A book review of “Russia’s Food Policies and Globalization”

[ This is a book review of Stephen Wegren’s 2005 book “Russia’s Food Policies and Globalization”.  Related articles:

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

Governments that can’t feed their people lose their legitimacy and risk widespread social unrest.  The Russian government has made many mistakes in the past, such as with collectivization (which America has also done by policies that discouraged family farms in favor of mono-cropping industrial large-scale farming).  Russia has also had to cope with a very harsh climate, which has always affected production.

But because of the hard times for centuries, Russians are more prepared than highly functional, industrialized societies like America or Europe, because when times have gotten tough, many of Russia’s citizens have had access to garden plots.  In the 1980s, households that grew food consumed 90% of it and sold the other 10%.

Although the USSR modernized in fertilizer, machinery, food distribution, and post-harvest technology somewhat from 1964 to 1982, farms still had all kinds of shortages.  Large farms couldn’t fire drunks and slackers, nor hang onto skilled and hard-working laborers.  Adding to the confusion, over eleven different ministries oversaw food production.

The main Russian food policy for many decades has been to protect urban dwellers from the true cost of food, to the detriment of the rural sector.  Over 80% of subsidies to agriculture went to keeping the price of food in cities down.  Meanwhile the country had 100 million people, but only 10% of the electricity, no access to the gas network, poor roads, schools, medical services and so on.

Yet food production went up on average, though there were long lines, poor quality, and little selection in the cities due to an inadequate food distribution system.  But still, the USSR fed itself most of the time.

At the state controlled level, large farms mainly produced the grain, flax, sugar, beets, sunflower seeds, and a lot of the meat, milk, eggs, and wool, but only half of the vegetables and a quarter of the potatoes.

In the 1990-1991 food crisis, there was rationing and people resorted to buying very expensive food in the farmers markets that sprang up in cities.  From 1991 to 2002 food production went down 35-40% yet the population only went down 2.5%.  Food production went down and prices went up because less land was cultivated, less fertilizer and pesticide were used, there was more manual labor, and less farm equipment (especially since spare parts were expensive or not available), increased fuel, electricity, and transportation costs.  The years from 1992 to 1998 were the worst.  By 2002, 45 million families grew food on an average of 1 acre (up from half an acre in 1990).  By 1998, households produced 59% of the food grown (the ruble, not calorie value).

Rural families produced 46% of their food, in urban areas families could only provide 9%.  During this time the number of cattle and pigs went down to numbers lower than in 1943.

After price liberalization in 1992, inflation reached 2,600%, and again went up 900% in 1993.  Food prices skyrocketed.  A third of Russians were undernourished.  Hunger was prevalent among older people without sufficient pensions.  Food went from a third to half of urban budgets initially, and then as food production went up, down to 40% in 2000.  But low income families still experienced hunger and malnutrition.  The wealthier were still able to afford to eat meat.

In the worst year, 1998, rural people got a third of their food from what they could grow on their private plots – 3,216 calories per capita vs 2,612 for urbanites, as well as more protein and fat.  Rural people also had more bread, potatoes, vegetables, milk and milk products, and sugar than city dwellers did.

Among rural people, the wealthiest sold more of their home grown food and had more land than the poorer families.  The top 5% of families produced by far the most meat and fruit – the most expensive, valuable food to sell to cities.

The poor remained poor. They consumed all they grew, so they couldn’t sell extra food to accumulate capital to buy more land.

The average private plot of land was about 2100 square feet.  Men spent 10.5 hours and women 8.5 hours per week working the family plot, mainly for family food and not for sale from the 1960s through the 1980s.  In 1991 that acreage went up when 38 million put new plots on nearly 32,000 square miles of land.

Prices really needed to go up in urban areas to reflect the true cost of food production, but the government was so afraid of “social tension” that it wasn’t until April of 1991, for the first time in several decades, that prices went up.  Meat prices went up 200%, dairy 130%, eggs 100%, and bread 200%. But wages went up too.  Bread was subsidized until 1993.

From 1972 to 1991 the USSR accounted for 75% of USA agricultural exports of grain.  The USSR has never exported much food.  In 1991, 28% of Russian food was imported.

