regulation in Russia.
The Characteristic Features of the Development of Special Economic Zones in the Russian Federation On 18 January 2007, at the session of the Government of the Russian Federation the resolution to create seven tourism and recreational zones in the country’s territory was passed. From the point of view of the Ministry, the most attractive to tourists are the following regions: the Republics of Buryatia and Altai, Irkutsk and Kaliningrad Oblasts, the Altai, Krasnodar and Stavropol Krais. Apparently, this event symbolizes the start of the active period of the state support for tourist industry, which is to become one of the driving forces of regional development, and later the development of the Russian economy as a whole.
The amendments to the Federal Law from 22 July 2005, No. 116-ÔÇ on Special Economic Zones in the Russian Federation, which came into effect in July 2006, added to existing types of industrial and manufacturing zones and technical and innovation zones one more type of tourism and recreational zones. The main reason for their establishment is the aspiration of the government to speed up tourism industry, sanatorium and resort sphere development rates. As a tool to reach this goal the mechanism of public private partnership was chosen. This step is fully logical and economically justified because of a number of reasons.
Firstly, the annual increase in scales and number of directions of the world tourism rouses more and more interest for the search of effective ways of this industry development in Russia. Secondly, despite the positive dynamics of development, the sphere of tourism and recreation has not become a highly profitable industry and an appreciable source of the GDP growth so far. According to the estimation of the Ministry of the Economy Development and Trade of the Russian Federation, at the moment its share in the country’s GDP does not exceed 1.5%, whereas in the European countries the same index reaches 5%. Third, despite the observed over the past years improvement of the country’s tourist appeal and the increase in entry tourism, the main reason hindering the further speed-up of industry’s growth rates in the environment of still high recreation and sanatorium and health resorts potential of Russia is indeed the lack of investments for modern tourism infrastructure construction to meet the growing requirements of Russian citizens and the foreigners to the quality and availability of provided service Thereupon the development rates of tourism industry and the economy of regions are in many respects predetermined by the efficiency of state regulation and willingness to give active assistance to business, also by means of budget funds investment in the development of engineering, transport and social infrastructure of chosen tourism and recreational zones, for which, according to the preliminary calculations, RUR 44.billions are required. It is planned to distribute the Federal budget funds among the zones in the following way: to tourism and recreational zone in the Krasnodarsk Krai— RUR 12.9 bln., in the Republic of Buryatia — RUR 10 bln., in the Altai Krai – RUR 6.9 bln., in the Republic of Altai — RUR 4.8 bln., in Irkutsk Oblast — RUR 2.56 bln., in the Stavropol Krai — RUR 2.5 bln., and, finally, in Kaliningrad Oblast –RUR 1.5 bln.. In all approximately RUR 325.2 bln. are designed to be obtained for the development of the tourism activity in these regions.
It is expected, that by these measures the flow of tourists into the country will have been trebled by 2016, and 86 thousand extra workplaces will be created by 2026 in tourism and recreational zones.