Clash of reforms with Soviet system stifles agro-sector (12/19/99)

Clash of reforms with Soviet system stifles agro-sector

by Yana Sedova
Special to The Ukrainian Weekly

KYIV - The clash of land reforms with a Soviet system that refuses to wither away has stifled attempts to revive Ukraine's agricultural sector. With little substantial legislative support for reforms, villagers and farmers are skeptical that there is a future for them in farming.

That was not always the case. In 1992, when land privatization first began, there were high hopes. Legislation had been passed that enabled citizens to take private land plots from the collective farms in which they had worked under the Soviet system. The intention was to put an end to the state control of land.

Ivan Holovko, a former official of the Novosilskyi collective farm in Kyiv Oblast, said that many collective farm workers and officials were optimistic about the country's agricultural future.

"In 1992 we had no problems with taking our plots," said Mr. Holovko, who took a loan at an interest rate of 10 percent from the Kyiv Oblast Association of Farmers and bought a tractor, necessary equipment for every fledgling farmer.

The start was quite promising. However after Mr. Holovko turned in his grain to a state-controlled elevator, he had to wait several months for payment, money that he needed to repay loans for seed and fuel given on consignment.

Severe inflation (from 1990 to 1995 the prices for agricultural supplies increased 202,000 times; finished products' prices increased by 34,000 percent) destroyed Mr. Holovko's plans, and he barely covered his expenditures. Today he has only two tractors left to show for his toil, a relatively new one, and another one that has been written off as scrap, although it still runs. Today he is out of the farming business.

"No one has ever gotten rich on this land, only hunchbacked," said Mr. Holovko. Now he is the head of the "silska rada," the local village council, and declines to criticize the state, although he admits that it should at least regulate agricultural prices and fuel, to give the farmer a fighting chance.

Most of the agricultural sector's problems today stem from the failure of the government to deal with three critical areas necessary to make the farmer competitive: to solve investment problems, to develop a clear state program for land privatization, and to create a competitive land market providing for the sale and purchase of land.

The Ukrainian Support Fund of Peasant Farmers began its work in 1992, and was legislated to support the law on farm enterprises, the original statute on agricultural reform passed in December 1991. The fund was supposed to give interest-free cash credits and to supply farmers with fuel and machinery on consignment under optimal terms.

This year, however, the fund was given merely 3 million hrv for programs to support Ukraine's 35,500 farmers.

"A 100-hectare farm needs at least $20,000-$30,000 to go into business," explained Anatolii Starunsky, the director of the fund. "We do not have the resources to help everybody, and do so only with collateral or a guarantor."

The shortage of contracts and markets in an undeveloped system also makes attempts to launch a business highly risky. Farmers do not know where to sell their harvest, or even where to store it. They often enter into contracts with commercial firms that give them fuel and seed on the promise that they will receive a portion of the future harvest. However, the prices of agricultural commodities are low and supplies are expensive. At the end of 1998 the state price for a ton of fuel was five to six times higher than for a ton of grain.

Besides the uncertainty in agricultural reform, a more basic problem exists: the unyielding post-Soviet mentality of control and corruption and graft.

During the period of Soviet state control, local government officials - especially the directors of collective farms - became accustomed to the villagers' total dependence on them. Today many potential individual farmers simply do not have the strength or the knowledge to fight the bureaucratic mill. These are villagers who are accustomed to working hard, but not in the political or bureaucratic field.

The current conflict between farmers and kolhosp (collective farm) directors started during the second phase of the reforms, when the land of collective farms was divided among its members, the villagers that belonged to the collective. Each person got a portion of the total land jointly owned, but few specific plots of land were doled out.

The original idea was to create enterprises based on private property, but it has not turned out that way. For the most part the collective farm directors either bought out people at low prices or convinced people to take stock certificates, turning the collective farms into joint stock enterprises controlled by the directors.

"I still can't get the certificate to my plot of land," said Viktoria Venchikovskaya, a farmer from the village of Dzvinkove in Kyiv Oblast. She has been fighting for the document with the head of the village council for many months. Meanwhile, her land continues to be used by the director of the collective farm.

"The parceling out of land became a feeding trough for the directors," said Mr. Starunsky of the Ukrainian Support Fund. He said that today's problems are a direct result of the past philosophy of collective ownership of land.

"If something belongs to everybody, it is nobody's," said Mr. Starunsky. In that case the local officials become the only masters in the village, and they think about their own profits first, he explained. They "write off" machinery - tractors or harvesters only eight years old - and it's quite legal. Local directors know the law better than the villagers, they have ties to regional state administration officials. That, to some extent, is why there are a lot of new agro-entrepreneurs among the former directors.

There are exceptions. An example of this is the Novosilskyi KSP (collective joint enterprise) in Kyiv Oblast. The Novosilsky enterprise has several modern German and Belarusian tractors and harvesters, and new Belgian milling equipment; it plans to build a bakery as well as barns for its cows. Novosilskyi employs more than 300 people.

The farm is a success thanks to Oleksander Plotnitzky, the enterprise's director, who chose another path to success. He maintains that he has not cheated, or stolen: no bribes, no larceny, no embezzlement. Nonetheless, as Mr. Plotnitzky admits, he has received much help from Viktor Pylypyshyn, the president of the Stoik Concern who, most importantly, is a national deputy and head of the Committee on Consumer Rights and Markets. Today Novosilskyi is part of the Stoik Concern.

Villagers employed by Novosilskyi, however, really don't care who owns what, only that they get paid regularly for their work. "I was lucky to find this place," said a security guard for Novosilskyi, who did not want his name used, and who makes about 140 hrv monthly (about $30).

Most villagers are grateful that they simply receive their miserly incomes, ironically, for working on land which is supposed to belong to them.

Statistics show that villagers have little faith in land reform: 66 percent said that they are against a free land market, according to the Kyiv Institute of Social Research. In 1998 only 4 percent said that changes were needed, and 52 percent responded that they found the familiar Soviet system of collective farms better. Only 9 percent of villagers said they would like to start their own private farm.

There is a problem with attitude and outlook. People have become accustomed to being menial laborers, cogs in the Soviet system. Villagers often are skeptical and even mocking of those who attempt farming on their own. Many simply do not have the money to invest in a private farm. For them the reorganization of the collective farm is simply reform on paper.

Since the collectivization of the village, peasants have been among the poorest people in society. Today reforms and the potential to farm their lands is considered a joke among villagers who are often owed 14 to 15 months back pay. Today they survive mostly as a result of their private gardens and some livestock.

Hundreds of villages are without gas, and electrical brown-outs are common in most places. There are schools with only two or three children in a classroom, and a chronic lack of teachers. Some villages have a single telephone, located in the post office. According to statistics, 70 percent of villagers do not have a job.

Even if they wanted to rebuild the agricultural sector, the peasants first must survive.

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