Betting the Farm on a New Russia

They rise like giants from an ancient myth, twin green titans grinding the earth beneath them in a stately procession across the plain. Huge, new John Deere tractors, the latest in agricultural mechanization, they are objects of wonder and hope to the people of the Banner--formerly Red Banner--collective farm.

Like most people on the disintegrating collective farms that still account for virtually all of Russia’s agricultural land, Banner’s members have been struggling since the collapse of the Soviet system.

“I hadn’t been paid a salary for 10 years,” said driver-operator Alexander Chernegin, 45, savoring the air-conditioned, stereo-equipped, computerized cab of his gargantuan machine. “And now I am starting to get something.”

“Look at those wheels,” he marveled. “In this, I could climb Mt. Elbrus,” the highest peak in Europe.

The resurrection of Banner is part of a little-noticed trend across Russia: For the first time since the Bolshevik Revolution and Josef Stalin’s murderous collectivization drive, big private land holdings are being quietly put together again, assembled from the carcasses of such farms.

Banner’s 380 members agreed last year to rent their land to a new Russian company called Yuzhny Put (Southern Way), which said it was ready to supply capital, fiscal discipline and Western technology.

Sowing its first crop this year on 57,000 acres leased from Banner and three similarly down-at-the-heels collectives in the Krasnodar region of southern Russia, Yuzhny Put marks a revolution for Upornaya. And contrary to their village’s name, which translates as “stubborn,” its residents have been willing to embrace the change.

But is Russia? The question facing President Vladimir V. Putin is whether the country is ready to cut one of the last links to its Communist past, its almost sacred belief that its land belongs to everyone.

If all goes in the State Duma as Putin’s aides predict, legislation will be enacted this year to permit Russia’s hallowed soil, the very “motherland,” to be bought and sold.

Even though the 1993 constitution guarantees the right to buy and sell real estate, all attempts since then to enact laws to actually permit private land sales have foundered.

The mythic stature given to land during 70 years of Communist rule helps explain why. After the 1917 revolution, the czar’s family and the aristocracy were stripped of their holdings. Vast estates and palaces were expropriated. Beginning 12 years later, a Stalinist drive to organize farmland into collectives wiped out millions of smallholders.

Wealthier peasants, the kulaks, were deemed class enemies, forced off their property and sent into internal exile or killed. Historians say millions of people died during the height of collectivization from 1929 to 1932 and millions more in the 1932-33 famine that followed.

Stalin squandered these millions of lives to rid the countryside of private farmers and erase any vestige of landownership. After that, successive generations were taught that the land belonged to all and that private landownership equaled exploitation.

In reality, the Soviet state had become the world’s largest landowner, controlling almost every square inch from Vladivostok in the east to the Baltics in the west.

That is essentially still the situation today. According to a national survey last year, the government owns 92.4% of Russian land, or 4.2 billion acres. The remaining 7.6% is in private hands, after the doling out of small shares in collective farms and other locally allowed transactions that do not carry with them the clear legal right to sell.

There remains a strong, visceral resistance to transferring land to anyone other than small individual farmers.

Solzhenitsyn Weighs In on Matter of Land Sales

An example is one of Russia’s sternest moral voices, Alexander I. Solzhenitsyn, who earlier this year declared his opposition to unfettered land sales--especially to big capitalists or foreigners.

“We would lose our Russia. Land should be owned by the farmer, not a plunderer or landlord,” he said. His jeremiad before lawmakers warned against putting Russian agriculture “into the greedy hands of robbers who already have stolen billions from Russia.”

Solzhenitsyn, whose “Gulag Archipelago” included descriptions of the agonies endured by the kulaks, proposed offering inexpensive loans to their descendants so they could buy back the land.

Those are fine sentiments--but not very realistic--believes Alexander Kuyemzhiyev, a former collective farm chief and regional agriculture minister who is a convert to capitalism. He is general director of Yuzhny Put in Krasnodar.

“Collective farmers will never be able to go it alone--they will never have the money,” he asserted. Russia’s recent experience would seem to support his claim.

In the past decade, almost all collective farms, or kolkhozes, underwent cosmetic privatization, becoming joint stock companies in which the members were allotted shares. In theory, members could opt out, take parcels of land and start individual farms. But few took the risk. And of those who did, many have failed.

For most, it was simply not practical to go up against the all-powerful local kolkhoz director, on whom the farmers still relied for access to tractors and harvesters, fertilizer, fuel, even schools for their children.

Kuyemzhiyev, 64, boasts that his region has the best farmland in all Russia: “If land reform doesn’t work here, it won’t work anywhere.”

Yet he admits that there is a long way to climb back. Grain production has fallen from 11 million tons in 1991 to 5 million last year.

For the moment, Yuzhny Put is only renting from the collective farmers. The company is vague about its financial backers but says it is putting $15 million into the project. Eventually, Kuyemzhiyev said, it would like to buy the land.

“And why not?” he said. “The individual never felt like a landowner here, and he never will. He has always been a hired worker, a slave, no matter what the propaganda said.”

