At the same time, the number of individual farms has remained surprisingly low. Eight years after the enactment of the first presidential decrees legalizing individual farming, the number of individual farms had actually decreased—from a peak of 280,000 in 1996 to 274,000 at the end of 1997. Individual farms produce just 2 percent of recorded agricultural output on 6 percent of agricultural land. The remaining 48 percent is produced on tiny private plots—averaging one-third of a hectare—by rural and urban workers for whom this is a part-time occupation or by pensioners for whom it supplements retirement benefits.

Ideological Remnants

To explain the puzzle of the longevity of collective farms, it is important to evaluate both the political and the economic benefits that different groups of stakeholders derive from the preservation of this institutional structure. The structure seems particularly appropriate for a post-Soviet setting. In Soviet times institutions were created to serve political and economic goals simultaneously: the role of collective farms was not only to produce agricultural output, but also to serve as an ideological showcase for the superiority of large-scale collective agriculture. Local governments not only provided the environment for the operation of economic entities and coordinated the distribution of agricultural inputs and outputs, they also oversaw the timely fulfillment of plans.

A close alliance between local governments and collective farm managers evolved because of their shared responsibilities. The goal of this informal association was to guarantee that collective farms within the jurisdiction of a particular administrator gained preferential access to scarce inputs—such as fuel, fertilizers, and seeds. The timely acquisition of these inputs from centralized sources and the fulfillment of output plans shaped the rules in the "battles for harvest," a term for harvesting and sowing under socialism.

Islands of the Command Economy

In the post-Soviet era, during which federal agricultural policies have been weakly implemented, the role of regional (oblast-level) government in fostering—or blocking—agricultural reform has become critical. Research in two Russian provinces reveals fundamental differences in the way oblast governments have influenced agricultural producers and, consequently, enterprise restructuring. In the Saratov oblast the regional government has pursued a more interventionist agricultural policy, while in the Leningrad oblast the administration has shifted to a more laissez-faire regulatory stance.

What made these two administrations act differently? More interesting, what allowed the interventionist government to succeed in the environment of liberalized prices and curtailed federal support?

The Saratov oblast is following the post-Soviet path. Politically, the oblast government depends heavily on rural votes and on personal and professional rural ties. All the key positions in the oblast administration, including the mayor of the city of Saratov, are held by former Soviet agricultural managers and administrators. The local administration, despite nationally liberalized prices, adheres to the earlier practice of central distribution of resources with the help of the commodity credits system. For example, the oblast government instructs oil refineries to deliver fuel to collective farms during the sowing period, in return for tax forgiveness. The collective enterprises are required to repay commodity credits to budgetary organizations after harvesting, either with food deliveries or in cash.

The oblast government is able to define the conditions of commodity credit repayment, besides deciding at what price the commodities should be delivered by the farms. The firmness of the repayment conditions depends on the priorities of the oblast administration for a particular year. If political imperatives of courting the village vote dominate the agenda, the repayments are not enforced. If, however, the government needs to generate more revenue, it forbids all other sales before the commodity credits are repaid.

This elasticity of budget constraint is nothing new for collective farm managers. Familiar with the economic mood swings of their Soviet superiors, post-Soviet collective farm managers know how to adjust their behavior to these fluctuations. They do not have to adjust their skill in distribution to the new market realities, where success depends on generating profits. In other words, most collective farm managers can only perform their traditional social, political, and economic roles in an interventionist setting.

Interviews with collective farm managers in the Saratov oblast indicated that these farms serve as "guarantors of stability" in the countryside, as a safety net of last resort, and as input providers for the small private household plots of their employees. Collective farm managers also have to make sure that the farms produce enough to exchange for the inputs that will be needed to resume the production cycle the next season. Obviously, these goals are very different from the market imperative of profit maximization.

Shedding Light on Motivations

The employees of collective farms are also interested in the preservation of this association for a number of reasons. A household-level survey of the employee-shareholders of the collective farms in the Saratov oblast showed that their income is derived primarily from household plots and livestock production and, to a much lesser extent, from direct wage payments by the collective farm. Inputs for private agricultural production, however, as well as agricultural services, come predominantly in the form of official and unofficial payments derived from the collective farm. The low cost of inputs compared with their market price makes the employees prefer the limited and egalitarian access to resources from the ex-kolkhoz to the risk of independent farming.

The other side of the coin is that growth of private farming—facilitated by the supply of inputs from the collective farm—is severely constrained by the egalitarian nature of input distribution and low—close to subsistence—levels of inputs available from the system.

There is a different dynamic in the Leningrad oblast. This oblast is more industrial, with a larger share of GDP coming from nonagricultural production and a larger population living in urban areas. The local administrative elites of this oblast also come primarily from urban backgrounds, and consequently do not have the skills required for Soviet-style distribution of resources.

Further, in this oblast the budget constraint of the enterprises appears to be hardening much faster than in the Saratov oblast. Employees of collective farms derive their incomes primarily from cash wages paid in a direct and transparent manner. To be able to compensate their employees in cash rather than in kind, the collective enterprises sell their output in the market and generate the necessary revenue. This is in sharp contrast to the continuous operation of the barter circle observed in the Saratov oblast.

These divergent developments in oblast-level policies and their effect on the institutional evolution of collective farms have far-reaching implications:

The intuitive approach—and the one likely to yield the largest return—is to support agricultural reform in those regions that are agriculturally better endowed. However, it appears to be more effective to concentrate the restructuring effort on those regions where the reform process has taken better root—where local governments have disengaged themselves from agricultural production and where agricultural producers operate under uniform rules. Foreign assistance to agricultural reform in Russia has to take into account the diverse patterns of restructuring as well as the intricate and, in part, hidden web of benefits that secures the longevity of the kolkhoz system.