Large and small business in Russian agriculture: adaptation to market.

INTRODUCTION

The main agricultural producers in Russia are large and superlarge corporate farms, on the one hand, and small or very small family farms, on the other. This article describes how the farms in these two categories evolve and adapt to market conditions. The term 'small

In market economies, most of the agricultural output is produced by small business. The predominance of small business in market agriculture has been widely discussed in the literature. Economic theory explains the sustainability and efficiency of family farms by the higher motivation of the owner compared with that of a hired worker, by the orientation towards family consumption instead of profit maximization, by the psychological value of working on one's own farm, and by the unity of work and family life.

Large agricultural business develops in response to economies of scale. However, the inevitable increase of management difficulties, transaction costs, and ecological hazards with the increase of farm size limits the growth of large business in agriculture. Modern institutional economics describes these limits to size in terms of moral hazard or opportunism of hired workers. Williamson (1985) defined opportunism as 'self-interest seeking with guile [which] includes but is scarcely limited to more blatant forms, such as lying, stealing, and cheating'.

Opportunism can be counteracted by provision of appropriate safeguards in labour contracts and by increased monitoring of the workforce. However, it is impossible to control everything, so the negative consequences of opportunistic behaviour are unavoidable. This is particularly so in agriculture, as farming is a spatially dispersed activity and it is difficult, or virtually impossible, to monitor all contract workers, safeguard all machinery and equipment, and protect all crops and all livestock everywhere. These considerations are highly relevant in modern Russia, where opportunistic behaviour has been inherited from the socialist system and most agricultural workers still regard it as the norm. Family farms are less prone to opportunism than corporate farms, because here the owner is at the same time the manager, the worker, the watchman, and the controller. The number of permanent hired workers in a family farm is usually small, and they all work together with the family members under their watchful eye.

During the decades of the Soviet regime, Russian agriculture was dominated by large collective and state farms (kolkhozes and sovkhozes). The predominance of large agricultural business during the socialist era was achieved by a combination of several policy factors. First, rural people were virtually 'modern-day serfs': they had no choice but to work in the local farm enterprise. Second, land was allocated to agricultural users by the state, which intentionally created only large farms and restricted individual activity. In this system, opportunism was counteracted by simplifying the farm management system through central planning (top-down assignment of production targets, input deliveries, state prices, exclusive suppliers for each user, etc) and by actually using the legal enforcement apparatus to combat moral hazard among agricultural workers by ensuring compliance with officially imposed behavioural norms. Soft budget constraints were implemented to cover losses and write off debt, ensuring that unprofitable large farms would never go bankrupt. Finally, large farms did not face any competition either from small business (which was ruthlessly suppressed) or from importers (which were not allowed to operate).

Most of these factors have not survived the process of transition to market; the influence of others has been dramatically attenuated. Peasants can no longer be forced to work on a farm enterprise, land and other assets have to be leased or purchased, the state is unable to help combat opportunism, managers now have to worry about what to produce, how to sell, and where to buy inputs. If a farm does not meet its financial obligations, it may be forced into bankruptcy. Farm enterprises are under constant pressure from competitors--both domestic (small agricultural business) and external (importers). Can the corporate farm sector retain its dominance under these new conditions?

LARGE CORPORATE FARMS

There are about 24,000 large corporate farms in Russia, which succeeded the former collective and state farms by a legal procedure that began in 1991-92. (1) These corporate farms are organised as joint stock companies, limited liability companies, agricultural cooperatives, and partnerships. Legally, most of them are private agricultural producers, and less than 3,000 state farms remain. Corporate farms control 80% of agricultural land, averaging 6,000 hectares and over 150 workers per farm.

The reforms began 14 years ago, but the organisational and legal forms have not yet stabilized. In the initial stages of reform, the most popular forms were limited liability partnerships and closed joint stock companies with ownership spread among hundreds of former kolkhoz members. By the mid-1990s, most of these early corporate farms had to re-register as agricultural production cooperatives (although this was the least efficient form of producer), because new laws limited the number of shareholders in conventional corporate forms to 50. During the last 2 years, we have been witnessing a reversal of the trend: agricultural production cooperatives disappear due to their inefficiency, while limited liability companies and closed joint stock companies survive due to tighter management made possible by the relatively small number of shareholders.

In parallel with vigorous organisational changes, fast consolidation of ownership is occurring in corporate farms. At the time of privatisation, peasants owned 100% of equity and controlled 100% of the votes; by the beginning of 2003, their control had slipped to 25% of the votes while the remaining 75% are now held by outside investors and various legal entities that have acquired shares in the equity of corporate farms (MinAg, 2002).