Some experts considered the food crisis starting in 1991 to be mainly due to the lack of post-harvest food handling facilities, because for about 6 years, the amount of grain lost to not being stored properly equaled the amount imported.

Grain is one of the most politically sensitive of all food products in the USSR because of the importance of bread in the culture, and even greater in the 90s when the standard of living dropped.

The cost of food went up an average of 5% per week in 1992 and 3% per week in 1993.  The feared social disorder didn’t happen because

1)      Moscow and Leningrad continued to get food – it was the 2nd and 3rd echelon cities that suffered

2)      Before the crash even successful people in the USSR could buy very little with their money, so few worked hard.  When high prices hit, so did the opportunities to make more money, and the appearance of luxury goods that hadn’t been available before, so people hoped that if they worked hard they could someday afford to buy expensive goods.

3)      There was still social protection.  Ceilings on price markups and profits from bread and flour were imposed.  Even in 2000, half of all Russian regions placed controls on prices of primary foods.

Cities like Kostroma were very innovative in coping with the crisis.  The city rented land from landowners and large farms for the poor to grow potatoes on.. The city also rented municipal land to grow food on at very low rates.  Those working on farms could buy their meals and groceries “at cost”, and at the next step up the food chain, food processing, employees could buy food at very little markup.  Restaurant employees got their main meal of the day at a discount.

Food expanded the use of barter – food could be traded for services, debt payments, and so on.  Stalls, kiosks, and urban markets selling food sprang up in new places.

In some regions, the local or regional government gave farmers fertilizer, oil, seed, and so on to grow grain but then insisted on a low price, often too low, to make sure their people had food, or sold the grain at a profit to other regions.   As state government control of agriculture decreased, regional control increased to make sure there was enough food for the people living in the region.  By 1999, 20 regional food markets existed with 30 more regions in the process of doing the same.

Russian oil and gas companies invested in food processing after the 1998 financial crash, which helped food processors recover.

Wheat was especially valued due to its nonperishable nature and in some respects became a substitute currency.  Growers used wheat as barter in 16% of transactions in 1995 and 25% in 1997.

Not much food was sold on commodity exchanges, only 3.3% of the wheat crop was sold this way in 2002.

Many advocated for vertical processing of food, with processors owning the farms, but this isn’t happening much, when it does, it’s in the Moscow or Leningrad area where consumers have greater purchasing power and money to invest.

Families growing a fair amount of wheat, meat, and other food often preferred to sell to the local government or a private company rather than directly to the public because they didn’t have enough time, surplus labor, or contacts to find buyers.

Despite all the pressure to go to a “market economy”, regional governments distrusted “the market” and regulated agriculture heavily to be sure people were fed.  Even in the worst times in 1998, the government made sure that they won the bids to distribute food – controlling food is a good way to stay in power.  This upset some political factions in the USA – we’d sent a lot of food over there and didn’t want this to aid the old guard in maintaining their power.

This book spends a lot of time explaining the history of food in Russia, because it’s trying to explain why it isn’t likely food will be exported from Russia in vast amounts any time soon.  Currently regional governments restrict how much food can be sold outside of the region to other regions within Russia to make sure their people are fed.  Farmers like this protection because they’re paid more since they’re protected them from outside competition.  There are 16 regions that forbid any export of food beyond their borders.  Governments, by lending them money for oil and other farm inputs can insist on this.

So opportunities for Wall Street and Russian capitalists to make lots of money from exporting Russian food globally is not a good way to grow rich now.  Plus Russia’s agricultural production is still low compared to USA or Europe because they’re less mechanized, experience fuel shortages, and have greater production costs.  Their scientists estimate that the biological potential of the agricultural land is 2.5 times less than the USA or EU on average.  So agriculture is protected – just as it is in the USA and EU with subsidies.

In the highest circles of government, Russians would prefer to have food security over importing cheap food and fight to continue to protect Russian agriculture, but it’s a delicate balance since they don’t want to have food prices so high that citizens can’t afford it – so the government helps the bottom 25-35% below the poverty line afford food.

The problems of the large farms – mainly the politics and bureaucracies that oversaw them, were so awful it’s amazing any food was ever produced

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