Pages:     | 1 |   ...   | 10 | 11 || 13 | 14 |   ...   | 21 |

The reduction of the import due to thefinancial crisis and the growth of prices on the imported food resulted in thereduction of the import share in the food consumption. thus, according to theexpert estimate of the State Committee on statistics, in the fourth quarter of1998, the share of the food import in the retail trade dropped down to 19%,while before the crisis it had been 36%.

The stabilization of the currency exchangerate in October and November 1998 resulted in the growth of the import ofnumerous foods.

Fig. 2.18

Alteration of import of certain agrarianproduce and food in October and November compared withSeptember1998

Source: RF State Committee onstatistics

The supplies of the butter, poultry meat,sugar, and raw sugar grew already in October1998. In November, the growth ofimport of the meat and vegetable oil was observed. The largest inflow of thefood supplies was from the CIS countries. In October1998, the CIS countrieswere the main suppliers of the sugar and butter.

Agrarian produce and food policy in1998

The agrarian produce and food policy ofRussia of 1998 formed to a great extent under the effect of the factorsexternal for the sector. First of all, this was the replacement of the Cabinetof Ministers, having resulted in the replacement of the agrarian and foodcomplex management. At the replacement of the Cabinet of V.Chernomyrdin, theMinister of agriculture and food was replaced as well; this entailed thereplacement of a large part of the management of the Ministry of agricultureand food. At the same period, the double-stage system, "VicePrime-Minister‑Minister", of the agrarian and food complex management was annulled, as well.In August, as soon as the new Minister of agriculture and food only declaredthe strategic goals of his program, the financial and economic crisis brokeout, having made an important part of this program obsolete. The politicalcrisis that followed the financial one resulted in the replacement of theCabinet of Ministers and restoration of the double-stage system of the agrarianand food complex management.

The second condition determining the policywas the significant, much more sharp than in the preceding years, reduction ofthe budget allotments to the agrarian and food sector.

The absence of the financing on the federallevel resulted in that, for the first time during the years of the reforms, theshare of the regional budgets in the budget financing of the agrarian and foodcomplex grew so strongly: up to 80% in the aggregate expenditures on theagrarian and food complex in the consolidated budget of Russia.

Due to all the above, the main share of theyear was spent on forming any strategy for the agrarian and food complex; forthe other hand, the budget limitations made the possible selection of themeasures in the agrarian and food policy extremely sparse.

The third important factor conditioning thestate policy in the agrarian and food sector was the political inertia thatpredetermined the safeguard of many programs adopted during the previous years.Thus, the Fund of privileged crediting of the agrarian and food complexcontinued to exist; attempts were made to quote the so-called agrarian bonds ofthe subjects of Federation; the programs of subsidies to the agrarian economycontinued nominally (because the real financial filling was practicallyabsent). In the other words, neither the absence of the real budget financingon the federal level, nor the impending economic crisis brought to the urgentrevision of the agrarian and food policy and to the concentration of theefforts at the most important issues of the sector.

At last, beginning from August 1998, theagrarian and food policy has been determined, first of all, by the conditionsimposed by the financial and economic crisis that had made the tactical issuesmore important than the strategic plans of development of the sector.Practically all the 89 subjects of Federation did not wish to wait the solutionof the crisis at the political level and, at the end of August‑ beginning of September 1998 madethe attempts to protect their food markets against the crisis. These attemptswere, mostly, the attempts to control, this or that way, the retail prices andbuild the trade barriers between regions. The federal power became the hostageof these solutions because to the moment when it became capable to undertakeany political steps, everything had been solved at the regional level.Everything left to the Federal Government was the sphere of the external tradeand tax control, and the Government used this.

As a result of all the above factors, theagrarian and food policy of 1998 is a quite fragmentary picture and does notreflect any integral strategic line of the Federal Government or regionalpowers. However, the cutback of the federal power role in forming this policyis quite obvious together with the further, but much more expressed, shift ofthe center of gravity in the agrarian and food policy to the subjects ofFederation.

Regulation of agrarian produce and foodmarkets

The main programs of support of theagrarian and food complex are traditionally envisioned by the annual integratedgovernment act distributing by directions the money allotted in the federalbudget for this sector of economy. In the middle of April 1998, the Governmentsigned the Act#392 "On Economic Conditions of Functioning of Agrarian andFood Complex in 1998".

This Act envisioned no new measures fromthe viewpoint of regulation of the agrarian markets. Just as before, itproposed to set up the "minimal guaranteed purchase prices" on the food to bepurchased to the federal funds. Just as before, these prices had nothing incommon with the mechanisms of the interventions with which such prices areusually connected; they were supposed to be the calculation parameters forcrediting the state contractors for the purchases in the statefunds.

In practice, the RF Ministry of economystrongly objected to fixing the guaranteed prices as contradicting theprinciples of functioning of the market, and despite the negative reaction ofthe agrarian group of the State Duma, no such prices were fixed for1998.

The Law "On State Regulation of Agrarianand Food Complex" adopted by the Federal Assembly of Russia in 1997 envisionedthe governmental purchase and commodities interventions in the agrarianmarkets. In order to put into life the clauses of this Law, the GovernmentAct#392 envisioned the new, compared with the previous years, measure, thepurchase interventions. However, the mechanism of such interventions was notstipulated. As the Act speaks of the purchase quotas at the purchaseinterventions, no full-scale interventions to support the agrarian produceprices at the guaranteed level were proposed; instead, the Act envisioned theright of the producers to sell their produce to the state at the fixed("guaranteed") prices within the limits of the certain quotas. The greatestdoubt was incited by the decision of the Government to make such purchases ofthe grain and oil-bearing crops, i.e., the ones with the highest and relativelysteady profitability. However, the absence of the real mechanism ofinterventions and, which is the main thing, the budget crisis felt already atthe beginning of 1998did not let to take this clause of the Government programseriously. As a result, no intervention transactions were made in the market ofthe agrarian produce and food.