The corporate farms have lost most of their assets since the beginning of reforms. Between 1996 and 2002, both the stock of fixed capital (adjusted for inflation) and net total assets decreased by more than 85%. Yet corporate farms are becoming increasingly differentiated by financial measures. About 40% of the farms grow richer, while the rest accumulate losses and debt. Their indebtedness is so high that they can no longer pay it off on their own.

Production in corporate farms is becoming increasingly concentrated. The share of the largest producers increases, while the role of all the rest becomes less important. In 2002, one quarter of corporate farms classified as 'best performers' contributed 55% of sales, while roughly the same number of loss-makers contributed 5% of sales.

Superlarge farms, such as agrofirms and agroholdings, are beginning to emerge. Each of these giants controls tens and even hundreds of thousand of hectares of farmland and employs tens of thousands of hired workers (Rylko and Jolly, 2005). On the other hand, a significant number of corporate farms have transformed into small enterprises. Liquidations of corporate farms are becoming more frequent, releasing resources to new users and owners (mainly other corporate farms, not the individual sector).

SMALL AGRICULTURAL BUSINESS

The developments in this category of farms are described separately for three components: small agricultural enterprises, independent peasant farms established by private entrepreneurs outside the large farm enterprises, and household plots, which are generally cultivated by workers and retirees of local corporate farms and rural social services.

Small agricultural enterprises

At the beginning of 2003, Russia bad 29,800 small agricultural enterprises that used 7.8 million hectares of agricultural land and produced 23.3 billion rubles in agricultural output. Small agricultural enterprises specialise mainly in crop production (76% of their product mix in 1999). In 2002, they produced 6 million tons of grain and 0.8 million tons of sunflower seeds. The numbers of cattle and livestock production volumes in small enterprises are negligible and tend to decrease.

Peasant farms

Contrary to the early expectations, the private farm sector had not become the dominant force in Russian agriculture. In 2002, some 260,000 peasant farms produced only 3.7% of gross agricultural output. Nevertheless, peasant farms are the fastest growing sector of Russian agriculture. During the last 5 years, the land in peasant farms increased by one million hectares each year and by 2003 it had reached 17.7 million hectares. The increase was made possible mainly by the leasing of land shares from rural individuals (Shagaida, 2005). Peasant farmers outbid the corporate farms in competitive land leasing because they offer higher rent to the owners of land shares. Peasant farms also achieve the highest growth rates in agricultural output. Between 1998 and 2002, the production in peasant farms increased by 225% (compared with only 25% in corporate farms).

Although in general the share of peasant farms in gross agricultural output is small, they contribute significantly to the production of certain agricultural products. Thus, in 2002, peasant farms produced 20% of sunflower, 12% of grain, 7% of sugar beet, and 8% of wool.

In some parts of Russia (Ingushetia in European Russia, Birobidjan in the Far East), peasant farmers produce more than the corporate farms. In Saratov Oblast, the agriculture in some districts is 'totally individualized': all the corporate farms have been liquidated and their land and assets have passed to peasant farmers. The sown area of peasant farms in Saratov is more than one million hectares and they harvested 1.3 million tons of grain. Saratov farmers produced 36% of grain and 37% of sunflower in the oblast.

Household plots

The land in household plots doubled during the 1990s and today it stands at 8.6 million hectares. Yet the official Goskomstat data on land use in household plots (see, eg, Goskomstat, 2002a) are clearly incomplete.

First, these data do not include agricultural land in several categories that is actually used by the rural population. This is land allocated to rural people for hay cutting (15.3 million hectares of agricultural land), for livestock production (0.5 million hectares), for rural residential construction (0.4 million hectares), and for individual agricultural entrepreneurship (0.2 million hectares). Another 3.0 million hectares is in land plots and land shares that have been allocated without designation of intended use. According to Roszemkadastr data as of January 1, 2003, rural individuals (excluding peasant farmers) officially used 27.8 million hectares of agricultural land (14% of total agricultural land used by corporate farms).

Second, in addition to officially allocated land, people with cattle have access to municipal commons for grazing and hay cutting. At the beginning of 2002, these areas amounted to 7.8 million hectares (Roszemkadastr, 2002, p. 734, 766).

The total land used by individuals (excluding peasant farmers) is thus not 8.6 million hectares (as reported by Goskomstat, 2002a), but 27.8 million hectares of formally allocated agricultural land plus 7.8 million hectares of informally used land (municipal commons), that is, a total of 35.6 million hectares.

