At a recent Kennan Institute talk, Stephen Wegren, Associate Professor, Department of Political Science, Southern Methodist University, spoke about improvements in Russia's agricultural sector that have occurred under president Vladimir Putin. Wegren contended that Russia had reached the point of a near-catastrophe in agriculture under former president Boris Yeltsin. Since 1999, agricultural production has increased substantially and the sector has become more stable. Wegren argued that these improvements are a part Russia's overall economic growth, but have been facilitated by the policies of the Putin administration.

According to Wegren, Putin assigned a higher priority to agriculture than Yeltsin had. In July 2000 the Ministry of Agriculture announced a list of basic directions for agriculture, which shifted state priorities away from small private farms and toward large farms and contained a number of measures to stabilize the agricultural sector and increase production. Wegren argued that—in contrast to strategic documents developed under Yeltsin and then largely ignored—these basic directions actually guided state policy.

Wegren argued that Putin's agricultural policy has led to specific achievements in three areas. First of all, the ruble value of Russian agricultural production has been steadily increasing, although it has not yet reached 1992 levels. According to Wegren, the increased production is both a response to increasing domestic demand and a result of greater efficiency. He noted that although private farms are no longer the focus of state policy, their production rates are increasing faster than the rates of large farms. There is increasing stratification among private farms as the most productive acquire new land.

Second, Wegren continued, the agricultural sector has become more financially stable. This is the result of a number of state policies, including: the development of reliable credit sources, better state fulfillment of budget obligations, the adoption of price stabilization measures, and trade protection for agricultural products. These measures have not been entirely successful, he cautioned, but progress has been made. For example, the percentage of unprofitable large farms has dropped from 88 percent in 1998 to 50 percent today.

Finally, state policy is promoting behavioral change among Russian agricultural producers, Wegren argued. The current system encourages entrepreneurship. He contended that a core of highly productive farms is being created as profitable farms take over unprofitable ones and acquire production facilities.

There is much left to be done in the Russian agricultural sector, according to Wegren. Productivity will need to be increased further if Russia is to be competitive in the global market. Particularly, Wegren suggested, Russia needs to improve agricultural science and education, as well as to improve its capital stock. He warned that there are a number of obstacles to these types of reform, including: the ambivalence of Russian officials toward international integration, the inherent contradictions within Putin's policy agenda, and the continued low priority of agricultural reforms.