De-socialization of Russian Farms

After nearly eighty years, the New York Times reports that Russia may now finally be moving to de-collectivize and privatize its farmlands. From 1928 to 1933, Stalin pursued a ruthless drive to collectivize all agriculture in the Soviet Union, and implemented a series of events in the Ukraine (“the breadbasket of Europe”) to crush the people seeking independence from Russian rule. The result was massive resistance and a catastrophic famine—one of the greatest mass starvations in modern world history, as is documented in Robert Conquest’s seminal book, The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine. Now, perhaps the horrendous “experiment” in farm collectivization may come to an end:

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. [A hectare is about two and a half acres.]

. . . .

Yields in Russia, however, are tiny. The average Russian grain yield is 1.85 tons a hectare—compared with 6.36 tons in the United States and 3.04 in Canada.

However, most of the discussions to privatize appear to entail large-scale, land purchases/grants with government restrictions on the ability to subdivide and sell, inhibiting a viable and fluid, decentralized, real estate market. If so, cronyism and mercantilism would be the likely outcome, with higher prices and major disparities in economic opportunity. And without the benefits from a truly free market in farmlands, political pressures to re-nationalize could result:

[T]he business of buying and reforming collective farms is suddenly and improbably very profitable, attracting hedge fund managers, Russian oligarchs, Swedish portfolio investors and even a descendant of White Russian émigré nobility.

Earlier reformers envisioned the collective farms eventually breaking up into family farms.  But the new business model rests on a belief that Russia’s long, painful history of collectivization is destined to end in large corporate farms.

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.

Interestingly enough in 1929, Russia had about 20 million family farms, which were combined by Stalin into 240,000 collective farms. Fortunately, two percent of the land remained in small, private plots, producing as much as 30 percent of farm output for the nation. This lesson will hopefully not be lost in the new movement toward de-collectivization.

And since according to the U.S. General Services Administration, the federal government here directly owns about 30% of the land in the U.S., wouldn’t de-collectivization be advisable for Americans as well? E.C. Pasour, Jr. and Randal Rucker discuss this need for de-socialization in their Independent Institute book, Pork Barrels and Plowshares: The Political Economy of Agriculture.

David J. Theroux is Founder, President and Chief Executive Officer of the Independent Institute and Publisher of the quarterly journal, The Independent Review.
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