There are no statistical data on the number of employed in household plots. The number of employed in commercial production on household plots can be roughly estimated at 3.3 million. This is calculated for 2002 by subtracting the number of employed in large and medium corporate farms (3.8 million), in small agricultural enterprises (186,600), and in peasant farms (417,000) from the reported agricultural employment of 7.7 million. The number of employed in commercial household plots is thus nearly equal to the number of employed in large and medium corporate farms. However, most of the rural people work on non-commercial subsistence plots, and Goskomstat estimates put the number of these 'household workers' at about 10 million full-time equivalents (Goskomstat, 2002b, p. 106).

Household plots--both commercial and subsistence--thus employ 13.3 million people. This number is three times the total number of employed by all other agricultural producers taken together.

The importance of the household plot in rural life is highlighted by Goskomstat household budget surveys. In 2002, the per capita annual income from a household plot was 4,192 rubles (Goskomstat, 2003, p. 151). The total annual wage bill of corporate farms in 2002 was 43 billion rubles (cash and in-kind wages, excluding social deductions and income tax), or 900 rubles per person per year (MinAg, 2002). The income from the household plot was thus 4.7 times the wages earned on a corporate farm.

CHANGING ROLE OF LARGE AND SMALL BUSINESS

The role of corporate farms in the labour market has dramatically decreased over time (Bogdanovskii, 2005). Between 1990 and 2002, the number of employed in large and medium farm enterprises dropped from 8.3 million to 3.8 million, while the number of employed in small business engaged in commercial farming increased from 1.4 million to 3.9 million (Figure 1). In addition, nearly 10 million are engaged in small subsistence farms (Goskomstat, 2002b), that is, the actual number of employed in small agricultural business is 3.6 times greater than the number of employed in large business.

[FIGURE 1 OMITTED]

According to official statistics, the land used by corporate farms decreased from 209.8 million hectares to 150.4 million hectares between 1990 and 2002, that is, a decrease of almost 30%, while the land used by the family sector increased nearly by a factor of 20, reaching 44 million hectares by the beginning of 2003. This does not include the municipal common land (another 8 million hectares) and the land in corporate farms informally used by the rural population. The corporate farms lost out in the competition with family farms. The agricultural output of the family sector increased by 30% between 1990 and 2002, while the output of corporate farms declined by a factor of 2.3.

Before the economic and agrarian reforms of the 1990s, farm enterprises produced most of the gross agricultural output, while family farms (only household plots at that time) played a subsidiary role. The situation changed in the course of the reform. By the mid-1990s, the shares of these two sectors in agricultural production had become equal, and by 1998, the family sector (consisting of both household plots and peasant farms) was producing 61% of gross agricultural output compared with 39% in corporate farms (Figure 2). Family farms have increased their share of production of all crop and livestock commodities. Their shares in meat, milk, and wool have reached 59%, 52%, and 62%, respectively.

[FIGURE 2 OMITTED]

Agricultural producers of different organisational forms are becoming increasingly specialised. Corporate farms dominate the production of grain and industrial crops, while family farms produce mainly potatoes, vegetables, and fruits. The share of family farms in livestock production is also increasing.

REGIONAL TYPOLOGY OF FARM STRUCTURE

At the beginning of the 1990s, all regions had the same sharply dual farm structure, with predominance of large corporate farms and a small share of land in household plots. During the 1990s all the regions followed the same transition path, with decreasing share of corporate farms in agricultural product and land and increasing share of the family sector (peasant farms and household plots). However, the rates of change varied across the regions. As a result, after more than a decade of transition we observe different farm structures in different clusters of regions.

We distinguish between three types of regional farm structure: corporatised, mixed and individualised. Regions where corporate farms contribute more than 50% of agricultural production are characterised as having a corporatised farm structure; regions where individual farms produce more than 70% of output (and corporate farms produce 30% or less) are characterised by an individualised farm structure; and all other regions are characterised by a mixed farm structure, with corporate farms contributing from 30% to 50% of agricultural production.

Corporate farms dominate only in nine of the 77 regions. Here, more than 60% of agricultural production is produced in large corporate farms. Individualised agriculture is observed in 26 regions. Here the share of corporate farms in agricultural production is as low as 23%, while individual farms produce 77%. In Ingushetia, the family sector accounts for 95% of gross agricultural output; in seven other regions (Dagestan, Buryatiya, Yakutiya, Astrakhan Oblast, etc), the share of the family sector is more than 80%. All other regions are characterised by a mixed farm structure with clear dominance of the family sector (which produces more than 60% of agricultural output). In regions with individualised farm structure, corporate farms not only produce a small share of agricultural output; they are also of relatively small size (mainly classified as small agricultural enterprises).

