The magnitude of value destruction boggles the mind. Bring the market to the Russian countryside, and let this land reach the market, and the whole world benefits tremendously:
“The fields around this little farming enclave are among the most fertile on earth. But like tens of million of acres of land in this country, after the collapse of the Soviet Union, they literally went to seed. Now that may be changing. A decade after capitalism transformed Russian industry, an agricultural revolution is stirring the countryside, shaking up village life and sweeping aside the collective farms that resisted earlier reform efforts and remain the dominant form of agriculture. The change is being driven by soaring global food prices (the price of wheat alone rose 77 percent last year) and a new reform allowing foreigners to own agricultural land. Together, they have created a land rush in rural Russia.
“…These investments are also a gamble in a country accustomed to government control of business. Some officials have hinted at the prospect of a government takeover of the farming industry reminiscent of the Soviet era.
“…Russia occupies an unusual niche in the global food chain. Before the Russian Revolution and the subsequent forced collectivization of farming under Stalin, it was the largest grain exporting nation in the world. Today, roughly 7 percent of the planet’s arable land is either owned by the Russian state or by collective farms, but about a sixth of all that agricultural land — some 35 million hectares — lies fallow. By comparison, all of Britain has 6 million hectares of cultivatable land.
“…Yields in Russia, however, are tiny. The average Russian grain yield is 1.85 tons a hectare — compared with 6.36 tons a hectare in the United States and 3.04 in Canada.
“…Some trade and agriculture experts say there is still a danger that a country like today’s Russia, which jealously guards its natural resources, could one day renationalize farms or form a cartel that dictates to landowners.
“…The rural population has declined precipitously as young people fled to the cities. The title to land, after the failed decollectivization of the Yeltsin era, is often unclear. Rural Russians’ work ethic has been shaped by decades on collectivized farms that offered little reward for individual effort.
“…This latest headlong wave of privatization has gone too far and too fast for some in government here. Officials, as is often the case these days, have floated the idea of forming a state monopoly. They would create a Soviet-style grain trading company out of an existing regulatory agency, a notion that has alarmed agricultural experts, though the seriousness of the idea is unclear. Such a monopoly could control domestic grain prices by limiting exports, benefiting low-income consumers but discouraging investment in agriculture.”
“The Food Chain - Russia’s Collective Farms - Hot Capitalist Property” via the NYT. The photo is not directly related to this story.
