199 



7 



There has been no history of any credit discipline for state and collective farms 



I 

 as well as agro-industrial enterpnses. The banking system is fragmented and not 



adequately developed to properly administer the payment and credit needs of a 



changing agriculture. Banking reform in general and agricultural credit reform in 



particular could establish credit as a production input with a real price (the interest 



rate) which is rationed to borrowers on the basis of price and risk. This type of reform 



will be slow but unless it brings hard credit discipline, we should not expect serious 



change in the behavior of large farms and agro-industrial enterprises. 



Furthermore, if the Russian government and the International Monetary Fund 

 (IMF) come to an agreement on an economic stabilization JDoiicy which requires tighter 

 credit policy to dampen inflation, the resulting credit crunch will be felt immediately in 

 banks serving agriculture. The state and collective farms will feel the burden of tighter 

 credit policy but the private farmers will see their credit sources disappear since they 

 are often the least credit-worthy customers. 



Reforming Russian agriculture is very different from ^he challenges which I have 

 encountered in Third World countries like Thailand and Barjigladesh. Among the new 

 Russian private farmers there are few traditional "peasants'", in any sense similar to that 

 of the peasant rice farmer of Asia. This is a highly capitalized agriculture with modern 

 technologies and operating on a very large scale. Within thSs framework, the state and 

 collective farms represent the social and economic fabric of rural Russia. There is a 