The main factors that influence this sharp differentiation by regional farm structure appear to be the following:

Natural conditions: Individualised agriculture occurs in regions where the conditions for agriculture are less favorable: the average bio-climatic potential (2) in individualised regions is 94 points versus 102 points in corporatised regions. Corporate farms survive in regions with the most favourable natural conditions (Krasnodar, Stavropol', Belgorod) or the most developed economic environment (Moscow and Leningrad oblasts).

Availability of land: Arable land is less abundant in regions with individualised farm structure (1.8 hectares per worker including both commercial and subsistence farming versus 3.4 hectares per worker in corporatised regions).

Efficiency of corporate farms: Individualised agriculture is observed primarily in regions where corporate farms are relatively inefficient and have not adapted to market conditions. In corporatised regions, 37% of corporate farms were unprofitable in 1995, whereas in individualised regions the proportion of unprofitable corporate farms was 71%.

Ethnographic features: Individualised agriculture predominates in regions governed by ethnic minorities. Thus, corporatised farm structure is observed in only six out of 22 'ethnic' regions, while 11 'ethnic' regions are characterised by individualised farming (for a more detailed discussion see Nefedova, 2003).

Regional agricultural policies: Corporatised agriculture is characteristic of regions with a high level of subsidies per agricultural worker. Strong regional support of corporate farms is apparently the main reason for the corporatisation of agriculture in Tatarstan (an ethnic-minority region) and in Murmansk Oblast or Chukotka (agriculturally poor northern regions). On the other hand, the formation of the individualised farm structure in Saratov and Samara oblasts (where the individual sector produces about 72% of gross agricultural product) is most probably the result of regional policies that explicitly support family farms, as it cannot be explained by natural, land-related, or ethnographic conditions.

These five factors were found to be statistically significant at 10% in a regression model using the share of corporate farms in regional agricultural product as the dependent variable ([R.sup.2] = 0.77).

GOVERNMENT SUPPORT POLICIES FOR LARGE AND SMALL BUSINESS

Since the very beginning of reform, the declared policy was to achieve a 'multi-organisational' agricultural structure with a level playing field for farms of all organisational forms. This policy was clearly stated in all agricultural development programmes during the last 15 years. However, it has never been really implemented. The actual policy and the great majority of Russian politicians are strongly biased toward supporting large business and restricting small business in agriculture. Subsidies from the federal budget are only available to large producers. Household plots are not even mentioned in the budget law and therefore cannot enjoy any of the state subsidies. Peasant farms had access to earmarked funds in the early 1990s, but subsequently this support has disappeared.

Formally, peasant farms are eligible to partial reimbursement of interest expense within the subsidised interest rate credit programme. In practice, however, peasant farmers cannot take advantage of this subsidy, because commercial banks refuse to lend to small producers and there is no subsidised interest rate on loans from credit cooperatives that peasant farmers patronise. Corporate farms are thus the main recipient of state subsidies, but even within this sector there is discrimination in favour of the larger farms (see below on accessibility to subsidies).

Distribution of subsidies: Agricultural production is subsidised from federal, regional, and local budgets. In 2001, only 29% of the subsidies to corporate farms were paid from the federal budget (MinAg, 2002). Federal subsidies are intended mainly for compensation of losses caused by natural disasters, for capital investment, and for the support of breeding livestock and seed selection. Regional budgets generously subsidize the costs of livestock production, soil fertility improvement, etc.

Entitlement to subsidies: Both agricultural producers and intermediaries such as processors, input suppliers, traders are entitled to subsidies from the government. In 2001, the federal agricultural budget was 20.8 billion rubles, but only 5.4 billion rubles was transferred directly to agricultural enterprises. The rest was spent on the bureaucracy or distributed to intermediaries, suppliers, contractors, etc.

