Modelling Subsistence Agriculture in Russia: Effects of Total Productivity Changes and Reduction of Marketing Margins
The transition process in Russia, which started vigorously at the beginning of the 1990s, has yielded negative economic growth rates for almost a decade, with the exceptions of 1997 and 1999. Agriculture and domestic food industries in particular have suffered from the ongoing transition process and the associated restructuring of the economy. During the first transition decade the share of agriculture in Gross Domestic Product (GDP) declined from more than 16% in 1990 to about 7% in 1998. Structural and institutional changes have significantly altered the performance of Russia's agriculture in the past and will continue to do so in the years to come. In the 1990s, for instance, the economic performance of the former kolkhozi and sovkhozi, the former collective and large-scale farms, deteriorated significantly. In fact, only 'soft budget constraints' exercised by regional administrations kept many of the large-scale crop and livestock farms alive at the end to the 1990s. Parallel to the decline of the large-scale sector, a shift in agricultural production has taken place towards private subsidiary plots (in Russian they are called Lichnie Podsobnie Khozyaistva (LPH)), the subsistence-oriented production units of the rural populace. By 1998, about half of Russia's agricultural production was produced by this sector.