In early March the President of the Russian Federation signed the decree “On realization of the citizens’ constitutional rights for land." The Decree has been long awaited. The point is that after the re-organization of the collective farms and state farms in 1992/93 quite a controversial situation set up in the land relations of the agrarian sector, which was a consequence of their incomplete reforming. The state transferred the land to the collectives of the agricultural enterprises, into their collective ownership thus putting an end to the state's absolute monopoly over land. In 1993 the President by his decree that at the moment had the status of a law, made legal the free circulation of the land plots in agriculture with no approval on behalf of the members of the collective owners required. All that facilitated transition to the most liberal agricultural land legislation in Russia at the federal level. However weakness of the state authority, delegation of the powers pertaining to the legal reglamentation of the land-related issues to the federal/regional level and freedom of arbitrary interpretation of the laws by local authorities has brought about a situation where the said liberal legislation was not enforced at all or was enforced incompletely.
The problem became worse also due to the fact that having received the land lots in their ownership the rural population in a hundred percent of cases transferred them to their agricultural enterprises for utilization. Yet the conditions of such transfers were actually never recorded. So the land owner does not feel any responsibility for the usage of his property nor does he get any tangible gain from such use or has an opportunity to compare different options of transfer of his land share.
On the other hand the agricultural enterprise is in a difficult situation too for it is using its most important asset on uncertain terms, when one or several land owners can request their land back at any time. Such a situation renders impossible any effective planning of the production process or signing medium term contracts, etc.
The primary purpose of the presidential decree lies in the requirement to legalize the relations between the land owners and the land users. The state can not but control by way of legal registration the transfer of such an expensive real estate which is land. If the Decree proves to be implemented in practice, then even under the conditions of the current slump in production the real land circulation in the agrarian sector will become possible. In certain cases the land share owners will get the possibility to choose between the farm businesses offering better conditions of the land use which means process of re-allocation of arable lands to more efficient users. The same factor would determine the optimum size of the agricultural enterprise, for no one would be willing to pay for extra land (the current land tax does not fulfill this function). And finally under the conditions of that deep slump in the industrial production laying the land off the turnover would unavoidably happen primarily at the expense of the worst lands (no one would be willing to rent them or buy them back).
In practice fast signing of the registration deals for the transfer of the land plots can make adoption of the Land Code in its current wording less dangerous for the fates of the land and agrarian reforms in the country. The draft code suggests resolution of the above-mentioned contradictions between the land owners and the user of the land plots exclusively in favor of the agricultural entities. According to the draft the land used by the agricultural enterprises becomes their property formally as the property of a legal entity. This sort of approach means first of all actual expropriation of the rural population all over the country and secondly it would delay the land circulation in agriculture for a inadmissibly long period of time. However subject to registration of the contracts for sale, lease or transfer to the authorized capital of the land plots this measure would be less dangerous (if of course the new Code does not become retroactive).
February and March witnessed some changes in the field of the trade protectionism in the agricultural complex. Because of the continued crisis in the domestic poultry husbandry it is by now traditionally associated with the aggressive poultry importation from the West. According to the Customs statistics, the poultry importation in 1995 grew by 162.7% by physical volume and by 154.6% by cost. Meanwhile the slump of the domestic poultry production for the same year was 22%. A new 30% customs tariff instead of former 25% was introduced. Such a measure could hardly have had such consequences for the commercial relations between Russia and USA - the principal supplier of chicken poultry in the country (US share in the imports of this product in physical terms in 1994 / 1995 grew from 73.1% up to 75.0%, and by value from 69.2% to 77.7% respectively) - but for the decision by the Veterinary Department of the RF Ministry of Agricultural Production terminating licenses for the poultry importation from US since 16 March, under pretense of formal sanitary requirements.
The wholesale per-kilo prices for the chicken legs forming the principal share of the poultry imported by Russia are by 30% lower than per-kilo prices for meat. Thus the prohibition on their importation will primarily affect incomes of the low profit groups of population. The situation would be quite different if the possible niche were quickly and completely occupied by a similar domestic product. In March an increase in grain purchases was recorded, while the purchase volumes in the first months of the new year were quite low. Only for 10 days in March the JSC “ROSKHLEBOPRODUCT” purchased K62 tons of grain, mostly food wheat. The bulk of the purchases came from the West Siberia where in 1995 there was a relatively good crop.
The increase in grain purchases can be attributed to a number of reasons. Firstly, the forthcoming sowing campaign and unresolved problems of the seasonal credit at the Federal level stimulate the grain producers to sell their inventories.
Secondly, by March on an average the contractual grain elevator storage terms will expire and the grain elevators are demanding increased rentals for the storage. Thirdly, the prices for grain have remained stable for more than two months by now and are unlikely to grow in the near future.