Accessibility of subsidies: The subsidies are not equally accessible for all corporate farms. Thus, 15% of farm enterprises did not receive any subsidies at all, and 20% received on average a mere 45,000 rubles. At the same time, 1.4% of the largest corporate farms received 22.5% of all subsidies (each farm enterprise in this group received more than 10 billion rubles in subsidies and compensations). Some corporate farms received even greater amounts of subsidies. The three largest beneficiaries received nearly 200 billion rubles. (3)

Many countries limit the total amount of government subsidies that a single farm can obtain. In the United States, a farm cannot get more than $50,000 from the government. Thus, large corporations cannot secure superlarge subsidies. In Russia, there are no such limits. As a result, the Russian agricultural budget is used for the benefit of large business, while the US budget mainly supports small business. In the United States, 26,500 largest farms contributing 42% of sales receive 8% of government payments in all farm programmes (USDA, 1997), whereas in Russia the equivalent group of 24,300 corporate farms contributing about 40% of gross agricultural product receive almost 100% of government subsidies (the millions of peasant farms and commercial household plots do not get any subsidies).

THE IMPACT Of CORPORATE FARMS ON THE DEVELOPMENT OF FAMILY FARMING

Close interaction or even symbiosis between collective farms and household plots is a long-established feature of Russian agriculture. For instance, potatoes are mainly grown on household plots, but it is the local corporate farm that provides the machinery for plowing and other non-manual work in private potato patches in the village. Corporate farms play an even greater role in private livestock production. The households typically purchase their young animals (calves, piglets, chicks) from the local corporate farm. They also receive help with hay cutting and hay delivery. The corporate farm supplies households in 'its' village with grain and grain waste to be used as feed for private cattle and poultry. This is normally done free of charge or at preferential prices. The local corporate farm also assists village households with the marketing of livestock products, and especially with transportation and sale of milk.

Many Russian scholars and politicians are of the opinion that there is a direct link between the level of development of corporate farms and household plots: the more developed the corporate farm, the higher the level of development of the household plots in the same area (for a review of these opinions see, eg, Kazarezov and Rasskazov, 2002; Shmelev, 2002). It is argued that family farms rely on inputs and services from corporate farms and cannot exist without them. To be able to provide the household plots with all these services, the corporate farm itself must be sufficiently profitable and productive.

There is also a different view of this relationship. Family farms achieve a higher level of development in a given area because people have lost their jobs in the corporate farm and are forced to concentrate on farming the household plot or create an independent peasant farm. The resources of the deteriorating corporate farms are gradually reabsorbed by the family farms in the area.

The third point of view holds that peasant plots had existed for many centuries before the appearance of collective farms and that they still exist in areas where no corporate farms are to be found anymore. Thus, there is no direct relationship between the two types of farming. To ensure that large corporate farms operate efficiently, their relationship with household plots must be placed on a strictly commercial basis. Without adequate reciprocal arrangements, the household plots will ruin the corporate farms and pilfer all its resources.

To test the hypothesis concerning the relationship between the efficiency of corporate farms and the development of family farms, we have grouped Russia's 77 regions by percent of unprofitable corporate farms. The value of output per rural family produced in household plots is fairly stable across the profitability groups (30,000-31,000 rubles). Its variability is substantially less than the variability of output per family in corporate and peasant farms. There is no statistically significant correlation between the output per family produced in corporate farms and in household plots. As corporate farms become less efficient ('more unprofitable'), their share in agricultural production decreases, while the share of family farms correspondingly increases. In the first profitability group, corporate farms account for 52% of agricultural production; in the last profitability group they account for 26% only. In regions where corporate farms are weak, peasant farms are also less developed, and it is only the share of household plots in agricultural production that increases (Figure 3). The share of employed in subsistence-oriented household plots also rises from 56% of agricultural employment in the regions with best corporate farms to 69% in the regions with least profitable corporate farms.

[FIGURE 3 OMITTED]

The impact of the basic production variables on gross agricultural output (in farms of all types) has been studied by a regression model based on the data from Russia's 77 regions. Corporate farm characteristics, such as the financial situation, the production volume, the agricultural land, and the number of employed, do not significantly influence agricultural production in household plots. Only the machinery of corporate farms is important for the development of household plots, presumably because they rely on the local corporate farm for help with seasonal field work (plowing, tilling, harvesting).

COMPARATIVE PRODUCTIVITY OF LARGE AND SMALL BUSINESS

Performance comparisons between large and small business are so far restricted to partial productivity measures, such as land and labour productivities (Table 1). Comparative analysis of total factor productivity is left to future research because of data limitations.

Household plots achieve the highest productivity of land among all farm types: their output per hectare is 8-9 times higher than in corporate and peasant farms. These results are probably overestimated, because part of the land actually used by household plots is officially registered to corporate farms and livestock production is largely supported by feed from the corporate farm. Nevertheless, household plots obviously use their land much more productively than other farms. This is evident from the figures for crop production per hectare, which maintain the same advantage relative to corporate farms as gross agricultural output (which includes both crops and livestock). The higher productivity of land in household plots can be explained by the difference in cropping patterns: household plots specialise in labour-intensive crops (potatoes, vegetables, and fruits), while corporate and peasant farms mainly produce extensive crops (grain, industrial crops, and feed crops).

