Recent Development In Russian Agro-food Sector And Its Further Policies

Russian economy has experienced many changes since the economic reform started in the beginning of the 90-s. The price liberalisation launched in 1992 diminished the role of central planning in the allocation of inputs and outputs in favour of the role of market prices. The reform of the agricultural sector has resulted in a widely spread privatisation. Markets were liberalised relatively fast; at least those for commodities and services as well as the labour market. This meant the planning system was largely dismantled, state procurement abolished and production and consumption decisions were to be guided by the market. Also government intervention via subsidies or other instruments were greatly reduced. Low production and financial performance of agricultural enterprises have expressed in production decline (over 40% between 1991-1998) and a large proportion (84,4% in 1998 and 60% in 1999) of the unprofitable agricultural enterprises (Goskomstat, 2000). The restructuring process in the country created uncertainties for farmers and resulted in fragmentation of farms or farm ownership. Compounding the problem was the shortage of technical and business management skills for successful private farming that had been absent under the previous system. Previous linkages between farms and the up- and downstream industries broke down. The whole set of problems was worsened by the lack of agricultural finance and credit (Trzeciak-Duval, 1999). A lack of finance is caused by internal and external reasons. The farms are lacking its own revenue due to high production costs and price disparity between agricultural and other sectors of economy. Yet the possibilities to obtain the credit sources are rather limited due to farm’s inefficiency, low profitability so they cannot meet the high bank requirements. Agricultural production declines for various reasons and results in several outcomes. One of the outcomes of the production decline is sharp reduction in food consumption. This paper presents the description of the current situation in the producer and consumer side and points their interrelations. The major problems of the Russian agro-food sector are listed. Also the key subjects of the Agenda for agricultural development of Russia in 2001-2010 in respect to production and consumption strategies, information service are presented. We describe the objectives and existing strategies of the Federal Training Centre located in Moscow Timiryazev Agricultural Academy as an example of promoting the information service in agriculture, which in our view serves the solutions to overcome the production difficulties. The paper finalises with conclusions and discussion.