There is no reason for the producers proper in delaying sales of the commodity grain. The growing purchasing volumes make it possible to draw a conclusion that the official totals for the real harvest of grain in 1995 were understated by 3 or 4 million tons (4.5 or 6%).
Case studies conducted by the IET Agricultural Policies Laboratory in a number of farms in Rostov region proved that the governmental tied credit of the last year had about 120 or 130% real annual interest rate (due to the increase in prices for the delivered fuel and lubricants).
The interest was actually paid to oil suppliers instead of the state. Under the tied credit commercial deals the interest in annual expression was much lower (sometimes reaching a zero level), besides the tied credit was not strictly biased: depending on the requirements of a particular contracted agricultural producer alternatively either fuel and lubricants or fertilizers or spares could be delivered in exchange for the future supplies of grain and sun flower seeds. With the introduction of the state-controlled prices the commercial tied credit is bound to develop further.
The IMF loan requirement banning the state tied credit as a hidden (i.e., not overtly shown in the budget) form of support for the agrarian sector, also facilitates broader application of the commercial tied credit.
Table 4. Guaranteed purchasing prices for certain agricultural products purchased for the Federal Reserve, in thousand rubles per 1 metric ton.
Hard grain wheat, grade III
Soft grain wheat, grade III
Corn (different grades)
Milk (basic fat content)
Cattle (living mass)
Pigs (living mass)
Poultry (living mass)
* Ex- farm, VAT excluded.
by E.Serova, I.Khramova
Labour Market: Development Trends
In January-April, 1996 the trends in the employment sphere and labor market of Russia were steady. They were characterized by a slight drop in the number of people employed in the national economy, a moderate rise in unemployment and a growth of latent unemployment.
By early April of 1996, the total number of people employed in the economy was 73.10 million or 49% of the total population of the country, including 66.80 million (91.4%) occupied in the national economy, and 6.3 million (8.6%) - had no job and were>
When assessing the situation on the labor market it is important to consider not only the unemployment figures, but the duration of unemployment which is growing and turning into a chronic or long-term unemployment. At present the average duration of unemployment exceeds 10 months (in 1995 - 10.3), but in more than 20 regions it is over a year. Considered from the point of view of adverse social consequences, the duration has a greater social importance than the total number of unemployed. The growing latent unemployment caused by the reduction in output without the respective dismissal of the employees (leading to a drop in productivity), on the whole in the national economy was 0.9 million in February 1996, as compared with February 1995, although in industry due to some growth of output latent unemployment went down slightly. In general, the national economy is characterized by a fall in productivity, a rise in latent unemployment manifesting itself as part-time employment, imposed non-paid leaves etc. Moreover, the employees, who are paid by the lowest rates, since the companies are short of money, may also be regarded as unemployed contributing to latent unemployment.
Late 1995-early 1996 saw a sharp increase in the number of companies, institutions and organizations that went on strike: in January - 2108, in February - 1460, compared to 96 and 249 for the respective months in 1995. The largest number of strikes was recorded at educational institutions and in the fuel sector companies. Considerable loss of working time took place in schools of Kemerovskaya and Kyrganskaya regions, Krasnoyarskiy krai, and in the fuel sector enterprises of Kemerovo and Rostov regions and in Komi Republic. The strikes were mostly caused by delays in wage payments, low wages, and meager financing of the educational establishments.
In the first quarter of 1996 the Federal Employment Service of Russia was facing an acute problem of financing contributions into the Employment Fund from 2% to 1.5% from January 1996. Moreover, 20% of the amount is to be re-distributed, while the remaining part is given to a particular administrative area. The federal part of the Fund is short of money to adequately finance some regions with a high rate of unemployment, while other better- off regions may have some surplus money.
by O. Zalesova
Insured Medicine: Prospects For Development
In early April 1996 the RF Government discussed the actual implementation of the law entitled “On the medical insurance of the Russian citizens." Presently suggestions of changing the obligatory medical insurance model (OMI ) which has been introduced since 1994 are being developed.
Which were are the major problems encountered in the course of OMI introduction
Firstly, the size of OMI financing (by contributions of the legal entities and budget appropriations) does not match the figure required for the free healthcare servicing of the population, guaranteed by the state. Therefore a complete replacement of the budget financing of the healthcare establishments (by certain articles of expenditure) by the new system (payment for the rendered services) has proved impossible.
Secondly, instead of a step-by-step transition from one system of healthcare financing to the other what we really have in practice is an eclectic coexistence of different system elements. This has resulted in ruining the intended purpose of the reform for the healthcare effectiveness did not improve, on the contrary it has deteriorated.
Thirdly, what we are having now is a multitude of transitional OMI models in different regions.
Fourthly, the majority of the healthcare providers started treating federal and regional OMI funds as unnecessary and costly intermediaries in the system of healthcare financing.
What are the ways of fighting the said problems and transforming the existing OMI system
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