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Prospects of the Farming Sector and Rural Development in View of Food Security

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Prospects of the Farming Sector and Rural Development in View of Food Security LF-NA-26256-EN-N As the Commission’s in-house science service, the Joint Research Centre’s mission is to provide EU policies with independent, evidence-based scientific and technical support throughout the whole policy cycle. JRC SCIENTIFIC AND POLICY REPORTS Working in close cooperation with policy Directorates-General, the JRC addresses key societal challenges while stimulating innovation through developing new standards, methods and tools, and sharing and transferring its know-how to the Member States and international community. Key policy areas include: environment and climate change; energy and transport; agriculture and food security; health and consumer protection; information society and digital agenda; safety and security including nuclear; all supported through a cross-cutting and multidisciplinary approach. Prospects of the farming sector and rural development in view of food security The case of the Russian Federation Vassily Uzun Valera Saraikin Ekaterina Gataulina Natalia Shagaida Renata Yanbykh Sébastien Mary Sergio Gomez y Paloma 2014 Prospects of the farming sector and rural development in view of food security: The case of the Russian Federation. Prospects of the farming sector and rural development in view food security: Report EUR 26256 EN European Commission Joint Research Centre Institute for Prospective Technological Studies Contact information Address: Edificio Expo. c/ Inca Garcilaso, 3. E-41092 Seville (Spain) E-mail: [email protected] Tel.: +34 954488318 Fax: +34 954488300 http://ipts.jrc.ec.europa.eu http://www.jrc.ec.europa.eu European Commission Legal Notice EUR 26256 - Joint Research Centre – Institute for Prospective Technological Studies Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of this publication. Title: Prospects of the farming sector and rural development in view of food security: The case of the Russian Federation Europe Direct is a service to help you find answers to your questions about the European Union Authors: V. Uzun, V. Saraikin, E. Gataulina, N. Shagayda, R. Yanbykh, S. Mary, S. Gomez y Paloma, Freephone number (*): 00 800 6 7 8 9 10 11 (*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billed. Luxembourg: Publications Office of the European Union A great deal of additional information on the European Union is available on the Internet. 2014 - 143 pp. - 21.0 x 29.7 cm It can be accessed through the Europa server http://europa.eu/. EUR - Scientific and Technical Research series – ISSN 1831-9424 (online) JRC 85162 ISBN 978-92-79-34038-3 (pdf) EUR 26256 EN doi:10.2791/33981 ISBN 978-92-79-34038-3 (pdf) Abstract ISSN 1831-9424 (online) As the recent situation on world food markets has been increasingly volatile and has been associated with relatively higher food prices, contributing to demonstrations and riots across the world, Russia’s agriculture has attracted much attention from econo- doi:10.2791/33981 mists, experts and policy-makers because they believe that the country could become the world’s largest and most reliable grain producer and exporter. In that context, the aim of this report is to evaluate the role of the Russian Federation towards fulfilling Luxembourg: Publications Office of the European Union, 2014 domestic food security and more importantly global food security in the short and medium run. In particular, the study aims at examining if Russian farms could substantially increase further their respective output and export levels. The methodology fol- © European Union, 2014 lowed in this report is a bottom-up approach, i.e. going from the farm (i.e. microeconomic level) to the food market (i.e. macroe- conomic level), that explicitly considers the analysis of food security at the farm level and therefore complements well other Reproduction is authorised provided the source is acknowledged. works which study the agri-food sector in Russia at a more aggregated level. The perspective of the report is made possible by the use of a wide range of farm-level databases that are, for most, only available to Russian researchers and allow going into Printed in Spain a more disaggregated and detailed level of analysis. JRC SCIENTIFIC AND POLICY REPORTS Prospects of the farming sector and rural development in view of food security: The case of the Russian Federation Vassily Uzun Valera Saraikin Ekaterina Gataulina Natalia Shagaida Renata Yanbykh Sébastien Mary Sergio Gomez y Paloma June 2013 Joint Research Centre Acknowledgements Acknowledgements The JRC Technical Report on the “Prospects of the farming The authors owe acknowledgements to