The ranking by partial productivity of labour is reversed. The output per worker in household plots is much lower (by a factor of 2.2-2.3) than in corporate and peasant farms. In livestock production, this gap is even greater. Given the primitive technology used by most household plots and their reliance on manual labour, the finding of low labour productivity is not surprising.

In peasant farms, the output per hectare is somewhat lower than in corporate farms (Table 1). Peasant farms use 8.7% of agricultural land and produce only 3.7% of agricultural output. The opponents of private farming in Russia repeatedly cite this fact as a proof of inefficiency of peasant farms compared with corporate farms. This comparison is not valid, because peasant farms are compared not with corporate farms, but actually with all farms (including the highly productive household plots). In comparison with corporate farms as a separate group, peasant farms are found to be more efficient in crop production and less efficient in livestock production. However, most livestock production included in this comparison originates in large complexes, which use their resources very efficiently due to industrial economies of scale. It is more appropriate to compare the productivity of peasant farms with the group of relatively small corporate farms (those with the lowest sales). Corporate farms with sales revenue not exceeding 4.1 million rubles in 2002 (47% of all corporate farms) produced approximately the same value of output as all peasant farms. However, these corporate farms used 58 million hectares of agricultural land, so that their land productivity was a factor of 3.4 lower than the land productivity of peasant farms.

CONCLUSION

Russian agriculture today is characterised by a wide spectrum of organisational forms. Western-type family farms coexist with large private corporate farms, superlarge agrofirms and agroholdings, state farms inherited from the Soviet era, and patriarchal household plots that have continued to produce over centuries of upheavals. The share of large corporate farms in agricultural resources and production has been steadily declining since 1990, while the small business has become the main producer, the main employer, and the main source of income for the rural population. At the same time, the shrinking corporate farm sector is undergoing increasing differentiation by financial health and performance, with the share of the largest 'best performers' rapidly growing at the expense of the weak unprofitable farms.

Russian agricultural policy continues to channel support to the largest farms, ignoring the increasing role of small agricultural business. As a result, government support programmes and subsidies have no virtually no impact on the efficiency of agriculture. The government should urgently revise its policy priorities in view of the changing structure of agricultural production.

Table 1: Partial productivity measures for corporate and individual
farms, 2001

                                        All farms   Corporate   Peasant
                                                      farms      farms

Agricultural land (million ha)            194.6       150.4      17.0
Number of employed (millions)              17.7         4.0       0.4
Gross agricultural output (GAO)
  (billion rubles)                       1029         410        38
Crop production (billion rubles)          542         197        28
Livestock production (billion rubles)     487         213        10

Output per hectare ('000 rubles)
  GAO                                       5.3         2.7       2.2
  Crops                                     2.8         1.3       1.7
  Livestock                                 2.5         1.4       0.5

Output per worker ('000 rubles)
  GAO                                      58.1       102.5      95.0
  Crops                                    30.6        49.3      70.0
  Livestock                                27.5        53.2      25.0

                                        Household
                                          plots

Agricultural land (million ha)            27.2
Number of employed (millions)             13.3
Gross agricultural output (GAO)
  (billion rubles)                       581
Crop production (billion rubles)         317
Livestock production (billion rubles)    264

Output per hectare ('000 rubles)
  GAO                                     20.9
  Crops                                   11.7
  Livestock                                9.2

Output per worker ('000 rubles)
  GAO                                     43.7
  Crops                                   23.8
  Livestock                               19.9

Source: Goskomstat (2002a)

(1) On legal principles of farm restructuring during the transition and the early stages of its implementation see, for example, Brooks et al. (1996).

(2) The bio-climatic potential is a standard measure of biological productivity of soil used since the Soviet times. Other conditions being equal, the bio-climatic potential (on a scale of 1-100) is determined by the cumulative availability of heat (the sum of effective temperatures above 10 C), the available moisture (total precipitation during the vegetative period), and the continentality of the regional climate (frost hazard, length of agricultural seasons).

(3) This paragraph is based on an analysis of the Goskomstat database of all 24,000 corporate farms.

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VASILII UZUN

VIAPI--Institute of Agrarian Problems and Informatics, Moscow, Russia. E-mail: vuzun@raf.org.ru