198 



6 



There are many obstacles to further economic reform in agriculture. In the 



interest of brevity, let me mention two: private property rights and agricultural credit. It 

 seems to me that until you solve these two over-arching issues, the pace of further 

 reform will be very slow. 



With respect to private property rights, Russia's new, farmers now have a 

 perpetual "use" rights to land but they cannot buy or sell farmland, cannot mortgage 

 land for long-term credit, and in some cases farmers are being sued for return of land 

 withdrawn from collective farms. Russia's legal structure of land and property rights 

 needs clarification if real agricultural productivity is to improve. It seems to me that 

 more rational property rights hold the key to improved efficiency in land use, post- 

 harvest commodity handling, and enterprise decisionmaking. 



Agricultural credit is another critical element of system-wide reform. A comment 

 made by an ACDI volunteer is cautionary: "Americans must leave behind their 

 understanding of a banking system when attempting to comprehend the Russian 

 banking and command flow of funds." In short, agricultural: credit has been and still is 

 supplied to Russia's farms and agribusinesses on the basis of state budget 

 allocations. The government determines the interest rate. One large bank, 

 Rosagrobank and its 1000 branches, controls 80% of the credit flow. Although other 

 banks, including independent farmer banks, have been created the basic source of 

 credit is still government. 