However, he added, “There’s a world of difference between being a hired worker in a poor kolkhoz and being one in a modern, rich agricultural company.”

The spark plug at Yuzhny Put is Mikhail Y. Soldatov, its deputy director. A 41-year-old graduate of the prestigious Naval Academy in St. Petersburg and former commander of a naval destroyer, he left the service as military budgets were slashed in the 1990s.

Although he has not had a single hour of agricultural training (experts have been hired for matters such as seed selection and soil composition), when Soldatov surveys the rolling landscape around Krasnodar, he has a familiar feeling. It is not unlike being on the deck of his ship, he said, bringing order out of chaos and enforcing discipline.

At first, Yuzhny Put got a cold welcome in Krasnodar, Soldatov said. Newspapers accused the firm of seeking to “rob the peasants.” Some officials were miffed that the company would not pay bribes. But slowly, he said, people are starting to believe that the company will make a difference.

In contrast to the navy, Soldatov said, at Yuzhny Put he can choose his crew. Collective farms are rife with alcoholism, but he will not take on anyone who drinks. Theft is another vice he will not tolerate.

“It may seem to you a miracle that peasants have survived when they have not been paid for years,” he said. “Everybody here knows the answer: They steal.” It’s one of the reasons the farms all lose money, he said. “It is an epidemic.”

He gave the example of a dairy worker. Her monthly salary is 400 rubles--about $13--but the farm could not afford to pay her.

“We said we would pay her 2,000 rubles [$70], on one condition . . . that she can’t take any milk! When she heard that, she lost all interest.”

To lease the collective’s land, Yuzhny Put is paying each shareholder one ton of wheat, 110 pounds of sugar and 44 pounds of sunflower oil at harvest time. It comes out to about 700 rubles per month per shareholder, which, Soldatov said, is “reasonably good” since the average salary, often not paid, is less than 400 rubles.

Furthermore, a few qualified workers are hired, either seasonally or year-round, for salaries of 1,000 to 10,000 rubles a month.

Soldatov said Yuzhny Put needs only about 120 full-time workers, a tenth of the work force of the collective farms from which it is leasing land. Those not hired by the company continue to live on the kolkhozes. In addition to the lease shares they receive, they earn money by selling fruit and vegetables they raise in their personal gardens or find jobs, for instance in construction or as seasonal farm laborers.

Soldatov sees no alternative. “The kolkhozes were bound to go under sooner or later,” he said. “Apart from their total dependence on state subsidies, they had no real strategy or planning despite all the paperwork they had.”

‘Most People Here Just Want to Have a Job’

The assessment was shared by Alexander Marchenko, 41, chief of the Yuzhny Put tractor brigade.

“Most people here just want to have a job, to be paid regularly and decently, to have a normal life--and they don’t really care in a big way who gives them this chance,” Marchenko said. “If it is a capitalist, what does it matter?”

On a national level, it is clear that something must be done. Putin is among those pointing out that the lack of a legal code on land issues discourages investment and contributes to corruption and bureaucracy. Some regional governments have authorized sales on their own. Under-the-table deals also are being made. Many foreign and domestic companies prefer not to invest until the situation becomes clearer.

Alexander Maslov, deputy minister of economic development and trade, said the Kremlin intends to enact a new land code this spring. The bill was sent to the Duma in late April. Soon after the measure’s expected passage, the government plans to submit another bill specifically dealing with agricultural land, which everyone considers the most controversial.

Given the sensitivity, observers believe that some restrictions on the sale of farmland are inevitable, perhaps setting price floors or limits on how much land may be purchased.

A Fear Speculators May Gobble Up Plots

If present black market prices hold true, the land is very cheap. Soldatov said it costs only $24 to $40 per acre around Krasnodar. This knowledge increases fear that the land might be gobbled up by wealthy speculators. On the other hand, defenders of privatizing ask why anyone would buy the land if not to farm it.

Currently, 80% of collective farms nationwide are in debt. They cannot use land as collateral to borrow more. Short on cash, they cannot fully utilize their land. By one estimate, 7% of Russia’s best land now lies fallow as a result. With a land market, the farms could suddenly have an asset to use as collateral, obtain loans and ease their liquidity problems.

Yet many Russians remain deeply skeptical.

A survey of 1,600 adult citizens late last year showed that 57% of Russians fear drops in food production if farmland can be bought and sold. Sixty-five percent said they would react negatively to the private ownership of large plots. Twenty-four percent said land should not be put in private hands at all.

Yelena Zhuravlyova views it differently. She found out about Yuzhny Put early this year and talked it into funding a student project to rebuild Banner’s dying dairy and breeding herd. Yuzhny Put hired her to oversee it as a joint venture.

If her projections are correct, the livestock operation--whose surviving cattle almost starved last winter--should become profitable by the end of this year.

“I can see with my own eyes how the land is coming back to life,” said the budding economist, who at 23 is perhaps too young to be cynical. “This is what private capital and modern technologies can do! And I feel as if I am part of a new stage, if not a new era, in Russia’s agricultural development.”

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Sergei L. Loiko of The Times’ Moscow Bureau contributed to this report.