their colleagues from sector and rural development in European Neighbourhood the Agrilife Unit Jacques Delincé, Stephen Langrell, Fatmir Policy Countries in view of food security: The case of the Guri and Andryi Kharchenko for many fruitful discussions Russian Federation” results from the collaboration between and helpful comments. The authors are also particularly the Agriculture and Life Sciences in the Economy (AgriLife) indebted to Professor Zvi Lerman (Hebrew University of unit of the IPTS and the Russian Institute of Agrarian Jerusalem, Faculty of Agriculture, Food, and Environment) Problems and Informatics named after A.A. Nikonov, via the for a thorough review of the material exposed in the report ENP-RUSSIA project, under the scientific coordination of and many invaluable comments. Renata Yanbykh. 3 disclaimer Disclaimer The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission or the Russian Institute of Agrarian Problems and Informatics named after A.A. Nikonov. 5 Executive summary Executive summary Analysis of changes in the Russian agricultural sector subsidies across regions requires co-financing from the republics. 1. The analysis of the ownership and access to agricultural inputs, particularly land and assets, is important for an 7. While most of the farm subsidies are directed towards overall assessment of food security in Russia. Agrarian agricultural enterprises, whose output is marketed reforms implemented during the transition to a market (and partially exported), the existence of farm support economy in post-Soviet Russia have deeply affected the strongly contributes to the sustainability of many farms reallocation of land and assets in rural areas. through positive impacts on profitability and gross agricultural output. 2. The specific implementation of reforms in post-Soviet Russia prevented the splitting of land into thousands 8. Rural development policies are very limited and cannot of small plots. However, the emergence of a market for prevent rural depopulation and the increasing income land shares has also generated high transaction costs gap between urban and rural areas. and corruption. Furthermore, agrarian reforms in each region of Russia had its own specific features, mainly 9. Farmers perceive State Program measures as positive, because the privatisation of land was not homogenously though they think they have no si-nigificant impact carried out in all regions. For example, in some regions, on agricultural development. Also, farmers seem to preference was given to the preservation of state farms consider the business environment as favourable. (e.g. Chechen Republic) or the creation of producers’ cooperatives. 10. The most radical changes within the farming structure over the last 20 years are the resurgence of household 3. As a result of the reforms 11.8 million people became plots and the concentration of agricultural outputs in owners of property and land shares (approximately 120 large agricultural organisations. Among the largest million hectares). The majority of shareholders have enterprises, foreign companies are typically the most leased their land. Only a small part of the shareholders efficient and profitable. got property in-kind for their shares in order to create family farms. Overall, post-Soviet reforms have shaped 11. There have also been changes in farming practices as the structure of the farming sector in Russia and the household plots have specialised in la-bour-intensive capacity of the agricultural sector to use land and crops while agricultural enterprises have specialised in assets and therefore to pro-duce. cereals and industrial crops that require mechanisation and large areas. 4. One fundamental feature of the environment in which farmers operate is defined by the set of regulations 12. The agrarian structure across Russia has also that directly affect farming activities and define dramatically been affected as regions have dif-ferent the operating framework for agricultural and rural agrarian structures: the corporate sector has prevailed development policies. in 30% of the republics, with the predominance of large agricultural enterprises, agrofirms, and agricultural 5. Government support for agriculture is mainly aimed holdings. Ap-proximately the same proportion of at stimulating production (e.g. subsidies to support regions is characterised by the predominance of family expenditures or loans), most of which has been farms and about 40% of regions have a mixed agrarian traditionally classified in the Amber Box. Upon WTO structure. accession the mechanisms are due to change and a strong increase in Green Box subsidies is likely to occur. 13. The economic classification of agricultural producers of Russia, using the 2006 Census, has allowed
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