Russian Farms Struggle To Keep Up
Sunday, 15 November 1998
R Z H A V K I , R U S S I A (AP)
WHETHER THEY'RE pouring feed in the henhouse or sipping coffee in the
director's office, workers at the Plemptitsa poultry plant bundle up in
padded jackets and boots against the autumn chill.
The onetime flagship of Russian broiler chicken production can't afford to
keep the heat on to warm the 70 employees. It's working at only one-third
capacity. Several decaying buildings sit empty, surrounded by overgrown
grass.
Russia's farms were in dire shape even before the country's economic crisis
hit in August, and the latest turmoil could be a fatal blow to some
operations.
Yet the crisis also represents an opportunity for Russian farms. Imported
food is now too expensive for most Russians, and any domestic farm that
can get more of its goods to market is likely to win a new lease on life.
Can the farms meet the challenge?
Russia is the largest country in the world, and has large tracts of fertile
land. Yet the Soviet farming system was hugely unproductive and there has
been little agriculture reform since the Soviet Union collapsed.
Russian farm output fell 36 percent from 1990 to last year, the
Organization for Economic Cooperation and Development says. And
production was off 55 percent at large farms of more than 250 acres - the
former collective farms of the Soviet era that occupy most of Russia's
arable land.
"We've never experienced anything like this before, even in the (World
War II) years," mourned Alexei Zinchenko, a statistics professor at
Moscow's Timiryazev Agricultural Academy.
This summer's drought made things worse. The grain harvest, down nearly
half from last year, will be the worst in four decades.
"The land is dying, and there are no programs for preserving or developing
fertility. ... Only 5 percent of land is irrigated, and that means there's
absolutely no insurance for bad years," Zinchenko said.
Zinchenko blamed the farming decline on the sudden withdrawal of
government financing, and the flood of imports that knocked Russian food
products out of the competition.
With American and Dutch chicken imports gobbling up the market,
Russian chicken production has fallen to just 200,000 tons yearly since
1993 - compared with 1.7 million tons previously.
Zinchenko said the decline in agriculture was also due to what he called a
mistaken reorientation to small, private farms to replace the huge
collectives of the Soviet era.
Advocates for the approximately 280,000 small farms, which occupy
about 6 percent of Russia's arable land, counter that they've been better
able to adjust than the Soviet-era mammoths.
"The big farms really don't use inputs efficiently at all," said Gregory
Mohrman, Moscow director of the Rural Development Institute of the
University of Washington.
All farms, big and small, are struggling to find financing.
State subsidies are largely gone, and what little, high-interest credit was
available to farms has dried up. The costs of feed, fertilizers and farm
equipment have skyrocketed. Transactions are increasingly in barter rather
than cash. Farmers are falling deeper into debt.
For most farms, private financing is out of the question, partly because of
their dismal record and partly because it takes a long time for an
investment to show any return.
But chicken is an exception, because an investor can theoretically get his
money back relatively quickly. Investors have moved into all five poultry
plants in the Moscow region.
An import-export company has helped the Plemptitsa broiler business,
although Lev Kroik, the Plemptitsa director, refused to name the company.
"They pay part of the salaries" of 800 rubles ($47) a month, he said. "I
can't say that the salary level suits us, but we pay on time."
The partners had agreed on a $1 million plan for getting the entire plant,
with its 3,000-ton potential annual output of broilers, back into operation
within three years.
The August financial crisis has put that plan on hold, however, because
Plemptitsa's partner can't get its money out of the bank. For now, the
operation is limited to three henhouses, where 30,000 chickens live 12 to a
cage.
"We had great plans," Kroik said, sitting in an office stuffed with feed
samples, dusty cans of luncheon meat and posters bearing testimonials to
the health-boosting benefits of quail eggs. "Today we have big problems."
Still, he sees opportunities that didn't exist before the crisis.
Plemptitsa is selling every bird it raises, and a major Moscow supermarket
chain is clamoring for more - and continuing to pay the top price, about 62
cents a pound.
"People are beginning to reorient themselves to Russian products and
realize they're not bad at all," said Elena Tyurina, an analyst at the Institute
for Agrarian Market Trends, a market research company. |