The second step of the Government in thefield of regulation of the agrarian markets ensuing from the Law "On StateRegulation of Agrarian and Food Complex" was the drafting of the document onraising the parity of the prices on the agrarian produce.

The main idea of the document consists inintroducing the certain goal prices to be calculated after the basis prices of1990 and to be used to validate the level of subsidies for the agrarianproduce.

The return to the parity prices of 1990means the return to the pricing proportions of the Soviet time. It is knownthat the policy of support of the agrarian economy by subsidizing the agrarianeconomy itself and the population for the food had led to the proportionsbetween the prices on the means of production and the prices on the agrarianproduce mush more preferential for the agrarian sector than in the whole world.The share of the agrarian production in the end prices on the food was alsoartificially overestimated (due to the mechanism of subsidies, this shareexceeded 100% for certain foods). The liberalization of the prices resulted inthe violent mutation of the relative prices in the agrarian and food complex.As soon as these relative prices leveled with the world proportions, thedynamic of the prices in the three spheres became parallel (seeFig.2.19).

Fig. 2.19

Annual indexes of prices on agrarianproduce, means of production for agrarian economy, and retail prices onfood

Source: Russian State Committee onstatistics (Goskomstat)

The policy of the cheap resources for theagrarian economy led to their extremely wasteful use. It is known that up to40% of the mineral fertilizers purchased by the farms were lost. Almost all theannually manufactured in Russia tractors (sometimes, even more than 100% of themanufacture: due to the stocks) went to replenish their loss. The fuelconsumption was exuberant. The transition to the realistic price proportions(the calculations show that the relative prices in the Russian agrarian economyare more or less in accordance with the world level) resulted in the morecost-saving use of the resources: the purchased fertilizers are applied at100%, the equipment is used only for its purpose and in the much more rationalway (for already several years, it is hard to see the machines abandoned in thefields that had been quite normal in the Soviet times), the decline of theagrarian production is much lesser than the decline of use of the main agrarianproduction resources (see Fig.2.20 and 2.21). All this shows the rationalizeduse of the resources. Meanwhile, the Ministry of agriculture and food proposesto get back to the 1990 situation.

Fig. 2.20

Application of mineral fertilizers, % ofsupply to agrarian economy

* - 1980-1987: USSR in whole

Source: Russian State Committee onstatistics (Goskomstat) and RF Ministry of agriculture and food

Fig. 2.21

Dynamic of change of gross agrarian produce(accumulating after 1991) and consumption of automobile gasoline and dieselfuel per hectare of land under crop

Source: Russian State Committee onstatistics (Goskomstat) and RF Ministry of agriculture and food

The Federal Government stopped regulatingthe food markets in Fall 1993 when the federal subsidies for bread were lifted.The governmental program for 1998 did not suppose such regulation.

The main rationale of the Ministry ofagriculture and food for selecting 1990 as the basis year for the calculationsof the parity prices consisted in that that year was the one of the highestprofitability in the agrarian economy and minimal number of the profitlesshusbandries. However, the Ministry failed to take into account that in theconditions of the prices fixed by the state, the profitability is theexclusively calculating category. Had, in 1990, in the system of the doubleprices on the agrarian produce and double tariff on the electric energy, theproportions been more preferential for the agrarian economy, had the purchaseprices been raised higher (and they had been raised just before), theprofitability could have reached not 37%, but, say, 50%. Under the conditionsof the central plan economy, the profitability of the agrarian production wasdetermined, mainly, by the possibilities of the budget and the force of theagrarian lobbying.

Fig. 2.22

Ratio of indexes of prices on food togeneral index of consumer prices in July and August

Source: Russian State Committee onstatistics (Goskomstat)

The Government of S.Kirienko, guided bythe mainly fiscal purposes, lifted, in July1998, the privilege 10% rate of theVAT on most foods. With all this, the growth of the VAT rate did not affect theprices of the food. Fig.2.22 shows the ratio of indexes of prices on food togeneral index of consumer prices in July and August of 1996 to 1998. The Figureshows that after lifting the privilege VAT for an important group of foods, thefood prices were, in whole, growing slower than the average consumer prices(the comparison with the two previous years allows to eliminate the factor ofthe seasonal lowering of prices.

After the crisis, the list of the goods towhich the privilege 10% rate of the VAT was applied was expanded again. Inaddition to the foods fixed in August1998, it was supplemented with the meatand meat products, eggs, vegetable oil, margarine, sugar, cereals, macaroni,fish and sea products, vegetables, and potatoes. This measure is of temporarycharacter and will stay effective till 1June1998.

Thus, by virtue of the strict budgetlimitations, the state policy in the field of regulation of the agrarian andfood markets at the federal level had been forcedly liberal. With the beginningof the financial and economic crisis, the situation sharply changed: first theregional, then the federal power bodies made the attempts to regulate theagrarian and food markets in the administrative manner. These measures will bediscussed in more detail below.

Policy of subsidies

The Federal Government has practicallymoved away from subsidizing the agrarian and food complex: while in theprevious years of the reforms the share of the federal budget had been aboutone third of the aggregate budget financing of the agrarian and food complex,in the first half of 1998, this share dropped down to 19%.

Pages:     | 1 |   ...   | 10 | 11 || 13 | 14 |   ...   | 21 |

2011 www.dissers.ru -

, .
, , , , 1-2 .